EXHIBIT 99.1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE GERON CORPORATION STOCKHOLDER DERIVATIVE LITIGATION | ) ) | Consolidated C.A. No. 2020-0684-SG |
STIPULATION OF SETTLEMENT
This Stipulation of Settlement (“Stipulation”) is made and entered into as of December 21, 2022, between and among, (a)(i) plaintiffs in the above-captioned consolidated derivative action (the “Action”), (ii) plaintiffs in the consolidated derivative action pending in the United States District Court for the Northern District of California, captioned In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 3:20-cv-02823-WHA (N.D. Cal.) (the “Northern District Derivative Action”), and (iii) plaintiffs in the consolidated derivative action pending in the United States District Court for the District of Delaware, captioned In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 1:20-cv-01207-GBW (D. Del) (the “District of Delaware Derivative Action”) (collectively, “Plaintiffs”), derivatively on behalf of Geron Corporation (“Geron” or the “Company”), (b) defendants John A. Scarlett, Karin Eastham, V. Bryan Lawlis, Susan M. Molineaux, Robert J. Spiegel, Olivia Bloom, Daniel M. Bradbury, Hoyoung Huh, and Stephen N. Rosenfield (the “Individual Defendants”), and (c) nominal defendant Geron (together with the Individual Defendants, the “Defendants,” and collectively with Plaintiffs, the “Parties” and each a “Party”). This Stipulation sets forth the terms and conditions of the settlement of the Derivative Litigation (as defined in paragraph 1.5 below) (the “Settlement”), subject to the approval of the Court of Chancery of the State of Delaware (the “Court”), and is intended to fully, finally, and forever compromise, discharge, resolve, release, and settle the Released Claims (as defined in paragraph 1.10 below).
1
SUMMARY OF THE PROCEEDINGS
2
3
4
5
events: (a) public announcement of a settlement of the Securities [ ] Action; or (b) a final judgment in the Securities [ ] Action, including the lapse of any time to appeal and/or the final
6
non-appealable resolution of any filed appeal.”
II. On November 3, 2022, the Parties reached agreement on the language of the releases that are included in this Stipulation and agreed to present this Stipulation for approval in this Court.
7
8
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, BY AND AMONG THE PARTIES TO THIS STIPULATION, subject to the approval of the Court pursuant to Rule 23.1 of the Rules of the Court of Chancery of the State of Delaware, that the Derivative Litigation shall be fully and finally compromised and settled, that the Released Claims shall be released by the Releasing Parties (as defined in paragraph 1.14 below) as against the Released Parties (as defined in paragraph 1.12 below), and that the Derivative Litigation shall be dismissed with prejudice, upon and subject to the following terms and conditions, and further subject to the approval of the Court:
9
DEFINITIONS
10
Litigation, or (b) the institution, commencement, prosecution, defense, mediation, or settlement of the Derivative Litigation.
11
12
RELEASES
13
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR THE RELEASED PARTY.
SETTLEMENT CONSIDERATION
14
STAY OF PROCEEDINGS
15
SUBMISSION AND APPLICATION TO THE COURT
NOTICE
16
ORDER AND FINAL JUDGMENT
17
COOPERATION
18
CONDITIONS OF SETTLEMENT
19
20
WARRANTY AND NON-ASSIGNMENT OF CLAIMS
ATTORNEYS’ FEES
21
22
23
STIPULATION NOT AN ADMISSION
24
NO WAIVER
BREACH
25
GOVERNING LAW
ENTIRE AGREEMENT; AMENDMENTS
COUNTERPARTS
SUCCESSORS AND ASSIGNS
COMPLIANCE WITH ETHICAL RULES
26
JURISDICTION
AUTHORITY
DATED: December 21, 2022
27
DELEEUW LAW LLC
/s/ P. Bradford deLeeuw P. Bradford deLeeuw (#3569) 1301 Walnut Green Road Wilmington, DE 19807
OF COUNSEL:
SHUMAN, GLENN & STECKER Kip B. Shuman 100 Pine Street, Ste. 1250 San Francisco, CA 94111
SHUMAN, GLENN & STECKER Rusty E. Glenn 600 17th Street, Suite 2800 South Denver, CO 80202
SHUMAN, GLENN & STECKER Brett D. Stecker 326 W. Lancaster Avenue Ardmore, PA 19003
Counsel for Plaintiff Richard DiLaura and Co-Lead Counsel for Plaintiffs in the Action
ROBBINS LLP Brian J. Robbins Craig W. Smith Shane P. Sanders Emily R. Bishop 5040 Shoreham Place San Diego, CA 92101
Counsel for Plaintiffs Ernesto Elizalde, Jr. and Joseph Oriente and Co-Lead Counsel for Plaintiffs in the Action |
| MORRIS, NICHOLS, ARSHT & TUNNELL LLP
/s/ D. McKinley Measley D. McKinley Measley (#5108) 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347
OF COUNSEL:
John C. Dwyer Ryan E. Blair COOLEY LLP 3175 Hanover Street Palo Alto, CA 94304-1130
Counsel for Individual Defendants and Nominal Defendant Geron Corporation
LEVI & KORSINSKY LLP
/s/ Gregory M. Nespole Gregory M. Nespole 55 Broadway, 10th Floor New York, NY 10006
COOCH AND TAYLOR, P.A
/s/ Blake A. Bennett
Blake A. Bennett (#5133) The Nemours Building1007 N. Orange Street, Suite 1120 Wilmington, Delaware 19801
Counsel for Plaintiff Michael Henry Mongiello |
28
GLANCY PRONGAY & MURRAY LLP
/s/ Benjamin I. Sachs-Michaels Matthew M. Houston Benjamin I. Sachs-Michaels 745 Fifth Avenue New York, NY 10151
Counsel for Plaintiff Katharine Jameson |
JOHNSON FISTEL LLP
/s/ Brett M. Middleton Brett M. Middleton 501 West Broadway, Suite 800 San Diego, CA 92101
Counsel for Plaintiff Zachary Gamlieli |
29
EXHIBIT A
CORPORATE GOVERNANCE REFORMS
The corporate governance reforms set forth below (“Corporate Governance Reforms”) shall be implemented and maintained for a period of no less than five (5) years from the date of adoption. Defendants1 acknowledge that Plaintiffs’2 efforts, including investigating, preparing, commencing, and prosecuting the Derivative Actions,3 were the primary cause for the adoption, implementation, and maintenance of the Corporate Governance Reforms set forth below. Defendants acknowledge that Plaintiffs’ efforts were a factor in the Audit Committee’s determination to revise the Company’s Insider Trading Compliance policy (Revised July 2022). Defendants also acknowledge that the foregoing confer substantial benefits on the Company and its stockholders.
The Company shall create a new, separate management-level Disclosure and Controls Committee (“Disclosure Committee”) with the purpose of ensuring: (i) the accuracy of any material corporate information disseminated via corporate disclosure channels delivering information to investors; (ii) accurate filings with the SEC; (iii) appropriate corporate public disclosures and standards concerning research and development; and (iv) the effectiveness of the Company’s disclosure controls and procedures.
The Disclosure Committee members shall consist of the following senior executive officers:
The Disclosure Committee shall consult with the Chief Medical Officer (“CMO”), as necessary, with respect to disclosures related to his or her areas of responsibility, including, but not limited to: (i) the Company’s research and development activities; (ii) compliance with industry laws, including the FDC Act and related Acts, and other rules and regulations; and (iii) clinical trials, clinical trial results, and/or studies.
1 “Defendants” are, collectively: John A. Scarlett, Karin Eastham, V. Bryan Lawlis, Susan
M. Molineaux, Robert J. Spiegel, Olivia Bloom, Daniel M. Bradbury, Hoyoung Huh, and Stephen
N. Rosenfield. Geron Corp. (“Geron” or the “Company”) is named as a nominal defendant.
2 “Plaintiffs” are, collectively, Katherine Jameson, Zachary Gamlieli, Ernesto Elizalde, Jr., Joseph Oriente, Richard DiLaura, and Henry Mongiello.
3 The “Derivative Actions” refer to, collectively: In re Geron Corporation Stockholder Derivative Litigation, 2020-0684-SG (Del. Ch.); In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 3:20-cv-02823-WHA (N.D. Cal.); and In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 1:20-cv-01207-GBW (D. Del).
The mission of the Disclosure Committee will include ensuring effective procedures and protocols are in place at the Company such that all the Company’s corporate public statements, including, but not limited to, SEC filings, press releases, and other corporate public statements, are vetted for accuracy, integrity, and completeness, and for reviewing with management its ongoing compliance with these protocols and procedures.
The Disclosure Committee shall ensure that the Company’s and its officers’ corporate public statements concerning management’s target drug research, development, manufacturing, marketing, and operations goals are consistent with the Company’s capabilities. As part of its review, the Disclosure Committee will consider the Company’s drug research, development, manufacturing, marketing, and operations capabilities goals or targets, and related disclosures.
The approval of the Disclosure Committee shall be required prior to any corporate public statement made or authorized by the Company, its officers, and/or its directors, referencing the Company’s research, development, manufacturing, marketing, and operation capabilities, goals, or targets. The Disclosure Committee shall not grant any such approval without first fully considering the Company’s abilities to meet any such manufacturing and operations goals or targets and determining that any authorized corporate public statement is true and accurate.
The Disclosure Committee shall hold regular meetings prior to the preparation and filing of the Company’s annual and quarterly reports with the SEC, and ad hoc meetings from time to time.
Other personnel of the Company, or representatives of its outside advisors, may be invited to attend Disclosure Committee meetings as deemed necessary or appropriate by the Disclosure Committee in performing its duties and responsibilities.
The Disclosure Committee shall timely provide the Audit Committee with a written report regarding any concerns of the Disclosure Committee whenever warranted by the facts, issues, and circumstances.
The responsibilities of the Disclosure Committee shall include:
2
As an initial action item following the Company’s commercialization of one or more of its product candidates, because the Company does not yet have a Chief Compliance Officer, the Company will appoint a Chief Compliance Officer as soon as is practicable.
The Company’s CLO and/or CMO shall formally and timely update the full Board at a Board meeting if there are: (i) any material compliance violations by the Company that are raised by the FDA or other regulatory agencies that fall under their respective purviews; and (ii) any material adverse developments in clinical trials in each case that would likely impact the Company’s financing and/or the probability of regulatory approval of drugs or biologics under development in a significant manner.
The COO shall formally and timely update the full Board, as necessary, at a Board meeting regarding:
Upon the request of the CLO and/or CMO, or the independent members of the Board, the independent members of the Board will meet in executive session: (i) with the CLO to review any concerns, including any whistleblower issues, reports of management wrongdoing, pending or threatened litigation, and such other
3
matters that the CLO or independent board members identify, and/or (ii) with the CMO to review any concerns, including any material compliance issues raised by the FDA or other regulatory agencies that fall under the CMO’s purview, potential or actual issues concerning the status of ongoing or planned sponsored clinical trials or drug or biologic approvals, and the effectiveness of the Company’s policies, procedures, systems and controls designed to ensure regulatory compliance.
The Company shall provide all new hires and appropriate employee populations with training on expectations with respect to integrity and compliance and the Code of Conduct. The Company shall require the appropriate employee populations to attest on an annual basis that they have read, understand, and will comply with the Code of Conduct. The Company’s Whistleblower policy will adequately notify employees of the following: (i) complaints may be directed to an employee’s manager, any member of Human Resources, that employee’s Designated Officer, or via the Reporting Hotline; (ii) reports made through the Reporting Hotline made be made anonymously (unless prohibited by local law); (iii) information gathered during investigations into reports will be kept confidential to the extent possible; and (iv) Geron strictly prohibits retaliation against any individual who raises complaints in good faith.
The Company shall post information regarding the Reporting Hotline phone number on the Company website and make clear that it is available to assist on matters pertaining to a potential violation of the Code of Conduct. The Reporting Hotline shall be confidential, and reports made to the Reporting Hotline relating to accounting, auditing, or embezzlement matters shall be directed to the Chairperson of the Audit Committee.
Each member of the Board shall participate in continuing education related to corporate governance practices and other topics pertinent to the Company’s business, as follows:
The Company shall cover reasonable expenses for attendance at the programs detailed above.
4
In order to give the Board the ability to meaningfully discuss and address critical matters at each Board meeting, the materials the Board will be discussing at each meeting should be sent to Board members at least four (4) calendar days prior to the meeting, or as far in advance as possible if four (4) calendar days prior is impractical (for example, if a special meeting is called on short notice).
The independent directors of the Board shall meet in executive session at each regularly scheduled meeting of the Board, with a minimum requirement to meet at least four (4) times annually outside the presence of any director who serves as an officer of Geron.
The Company shall add an additional independent director to the Board and undertake best efforts to do so no later than twelve (12) months after final settlement approval. In undertaking such effort, the Nominating and Corporate Governance Committee shall consider the following criteria, among others:
The Company shall amend its Bylaws to require that at least three-fourths (3/4) of the Board be comprised of independent directors as set forth in the standards required by the NASDAQ Stock Exchange.
5
The Audit Committee Charter shall be amended to include the provisions below, and the amended Audit Committee Charter shall be posted on the investor relations portion of the Company’s website.
The Audit Committee Charter shall be revised to require that the Audit Committee meet at least six (6) times annually, including meetings prior to commencement and completion of the annual audit, inclusive of the four (4) Audit Committee meetings prior to the filing of each quarterly report with the SEC on Form 10-Q and the annual report with the SEC on Form 10-K.
The Audit Committee shall meet separately with the CEO, CFO, and/or CLO at least once each quarter and more frequently if necessary to effectively supervise the Company’s disclosure function and specific disclosure issues of particular importance.
The Audit Committee shall review with the CEO, CFO, and/or CLO the accuracy of the financial statements contained in SEC Forms 10-Q, Forms 10-K and associated press releases issued by the Company. Prior to the issuance of earnings or announcement of guidance, the Audit Committee shall review and approve any such disclosure with the Disclosure Committee (or an appropriate subcommittee of the Disclosure Committee) to ensure that the proposed disclosure has a reasonable basis and that all material risks and contingencies are properly disclosed.
The Chairperson of the Audit Committee shall meet with the Company’s outside auditors at least four (4) times annually, including before the filing of the Company’s quarterly and annual reports with the SEC.
Additionally, the Audit Committee Charter shall be revised to add a provision requiring that the Audit Committee review and discuss with the CEO, CFO, and/or CLO any material, proposed compliance-related disclosures in the Company’s annual and quarterly financial statements.
6
Exhibit B
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE GERON CORPORATION | ) | Consolidated |
STOCKHOLDER DERIVATIVE LITIGATION | ) | C.A. No. 2020-0684-SG |
SCHEDULING ORDER WITH RESPECT TO NOTICE AND SETTLEMENT HEARING
WHEREAS, (a)(i) plaintiffs in the above-captioned consolidated derivative action, (ii) plaintiffs in the consolidated derivative action pending in the United States District Court for the Northern District of California, captioned In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 3:20-cv-02823-WHA (N.D. Cal.), and (iii) plaintiffs in the consolidated derivative action pending in the United States District Court for the District of Delaware, captioned In re Geron Corporation Stockholder Derivative Litigation, C.A. No. 1:20-cv-01207-GBW (D. Del) (collectively, “Plaintiffs”), individually and derivatively on behalf of Geron Corporation (“Geron” or the “Company”), (b) defendants John A. Scarlett, Karin Eastham, V. Bryan Lawlis, Susan M. Molineaux, Robert J. Spiegel, Olivia Bloom, Daniel M. Bradbury, Hoyoung Huh, and Stephen N. Rosenfield (the “Individual Defendants”), and (c) nominal defendant Geron (together with the Individual Defendants, “Defendants,” and collectively with Plaintiffs, the “Parties” and each a “Party”), have entered into a Stipulation of Settlement dated December 21, 2022 (“Stipulation”), which sets forth the terms and conditions of the proposed Settlement and dismissal with prejudice of the Derivative Litigation,1 and provides for the full and final compromise, discharge, release, and settlement of the Released Claims by the Releasing Parties as against the Released Parties, subject to the approval of the Court;
1 All capitalized terms not otherwise defined herein shall have the same meaning ascribed to such terms in the Stipulation.
WHEREAS, the Court has read and considered the Stipulation and the exhibits attached thereto; and
WHEREAS, all Parties have consented to entry of this order.
NOW, upon application of the Parties, after review and consideration of the Stipulation and exhibits attached thereto, IT IS HEREBY ORDERED this day of __________, 2022 / 2023, as follows:
2
3
4
DELEEUW LAW LLC P. Bradford deLeeuw |
| MORRIS, NICHOLS, ARSHT & TUNNELL LLP |
1301 Walnut Green Road |
| D. McKinley Measley |
Wilmington, DE 19807 |
| 1201 North Market Street |
(302) 274-2180 |
| Wilmington, Delaware 19801 |
|
| (302) 658-9200 |
Counsel for Plaintiffs |
|
|
|
|
|
|
| Counsel for Defendants |
5
6
| Vice Chancellor Sam Glasscock III |
7
EXHIBIT C
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE GERON CORPORATION STOCKHOLDER DERIVATIVE LITIGATION | ) ) | Consolidated C.A. No. 2020-0684-SG |
NOTICE OF PENDENCY OF SETTLEMENT OF DERIVATIVE LITIGATION
TO: ALL CURRENT OR OTHERWISE APPLICABLE STOCKHOLDERS OF GERON CORPORATION (NASDAQ SYMBOL: GERN)
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY THE LEGAL PROCEEDINGS IN THIS DERIVATIVE LITIGATION. IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE FAIRNESS, REASONABLENESS AND ADEQUACY OF THE PROPOSED SETTLEMENT, OR PURSUING THE RELEASED CLAIMS DEFINED HEREIN.
IF YOU DO NOT INTEND TO OBJECT TO THE PROPOSED SETTLEMENT, OR THE ATTORNEY’S FEE AWARD AMOUNT DESCRIBED HEREIN, NO ACTION IS REQUIRED BY YOU IN RESPONSE TO THIS NOTICE.
The purpose of this Notice1 is to inform you of (i) the derivative litigation in the Action, the Northern District Derivative Action, and the District of Delaware Derivative Action (collectively, the “Derivative Litigation”) brought by Plaintiffs derivatively on behalf Geron Corporation (“Geron” or the “Company”); (ii) a proposal to settle the Derivative Litigation as provided in a Stipulation of Settlement (“Stipulation”) dated December 21, 2022, which sets forth the terms and conditions of the proposed Settlement of the Derivative Litigation; (iii) your right, among other things, to object to the proposed Settlement and Plaintiffs’ Counsel’s requested Fee Award, and to attend and participate in a hearing scheduled for [ ], 2023, at [ ] a.m. / p.m. (the “Settlement Hearing”). This Notice describes the rights you may have under the Stipulation and what steps you may, but are not required to, take concerning the proposed Settlement. If the Court approves the Stipulation, the Parties will ask the Court to approve an Order and Final Judgment (the “Final Judgment”) that would end the Derivative Litigation.
1 All capitalized terms not otherwise defined herein shall have the same meaning ascribed to such terms in the Stipulation and Scheduling Order.
2
THE FOLLOWING DESCRIPTION DOES NOT CONSTITUTE FINDINGS OF ANY COURT. IT IS BASED ON STATEMENTS OF THE PARTIES AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF ANY COURT AS TO THE MERITS OF ANY OF THE CLAIMS OR DEFENSES RAISED BY ANY OF THE PARTIES.
Plaintiffs are current stockholders of nominal defendant Geron. Geron is a Delaware Corporation with its headquarters in Foster City, California. Geron is a late-stage clinical biopharmaceutical company focused on the development and potential commercialization of a telomerase inhibitor, imetelstat, for myeloid hematologic malignancies. Defendants John A. Scarlett, Karin Eastham, V. Bryan Lawlis, Susan M. Molineaux, Robert J. Spiegel, Olivia Bloom, Daniel M. Bradbury, Hoyoung Huh, and Stephen N. Rosenfield (the “Individual Defendants”) are current or former officers and/or directors of Geron.
Plaintiffs allege that the Individual Defendants breached their fiduciary duties to Geron, and engaged in other wrongdoing, by failing to oversee the Company’s making of and/or causing the Company to make false and misleading statements about certain interim results from a Phase 2 clinical study of imetelstat – Geron’s sole drug candidate – called IMbark.
On April 23, 2020, plaintiff Katharine Jameson filed a verified stockholder derivative complaint in the United States District Court for the Northern District of California (the “Jameson Action”) against certain current and/or former directors and officers of Geron alleging breaches of fiduciary duty, unjust enrichment, and violations of Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
On August 21, 2020, plaintiff Richard Di Laura filed a Verified Stockholder Derivative
3
Complaint in the Court of Chancery of the State of Delaware (the “DiLaura Action”) against certain current and/or former directors and officers of Geron alleging breach of fiduciary duty.
On September 10, 2020, Jeffrey Byroade filed a verified stockholder derivative complaint in the United States District Court for the District of Delaware (the “Byroade Action”) against certain current and/or former directors and officers of Geron alleging breach of fiduciary duty, unjust enrichment, and violations of Section 14(a) of the Exchange Act.
On November 12, 2020, plaintiff Michael Henry Mongiello filed a verified stockholder derivative complaint in the United States District Court for the District of Delaware (the “Mongiello Action”) against certain current and/or former directors and officers of Geron alleging breach of fiduciary duty, unjust enrichment, waste, and violations of Sections 14(a) and 20(a) of the Exchange Act.
On January 5, 2021, the Byroade Action and Mongiello Action were consolidated as the District of Delaware Derivative Action and stayed pending resolution of the defendants’ motion to dismiss in a related federal securities class action, captioned Michael Tollen v. Geron Corporation and John A. Scarlett, Civil Action No. 20-cv-547-WHA, currently pending in the United States District Court for the Northern District of California (the “Securities Action”).
On March 16, 2021, plaintiffs Ernesto Elizalde, Jr. (“Elizalde”) and Joseph Oriente (“Oriente”) filed a Verified Stockholder Derivative Complaint for Breach of Fiduciary Duty in the Court of Chancery of the State of Delaware captioned Elizalde, et al. v. Scarlett, et al., C.A. No. 2020-0228-SG (the “Elizalde Action”), against certain current and/or former directors and officers of Geron alleging breach of fiduciary duty.
4
On April 2, 2021, plaintiff Zachary Gamlieli filed a verified stockholder derivative complaint in the United States District Court for the Northern District of California (the “Gamlieli Action”) against certain current and/or former directors and officers of Geron alleging breaches of fiduciary duty, unjust enrichment, and violations of Section 10(B) and 21D of the Exchange Act.
On April 9, 2021, the Jameson Action and Gamlieli Action were consolidated as the Northern District Derivative Action.
On April 12, 2021, the court in the Northern District of California granted in part and denied in part the defendants’ motion to dismiss the Securities Action.
On April 22, 2021, plaintiffs DiLaura, Elizalde, and Oriente and counsel for Defendants submitted a Stipulation and [Proposed] Order For Consolidation And Appointment Of Plaintiffs’ Co-Lead Counsel And Delaware Counsel (the “Consolidation Order”).
On April 26, 2021, the Court of Chancery of the State of Delaware entered the Consolidation Order.
On May 28, 2021, plaintiffs DiLaura, Elizalde, and Oriente filed their Verified Consolidated Stockholder Derivative Complaint (“Consolidated Complaint”).
On June 8, 2021, the parties in the District of Delaware Derivative Action agreed to a further stay through resolution of Defendants’ then-forthcoming motion to dismiss the Consolidated Complaint in the Action.
On June 8, 2021, Dennis Penney, a purported stockholder of Geron, filed a shareholder derivative complaint in the Superior Court of the State of California, County of San Mateo,
5
alleging claims for breach of fiduciary duty, waste and unjust enrichment against the Individual Defendants based on the same alleged underlying wrongdoing asserted by Plaintiffs in the Derivative Litigation (the “San Mateo Derivative Action”).
On June 28, 2021, the Northern District Derivative Action was stayed pending resolution of the plaintiffs’ class certification motion in the Securities Action.
On July 2, 2021, Defendants filed their motion to dismiss plaintiffs DiLaura, Elizalde, and Oriente’s Consolidated Complaint pursuant to Rules 23.1 and 12(b)(6).
On August 5, 2021, Defendants filed a motion to dismiss the San Mateo Derivative Action. In their motion, Defendants argued that the San Mateo Derivative Action was filed in California state court in violation of Geron’s bylaws, which provide that the Court is the “sole and exclusive forum” for derivative actions, actions alleging claims for breach of fiduciary duty, and actions alleging claims governed by the internal affairs doctrine.
On August 30, 2021, counsel for plaintiffs DiLaura, Elizalde, and Oriente informed counsel for Defendants that, rather than oppose Defendants’ motion to dismiss, plaintiffs DiLaura, Elizalde, and Oriente would be filing an amended complaint pursuant to Rule 15(aaa).
On September 1, 2021, plaintiffs DiLaura, Elizalde, and Oriente filed their Amended Verified Consolidated Stockholder Derivative Complaint (“Amended Consolidated Complaint”).
On October 12, 2021, Defendants filed their motion to dismiss plaintiffs DiLaura, Elizalde, and Oriente’s Amended Consolidated Complaint pursuant to Rules 23.1 and 12(b)(6)
6
(“Motion to Dismiss”).
On November 16, 2021, the California state court granted Defendants’ motion to dismiss the San Mateo Derivative Action finding that “Defendants have met their burden of proving the action should be tried in Delaware Chancery Court pursuant to the forum selection bylaw.” However, rather than dismiss the case, the California state court exercised its discretion and stayed the San Mateo Derivative Action.
On December 3, 2021, plaintiffs DiLaura, Elizalde, and Oriente filed their opposition to the Motion to Dismiss.
On December 23, 2021, Defendants filed their reply in support of the Motion to Dismiss.
On February 15, 2022, the Court of Chancery of the State of Delaware heard oral argument on Defendants’ Motion to Dismiss.
On April 2, 2022, the court in the Northern District of California certified the Securities Action as a class action under Rule 23 of the Federal Rules of Civil Procedure.
On June 3, 2022, the Court of Chancery of the State of Delaware issued a Memorandum Opinion staying consideration of Defendants’ Motion to Dismiss pending the final resolution of the Securities Action or, alternatively, pending a delay or other change in circumstances in the Securities Action or “as otherwise appropriate.”
On June 7, 2022, plaintiffs in the Northern District Derivative Action filed an amended stockholder derivative complaint.
7
On June 22, 2022, the Court of Chancery of the State of Delaware issued an Order staying this Action “until the resolution of the Securities Action, or until further Order of the Court on the application of any party.”
On July 6, 2022, the court in the Northern District of California further stayed the Northern District Derivative Action “until the earlier of the following two events: (a) public announcement of a settlement of the Securities [ ] Action; or (b) a final judgment in the Securities [ ] Action, including the lapse of any time to appeal and/or the final non-appealable resolution of any filed appeal.”
On August 31, 2022, Scott D. Cicero, a purported stockholder of Geron, served a demand on Geron’s board of directors (“Board”) requesting that the Board investigate and pursue claims for breach of fiduciary duty against the Individual Defendants and certain other officers of the Company based on the same alleged underlying wrongdoing asserted by Plaintiffs in the Derivative Litigation.
On September 2, 2022, the parties in the Securities Action filed a Stipulation and Agreement of Settlement (“Securities Action Settlement”).
After the filing of the Securities Action Settlement, the Parties began to discuss the prospect of holding formal settlement negotiations and the selection of a mediator.
On November 1, 2022, the Parties participated in a full-day mediation with former Vice Chancellor Joseph R. Slights III of the law firm Wilson, Sonsini, Goodrich & Rosati, LLP. During the mediation, the Parties reached an agreement on corporate governance reforms that would be instituted by Geron in connection with the Settlement, subject to approval of the
8
Court of Chancery of the State of Delaware.
On November 3, 2022, the Parties reached agreement on the language of the releases that are included in the Stipulation and agreed to present the Stipulation for approval in the Court of Chancery of the State of Delaware.
On November 7, 2022, the Parties participated in a second full-day mediation with former Vice Chancellor Slights regarding the amount of the Fee Award that Plaintiffs’ Counsel would apply for in connection with the Court’s consideration of the Settlement. The Parties were unable to reach a resolution on that issue at the November 7 mediation but continued arm’s-length negotiations and discussions thereafter, all of which were overseen by former Vice Chancellor Slights.
On December 1, 2022, former Vice Chancellor Slights issued a confidential, double-blind mediator’s proposal for Plaintiffs’ Counsel’s attorneys’ fees and expenses in the amount of $1,350,000 (the “Mediator’s Proposal”), subject to Court approval.
On December 4, 2022, former Vice Chancellor Slights informed the Parties that all Parties had accepted the Mediator’s Proposal.
On December 12, 2022, the plaintiff in the San Mateo Derivative Action filed a stipulation requesting that the San Mateo Derivative Action be dismissed without prejudice in light of the proposed Settlement in the Derivative Litigation.
On December 13, 2022, the California state court dismissed the San Mateo Derivative Action.
9
THE COURT HAS NOT FINALLY DETERMINED THE MERITS OF PLAINTIFFS' CLAIMS OR THE DEFENSES THERETO. THIS NOTICE DOES NOT IMPLY THAT THERE HAS BEEN OR WOULD BE ANY FINDING OF VIOLATION OF THE LAW BY THE INDIVIDUAL DEFENDANTS OR THAT RECOVERY COULD BE HAD IN ANY AMOUNT IF THE DERIVATIVE LITIGATION WAS NOT SETTLED.
In consideration for the full Settlement and release of the Released Claims, and upon Court approval of the Settlement, Geron has implemented or will implement the Corporate Governance Reforms set forth in Exhibit A to the Stipulation, of which Plaintiffs were the primary cause.
In further consideration for the full Settlement and release of the Released Claims, Defendants have acknowledged that Plaintiffs and the Derivative Litigation were a factor in Geron’s July 2022 revisions to the Company’s Insider Trading Compliance policy, and that the Corporate Governance Reforms confer substantial benefits on the Company and its stockholders.
The Corporate Governance Reforms shall remain in effect for a period of at least five (5) years from the date of adoption; provided, however, that the Corporate Governance Reforms shall not be binding upon any successor or acquirer of the Company in the event of a change in control transaction.
Upon Final Approval of the Settlement, Plaintiffs’ Releasing Parties shall fully, finally, and forever compromise, settle, resolve, release, relinquish, waive and discharge, and shall forever be enjoined from prosecuting any and all of the Defendants’ Released Claims as against the Released Defendant Parties.
10
Upon Final Approval of the Settlement, Defendants’ Releasing Parties shall fully, finally, and forever compromise, settle, resolve, release, relinquish, waive and discharge, and shall forever be enjoined from prosecuting any and all of the Plaintiffs’ Released Claims as against the Released Plaintiff Parties.
11
12
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR THE RELEASED PARTY.
Plaintiffs’ entry into the Stipulation is not intended to be and shall not be construed as an admission or concession concerning the relative strength or merit of the claims alleged in the Derivative Litigation. Plaintiffs’ Counsel has taken into account the uncertain outcome and the risk of any litigation, especially in complex cases such as the Derivative Litigation, as well as the difficulties and delays inherent in such litigation, and Plaintiffs’ Counsel is also mindful of the inherent problems of proof and possible defenses to the claims alleged in the Derivative
13
Litigation. Based upon Plaintiffs’ Counsel’s evaluation, Plaintiffs have determined that the Settlement is fair, reasonable, adequate, and in the best interests of Geron and all Applicable Geron Stockholders and has agreed to settle the Derivative Litigation upon the terms and subject to the conditions set forth in the Stipulation.
Defendants have denied, and continue to deny, that they committed any breach of duty, violated any law, or engaged in any wrongdoing, expressly maintain that they diligently and scrupulously complied with their fiduciary and other legal duties, to the extent such duties exist, and further believe that the Derivative Litigation is without merit. Defendants have entered into the Stipulation to eliminate the uncertainty, burden and expense of further protracted litigation. Neither their entry into the Stipulation nor the Stipulation itself shall be construed or deemed to be evidence of or an admission or concession on the part of any of the Defendants, with respect to any claim or allegation of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that Defendants have, or could have, asserted in the Derivative Litigation. Defendants expressly deny that Plaintiffs have asserted any valid claims as to any of them, and expressly deny any and all allegations of fault, liability, wrongdoing or damages whatsoever.
After negotiation of the principal terms of the Settlement, including the Corporate Governance Reforms and the definition of Released Claims, the Parties participated in a second full-day mediation session with the assistance of former Vice Chancellor Slights. At the conclusion of this mediation session, the Parties were unable to reach an agreement on the amount of attorneys’ fees and expenses that Plaintiffs’ Counsel would request they be paid in
14
connection with the Settlement of the Derivative Litigation. The Parties continued negotiating the amount of attorneys’ fees and expenses that Plaintiffs’ Counsel would request they be paid with the assistance of former Vice Chancellor Slights. Ultimately, these efforts culminated with the Parties accepting a double-blind Mediator’s Proposal made by former Vice Chancellor Slights. Pursuant to the Mediator’s Proposal, the Parties agreed that Plaintiffs’ Counsel will apply to the Court for an award of attorneys’ fees and expenses not to exceed $1,350,000.00 in the aggregate (the “Fee Award”).
Defendants acknowledge and agree that Plaintiffs’ Counsel is entitled to a fee award. Defendants have agreed not to oppose the application by Plaintiffs’ Counsel for the requested Fee Award.
Plaintiffs may also seek the Court’s approval of reasonable services awards for each of the Plaintiffs, to be paid from the Fee Award, and Defendants have agreed not to oppose any such request.
The requested Fee Award will be paid by Geron and/or its insurers.
Neither Plaintiffs nor Plaintiffs’ Counsel will make any application for an award of attorneys’ fees or expenses in any other jurisdiction. Except as otherwise provided in the Stipulation, each of the Parties shall bear his, her, or its own fees and costs.
15
The Court has scheduled a Settlement Hearing to be held on [ ], 2023 at [ ] a.m. / p.m. At the Settlement Hearing, the Court will consider whether the terms of the Settlement are fair, reasonable, and adequate and thus should be finally approved, whether the Fee Award should be approved, and whether the Action should be dismissed with prejudice by entry of the Final Judgment pursuant to the Stipulation. The Court will also hear and rule on any objections to the proposed Settlement and Fee Award, and rule on such other matters as the Court may deem appropriate. The Court may adjourn the Settlement Hearing from time to time without further notice to anyone other than the Parties and any Objectors (as defined below). The Court reserves the right to approve the Stipulation at or after the Settlement Hearing with such modifications as may be consented to by the Parties to the Stipulation and without further notice.
16
Yes. Any record or beneficial stockholder of Geron who wishes to object to the Stipulation, the proposed Final Judgment, and/or the Fee Award (“Objector”), may appear in person or by his, her, or its attorney at the Settlement Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no Objector shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if approved, the Final Judgment, unless he, she, or it has, no later than twenty (20) calendar days prior to the Settlement Hearing (unless the Court in its discretion shall thereafter otherwise direct, upon application of such person and for good cause shown), filed with the Register in Chancery, Court of Chancery, New Castle County Courthouse, 500 North King Street, Wilmington, Delaware 19801, and served upon counsel listed below, the following: (i) proof of current ownership of Geron stock; (ii) a written notice of the Objector’s intention to appear that states the Objector’s name, address, and telephone number and, if represented, the Objector’s counsel; (iii) a detailed statement of all of the grounds thereon and the reasons for the Objector’s desire to appear and to be heard, and (iv) all documents or writings which the Objector desires the Court to consider. Such filings must be served upon the following counsel by hand delivery, overnight mail, or the Court’s electronic filing and service system:
DELEEUW LAW LLC P. Bradford deLeeuw 1301 Walnut Green Road Wilmington, DE 19807 (302) 274-2180
Counsel for Plaintiffs | MORRIS, NICHOLS, ARSHT & TUNNELL LLP D. McKinley Measley 1201 North Market Street Wilmington, Delaware 19801 (302) 658-9200
Counsel for Defendants |
17
Any person who fails to object in the manner prescribed above shall be deemed to have waived such objection (including the right to appeal), unless the Court in its discretion allows such objection to be heard at the Settlement Hearing, and shall forever be barred from raising such objection in the Derivative Litigation or any other action or proceeding or otherwise contesting the Stipulation or Fee Award, and will otherwise be bound by the Final Judgment and the releases to be given.
This Notice summarizes the Stipulation. It is not a complete statement of the events in the Derivative Litigation nor a complete recitation of the terms and conditions of the Stipulation. For additional information about the Derivative Litigation and Settlement, please refer to the documents filed with the Court, in the Northern District Derivative Action, in the District of Delaware Derivative Action, and the Stipulation. The Stipulation can be found on the Company’s website at the following address: https://ir.geron.com/home/default.aspx. You may also examine the files in the Action during regular business hours of each business day at the office of the Register in Chancery, Court of Chancery, New Castle County Courthouse, 500 North King Street, Wilmington, Delaware 1980. The Clerk’s office will not mail copies of documents to you. You may also access the files in the Northern District Derivative Action and the District of Delaware Derivative Action, respectively, by accessing the dockets in those cases, for a fee, through the Public Access to Court Electronic Records (PACER) system at https://ecf.cand.uscourts.gov, or by visiting (i) the office of the Clerk of the Court for the United States District Court for the Northern District of California, 450 Golden Gate Avenue,
18
San Francisco, CA 94102, between 9:00 a.m. and 4:00 p.m. Pacific, Monday through Friday, excluding Court holidays, or (ii) the Office of the Clerk for the United States District Court for the District of Delaware, 844 North King St., Unit 18, Wilmington, DE 19801, between 8:30 a.m. and 4:00 p.m. Eastern, Monday through Friday, excluding Court holidays. For more information concerning the Settlement, you may also call or write to Plaintiffs’ Counsel referenced above in Section 8.
PLEASE DO NOT CALL OR WRITE TO THE COURT.
DATED: [ ] | BY ORDER OF THE COURT |
|
|
|
|
| Vice Chancellor Sam Glasscock III |
19
Exhibit D
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE GERON CORPORATION |
| ) |
| Consolidated |
STOCKHOLDER DERIVATIVE LITIGATION |
| ) |
| C.A. No. 2020-0684-SG |
ORDER AND JUDGMENT
A hearing having been held before this Court on _________, 2023, pursuant to the Court’s order of______, 2022 / 2023 (the “Scheduling Order”), upon the Stipulation of Settlement dated December 21, 2022 (“Stipulation”), entered into between and among the Parties in the Derivative Litigation,1 which is incorporated by reference, it appearing that due notice of the hearing has been given to all Applicable Geron Stockholders in accordance with the Scheduling Order, the Parties having appeared through their respective attorneys of record, the Court having heard and considered evidence in support of the proposed Settlement, the attorneys for the Parties having been heard, an opportunity to be heard having been given to all other persons requesting to be heard in accordance with the Scheduling Order, the Court having determined that notice to all Applicable Geron Stockholders was adequate and sufficient, and the entire matter of the proposed Settlement having been heard and considered by the Court, IT IS
1 All capitalized terms not otherwise defined herein shall have the same meaning ascribed to such terms in the Stipulation and Scheduling Order.
HEREBY ORDERED, ADJUDGED, AND DECREED, this _____ day of ________, 2023, that:
2
3
4
5
|
Vice Chancellor Sam Glasscock III |
6