| UNITED STATES | OMB APPROVAL |
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Menlo Park, CA 94025
1. | To elect the members of Class I of the Board of Directors to serve for the following three years or until their successors are elected and qualified; |
2. | To amend the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s Common Stock to 200,000,000 shares; |
3. | To approve the Company’s 2006 Directors’ Stock Option Plan, to replace the 1996 Directors’ Stock Option Plan, which is expiring; |
4. | To ratify appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; and |
5. | To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
Secretary
April , 2006
230 Constitution Drive
Menlo Park, CA 94025
For a Three Year Term Expiring at the
2009 Annual Meeting
Name | Age | Principal Occupation/Position with the Company | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Thomas B. Okarma, Ph.D., M.D | 60 | President and CEO | ||||||||
John P. Walker | 57 | Private Investor/Consultant | ||||||||
Patrick J. Zenner | 59 | Former President and CEO, Hoffmann La-Roche, Inc., North America |
VoteFOR the Election of Each Nominee to the Board of Directors
Name | Age | Principal Occupation/Position with the Company | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Thomas D. Kiley, Esq. | 62 | Attorney-at-law | ||||||||
Edward V. Fritzky | 55 | Former Chairman, CEO and President, Immunex Corporation |
Name | Age | Principal Occupation/Position with the Company | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Alexander E. Barkas, Ph.D. | 58 | Managing Member, Prospect Management Company, LLC, the General Partner of Prospect Venture Partners L.P.; Managing Member, Prospect Management Co. II, LLC, the General Partner of Prospect Venture Partners II, L.P. and Prospect Associates II, L.P.; and Managing Member, Prospect Management Co. III, LLC.; the General Partner of Prospect Venture Partners III, L.P. | ||||||||
Charles J. Homcy, M.D. | 57 | President and CEO, Portola Pharmaceuticals, Inc. |
(i) | Twenty Thousand Dollars ($20,000) per year, plus an additional Ten Thousand Dollars ($10,000) for service as Chair of the Board or the Audit Committee and an additional Five Thousand Dollars ($5,000) for service as Chair of the Compensation Committee or the Nominating Committee of the Board; plus |
(ii) | One Thousand Five Hundred Dollars ($1,500) for each regular or special Board meeting attended by such director in person, and Seven Hundred Fifty Dollars ($750) for each regular or special Board meeting attended by such director by telephone or videoconference; plus |
(iii) | For members of the Audit Committee, Nominating Committee and the Compensation Committee of the Board, Seven Hundred Fifty Dollars ($750) for each meeting of either such committee attended by such director in person, and Two Hundred Fifty Dollars ($250) for each meeting of either such committee attended by such director by telephone or videoconference; plus |
(iv) | Reimbursement for out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. |
Director | Number of Shares Issued Under the 2002 Equity Incentive Plan | Price Per Share | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Barkas, Alexander | 3,125 | $ | 6.40 | |||||||
Fritzky, Edward | 1,875 | $ | 6.40 | |||||||
Kiley, Thomas | 1,875 | $ | 6.40 | |||||||
Walker, John | 2,187 | $ | 6.40 |
Stockholders VoteFOR Proposal 2
Company will grant the Chairman of the Audit Committee an option to purchase 10,000 shares of Common Stock under the 2006 Directors Plan (a Committee Chair Option). The Committee Chair Option for the Compensation Committee Chairman and the Nominating Committee Chairman shall be for 5,000 shares of Common Stock. Finally, the Company will grant an option to purchase 2,500 shares to each non-employee director upon such director’s appointment to the Audit Committee, Compensation Committee or Nominating Committee of the Board of Directors, as well as on the date of each Annual Meeting during the director’s service on such committee (a Committee Service Option), other than the Chairman of such committee. There is currently no stock option grant contemplated for participation on other committees.
15% whereas the maximum rate on other income is 35%. Capital losses for individual taxpayers are allowed under U.S. tax laws in full against capital gains plus $3,000 of other income. The Company generally will be entitled to a tax deduction in the amount and at the time that the optionee recognizes ordinary income with respect to shares acquired upon exercise of a nonstatutory stock option.
Director | Number of Shares Subject to Options Granted under the 1996 Directors Plan | Weighted Average Exercise Price Per Share | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Barkas, Alexander | 32,500 | $ | 6.40 | |||||||
Fritzky, Edward | 22,500 | $ | 6.40 | |||||||
Homcy, Charles | 45,000 | $ | 8.60 | |||||||
Kiley, Thomas | 22,500 | $ | 6.40 | |||||||
Walker, John | 22,500 | $ | 6.40 | |||||||
Zenner, Patrick | 22,500 | $ | 6.40 |
Stockholders VoteFOR Proposal 3
Stockholders VoteFOR Proposal 4
Beneficial Ownership(1) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Beneficial Owner | Number of Shares | Percent of Total | |||||||||
Directors/Nominees and Named Executive Officers: | |||||||||||
Alexander E. Barkas, Ph.D.(2) | 360,724 | * | |||||||||
Edward V. Fritzky(3) | 178,045 | * | |||||||||
Charles J. Homcy, M.D.(4) | — | * | |||||||||
Thomas D. Kiley, Esq.(5) | 209,845 | * | |||||||||
John P. Walker(6) | 160,370 | * | |||||||||
Patrick J. Zenner(7) | 132,083 | * | |||||||||
David J. Earp, J.D., Ph.D.(8) | 376,855 | * | |||||||||
David L. Greenwood(9) | 771,028 | 1.17% | |||||||||
Calvin B. Harley, Ph.D.(10) | 458,539 | * | |||||||||
Jane S. Lebkowski, Ph.D.(11) | 410,193 | * | |||||||||
Thomas B. Okarma, Ph.D., M.D.(12) | 1,280,428 | 1.93% | |||||||||
All directors and executive officers as a group (12 persons) | 4,507,299 | 6.50% |
* | Represents beneficial ownership of less than 1% of the Common Stock. |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of February 21, 2006 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The persons named in this table, to the best of the Company’s knowledge, have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and except as indicated in the other footnotes to this table. |
(2) | Includes 17,308 shares held directly by Alexander E. Barkas, 882 shares held by Lynda Wijcik, the spouse of Dr. Barkas, 17,056 shares held by the Barkas-Wijcik Trust under Agreement dated July 26, 1999, and 325,478 shares issuable upon the exercise of outstanding options held by Dr. Barkas exercisable within 60 days of February 21, 2006. |
(3) | Represents 13,462 shares held directly by Edward V. Fritzky and 164,583 shares issuable upon the exercise of outstanding options held by Mr. Fritzky exercisable within 60 days of February 21, 2006. |
(4) | Represents no shares issuable upon the exercise of outstanding options held by Charles J. Homcy exercisable within 60 days of February 21, 2006. |
(5) | Includes 63,462 shares held directly by Thomas D. Kiley, 9,705 shares held by the Kiley Family Partnership and 46,653 shares held by the Thomas D. Kiley and Nancy L.M. Kiley Revocable Trust under Agreement dated August 7, 1981. Also includes 90,025 shares issuable upon the exercise of outstanding options held by Mr. Kiley exercisable within 60 days of February 21, 2006. |
(6) | Includes 2,187 shares held directly by John P. Walker and 158,183 shares issuable upon the exercise of outstanding options held by Mr. Walker exercisable within 60 days of February 21, 2006. |
(7) | Represents 132,083 shares issuable upon the exercise of outstanding options held by Patrick J. Zenner exercisable within 60 days of February 21, 2006. |
(8) | Includes 20,396 shares held directly by David J. Earp and 356,459 shares issuable upon the exercise of outstanding options held by Dr. Earp exercisable within 60 days of February 21, 2006. |
(9) | Includes 16,977 shares held directly by David L. Greenwood and 754,051 shares issuable upon the exercise of outstanding options held by Mr. Greenwood exercisable within 60 days of February 21, 2006. |
(10) | Includes 8,035 shares held directly by Calvin B. Harley and 450,504 shares issuable upon the exercise of outstanding options held by Dr. Harley exercisable within 60 days of February 21, 2006. |
(11) | Includes 19,254 shares held directly by Jane S. Lebkowski and 390,939 shares issuable upon the exercise of outstanding options held by Dr. Lebkowski exercisable within 60 days of February 21, 2006. |
(12) | Includes 31,575 shares held directly by Thomas B. Okarma and 1,248,853 shares issuable upon the exercise of outstanding options held by Dr. Okarma exercisable within 60 days of February 21, 2006. |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) | (b) | (c) | ||||||||||||
Equity compensation plans approved by security holders(1) | 7,786,707 | $ | 7.98 | 5,359,954 | (2),(3) | |||||||||
Equity compensation plans not approved by security holders | 5,335,436 | (4) | $ | 11.02 | — | |||||||||
Total | 13,122,143 | $ | 9.22 | 5,359,954 |
(1) | Includes the 1992 Stock Option Plan, the 1996 Director’s Stock Option Plan and the 2002 Equity Incentive Plan. |
(2) | Includes 312,498 shares of common stock reserved for issuance under Geron’s 1996 Employee Stock Purchase Plan. |
(3) | Does not include future automatic annual increases under Geron’s 2002 Equity Incentive Plan. The maximum number of shares to be reserved will automatically increase on each anniversary date of the Board of Directors’ adoption of the 2002 Plan during the term of the 2002 Plan by the least of (i) 2,000,000 shares, (ii) 4% of the Company’s outstanding common stock as of such anniversary date, or (iii) a lesser amount determined by the Board. |
(4) | Represents outstanding warrants issued in conjunction with equity financing transactions, consulting services agreements and license agreements with research institutions. For further details, see Note 12 of Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2006. |
Long-Term Compensation Awards | ||||||||||||||||||||||||||
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Annual Compensation | ||||||||||||||||||||||||||
Name and Principal Position | Year | Salary($) | Bonus($)(1) | Other Annual Compensation($)(2) | Securities Underlying Options(#) | All Other Compensation($)(3) | ||||||||||||||||||||
Thomas B. Okarma, M.D., Ph.D. | 2005 | $ | 445,000 | $ | 213,597 | $ | 0 | 110,000 | $ | 0 | ||||||||||||||||
President and Chief | 2004 | 441,000 | 255,003 | 0 | 100,000 | 0 | ||||||||||||||||||||
Executive Officer | 2003 | 420,000 | 268,230 | 42,000 | 100,000 | 0 | ||||||||||||||||||||
David L. Greenwood | 2005 | 350,000 | 137,802 | 0 | 85,000 | 18,000 | ||||||||||||||||||||
Executive Vice President, | 2004 | 340,389 | 151,204 | 0 | 75,000 | 16,000 | ||||||||||||||||||||
Chief Financial Officer, | 2003 | 310,010 | 153,040 | 31,000 | 75,000 | 14,000 | ||||||||||||||||||||
Secretary and Treasurer | ||||||||||||||||||||||||||
David J. Earp, J.D., Ph.D. | 2005 | 275,000 | 96,246 | 0 | 60,000 | 14,000 | ||||||||||||||||||||
Senior Vice President of | 2004 | 267,583 | 103,850 | 0 | 50,000 | 13,000 | ||||||||||||||||||||
Business Development and | 2003 | 243,800 | 103,290 | 24,380 | 37,500 | 12,000 | ||||||||||||||||||||
Chief Patent Counsel | ||||||||||||||||||||||||||
Jane S. Lebkowski, Ph.D. | 2005 | 275,000 | 90,746 | 0 | 60,000 | 18,000 | ||||||||||||||||||||
Senior Vice President of | 2004 | 267,170 | 103,127 | 0 | 50,000 | 13,000 | ||||||||||||||||||||
Regenerative Medicine | 2003 | 235,400 | 99,730 | 23,540 | 37,500 | 12,000 | ||||||||||||||||||||
Calvin B. Harley, Ph.D. | 2005 | 272,000 | 78,056 | 0 | 60,000 | 18,000 | ||||||||||||||||||||
Vice President and Chief | 2004 | 270,110 | 87,621 | 0 | 37,500 | 10,596 | ||||||||||||||||||||
Scientific Officer | 2003 | 257,250 | 74,260 | 25,725 | 37,500 | 14,000 |
(1) | The Company paid the 2005 and 2004 bonuses with shares of the Company’s Common Stock equal to the value of each employee’s bonus amount at an average price of $8.50 and $8.82 per share, respectively. |
(2) | The amounts in this column consist of retention bonuses paid in January 2004. Following a restructuring in January 2003, the Company entered into employment agreements with its remaining executive officers and certain other employees. Among other provisions, the employment agreements provided for the Company to pay on January 5, 2004 a retention bonus equal to 10% of the employee’s 2003 annual salary. The Company paid the retention bonuses with shares of the Company’s Common Stock equal to the value of each employee’s bonus amount at a price of $10.10 per share. See information about the employment agreements under Employment, Severance and Change of Control Agreements on page 17. |
(3) | The amounts in this column consist of matching contributions made by the Company under the Geron 401(k) Plan, a plan providing for broad-based employee participation. Under the 401(k) Plan, participating employees may contribute up to the annual Internal Revenue Service contribution limit. In December 2005, 2004 and 2003, the Board of Directors approved a matching contribution equal to 100% of each employee’s annual contributions during 2005, 2004 and 2003, respectively. The matching contribution is invested in the Company’s Common Stock and vests ratably over four years for each year of service completed by the employee, commencing from the date of hire, until it is fully vested when the employee has completed four years of service. The 2005 contributions were made on January 6, 2006 at a market value of $8.50 per share. |
Individual Grants | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(4) | |||||||||||||||||||||||||||
Name | Number of Shares Underlying Options Granted(#)(1) | Percent of Total Options Granted to Employees in Fiscal Year(2) | Exercise or Base Price ($/sh)(3) | Expiration Date | 5%($) | 10%($) | |||||||||||||||||||||
Thomas B. Okarma, Ph.D., M.D. | 110,000 | 7.9 | % | $ | 6.40 | 5/6/15 | �� | $ | 442,742 | $ | 1,121,995 | ||||||||||||||||
David L. Greenwood | 85,000 | 6.1 | % | $ | 6.40 | 5/6/15 | $ | 342,119 | $ | 866,996 | |||||||||||||||||
David J. Earp, Ph.D., J.D. | 60,000 | 4.3 | % | $ | 6.40 | 5/6/15 | $ | 241,496 | $ | 611,997 | |||||||||||||||||
Jane S. Lebkowski, Ph.D. | 60,000 | 4.3 | % | $ | 6.40 | 5/6/15 | $ | 241,496 | $ | 611,997 | |||||||||||||||||
Calvin B. Harley, Ph.D. | 60,000 | 4.3 | % | $ | 6.40 | 5/6/15 | $ | 241,496 | $ | 611,997 |
(1) | Each of these stock options, which were granted under the 2002 Equity Incentive Plan, is exercisable in a series of installments measured from the vesting commencement date generally over 48 months, provided that each Named Executive Officer continues to provide services to the Company. In the event of certain transactions involving a change in control of the Company, the options will vest in full. The maximum term of each option grant is ten years from the date of grant. |
(2) | Based on an aggregate of 1,393,537 options granted by the Company under the 2002 Equity Incentive Plan in the year ended December 31, 2005 to all employees of the Company, including the Named Executive Officers. |
(3) | Exercise price is equal to the closing sales price of the Common Stock underlying the stock option on the grant date as reported on the Nasdaq National Market. |
(4) | The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by the SEC. There is no assurance provided to any executive officer or any other holder of the Company’s securities that the actual stock price appreciation over the ten year option term will be at the assumed 5% and 10% levels or at any other defined level. Unless the market price of the Common Stock appreciates over the option term, no value will be realized from the option grants made to the executive officers. |
Number of Securities Underlying Unexercised Options at Fiscal Year-End(2)(#) | Value of Unexercised in-the-Money Options at Fiscal Year-End(3)($) | ||||||||||||||||||||||||||
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Name | Shares Acquired on Exercise(#) | Value Realized(1)($) | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||
Thomas B. Okarma, Ph.D., M.D. | — | $ | — | 1,200,313 | 274,687 | $ | 2,437,581 | $ | 620,089 | ||||||||||||||||||
David L. Greenwood | 30,000 | 200,700 | 719,572 | 181,769 | 1,672,938 | 471,018 | |||||||||||||||||||||
David J. Earp, J.D., Ph.D. | — | — | 338,699 | 108,801 | 415,243 | 251,682 | |||||||||||||||||||||
Jane S. Lebkowski, Ph.D. | — | — | 372,762 | 109,738 | 610,518 | 256,227 | |||||||||||||||||||||
Calvin B. Harley, Ph.D. | 25,000 | 146,575 | 433,421 | 101,873 | 1,101,992 | 248,178 |
(1) | Fair market value of the Company’s Common Stock on the date of exercise (based on the closing sales price reported on the Nasdaq National Market or the actual sales price if the shares were sold by the optionee on the same date) less the exercise price. |
(2) | These stock options, which were granted either under the 2002 Equity Incentive Plan or the 1992 Stock Option Plan, are exercisable in a series of installments measured from the vesting commencement date generally over 48 months, provided that each Named Executive Officer continues to provide services to the Company. In the event of certain transactions involving a change in control of the Company, the options will vest in full. The maximum term of each option grant is ten years from the date of grant. |
(3) | Based on the closing sales price of the Common Stock as of December 30, 2005, quoted on the Nasdaq National Market ($8.61 per share), minus the per share exercise price, multiplied by the number of shares underlying the option. |
• | Base salary: Base salary ranges are reviewed annually and adjustments are made at the beginning of the fiscal year to reflect changes in job description or market conditions. When establishing or reviewing compensation levels for each executive officer, the Committee considers numerous factors, including the qualifications of the executive, his or her level of relevant experience, specific operating roles and duties and strategic goals for which the executive has responsibility. |
• | Annual incentive awards: Bonuses are awarded on a discretionary basis, usually following the Company’s fiscal year-end, and are based on the achievement of corporate and individual goals set by the Board and the Company’s Chief Executive Officer at the beginning of the year, as well as the financial condition of the Company. |
• | Long-term incentive compensation: The Company has used the grant of options under its 2002 Equity Incentive Plan to underscore the common interests of stockholders and management. Options granted to executive officers are intended to provide a continuing financial incentive to maximize long-term value to stockholders and to make each executive’s total compensation opportunity competitive. In addition, because stock options generally become exercisable over a period of several years, options encourage executives to remain in the long-term employ of the Company. In determining the size of an option to be granted to an executive officer, the Committee takes into account an officer’s position and level of responsibility within the Company, the officer’s existing stock and option holdings, and the potential reward to the officer if the stock price appreciates in the public market. |
(1) | This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (the Exchange Act), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
• | closing of a public financing resulting in net proceeds of $58.0 million; |
• | continued strengthening of the Company’s intellectual property position; |
• | formation of two joint ventures to enable separate funding and focused attention for nuclear transfer and telomerase activation applications; |
• | establishment of a research, license and collaboration agreement with Merck & Co., Inc. for the telomerase cancer vaccine which included an exercise of a warrant to purchase Geron stock with aggregate proceeds of $18.0 million; |
• | commencement of the Company’s first clinical trial for GRN163L; |
• | published animal results for GRNOPC1, the Company’s first human embryonic stem cell-derived therapy; and |
• | continued progress in development of other human embryonic stem cell programs. |
Patrick J. Zenner
Geron Corporation, the Nasdaq-US Index and the Nasdaq-Pharmaceutical Index(2)
(1) | This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
(2) | Shows the cumulative total return on investment assuming an investment of $100 in each of the Company, the Nasdaq-US and the Nasdaq-Pharmaceutical on December 29, 2000. The cumulative total return on the Company’s stock has been computed based on a price of $15.438 per share, the price at which the Company’s shares closed on December 29, 2000. |
• | maintenance by management of the reliability and integrity of the accounting policies and financial reporting and financial disclosure practices of the Company; |
• | establishment and maintenance by management of processes to assure that an adequate system of internal controls is functioning within the Company; and |
• | retention and termination of the independent auditors. |
1) | The Audit Committee has reviewed and discussed the audited financial statements of the Company as of and for the year ended December 31, 2005 with management and the independent auditors. |
2) | The Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), other professional standards, membership provisions of the SEC Practice Session, and other SEC rules, as currently in effect. |
3) | The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), as currently in effect, and it has discussed with the auditors their independence from the Company. |
4) | The Audit Committee has considered whether the independent auditors’ provision of non-audit services to the Company is compatible with maintaining the auditors’ independence. |
(1) | This Section is not “soliciting material” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Edward V. Fritzky
Thomas D. Kiley, Esq.
Fiscal Year Ended December 31, 2005 | Fiscal Year Ended December 31, 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 450,054 | $ | 420,204 | ||||||
Audit Related Fees(2) | 5,330 | 60,066 | ||||||||
Tax Fees | 29,018 | 13,943 | ||||||||
All Other Fees | 1,225 | 1,500 |
(1) | Audit Fees include the audit of our annual consolidated financial statements, reviews of our quarterly consolidated financial statements included in our Quarterly Reports on Forms 10-Q and services provided in connection with SEC filings, including consents and comfort letters. |
(2) | Audit Related Fees include consultations on accounting and auditing matters related to proposed transactions and consultation on compliance requirements related to Section 404 of the Sarbanes-Oxley Act of 2002. |
(i) | experience in corporate management, such as serving as an officer or former officer of a publicly held company, and a general understanding of marketing, finance and other elements relevant to the success of a publicly traded company in today’s business environment; |
(ii) | experience in the Company’s industry and with relevant social policy concerns; |
(iii) | experience as a board member of another publicly held company; |
(iv) | academic expertise in an area of the Company’s operations; and |
(v) | practical and mature business judgment, including ability to make independent analytical inquiries. |
Secretary
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF GERON CORPORATION,
A DELAWARE CORPORATION
“(A) Class of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Corporation is authorized to issue is Two Hundred Three Million (203,000,000) shares. Two Hundred Million (200,000,000) shares shall be Common Stock, par value $0.001 per share, and Three Million (3,000,000) shares shall be Preferred Stock, par value $0.001 per share.” |
a Delaware corporation
David L Greenwood
Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
2006 DIRECTORS’ STOCK OPTION PLAN
1. | Purposes of the Plan. |
2. | Definitions. |
(a) | “Board” shall mean the Board of Directors of the Company. |
(b) | “Code” shall mean the Internal Revenue Code of 1986, as amended. |
(c) | “Common Stock” shall mean the Common Stock of the Company. |
(d) | “Company” shall mean Geron Corporation, a Delaware corporation. |
(e) | “Continuous Status as a Director” shall mean the absence of any interruption or termination of service as a Director. |
(f) | “Director” shall mean a member of the Board. |
(g) | “Employee” shall mean any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a director’s fee by the Company shall not be sufficient in and of itself to constitute “employment” by the Company. |
(h) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
(i) | “Option” shall mean a stock option granted pursuant to the Plan. All Options shall be nonqualified stock options (i.e., options that are not intended to qualify as incentive stock options under Section 422 of the Code). |
(j) | “Optioned Stock” shall mean the Common Stock subject to an Option. |
(k) | “Optionee” shall mean an Outside Director who receives an Option. |
(l) | “Outside Director” shall mean a Director who is not an Employee. |
(m) | “Parent” shall mean a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code. |
(n) | “Plan” shall mean this 2006 Directors’ Stock Option Plan. |
(o) | “Share” shall mean a share of the Common Stock, as adjusted in accordance with Section 11 of the Plan. |
(p) | “Subsidiary” shall mean a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code. |
3. | Stock Subject to the Plan. |
4. | Administration of and Grants of Options under the Plan. |
(a) | Administrator. Except as otherwise required herein, the Plan shall be administered by the Board. |
(b) | Procedure for Grants. All grants of Options hereunder shall be automatic and non-discretionary and shall be made strictly in accordance with the following provisions: |
(i) | No person shall have any discretion to select which Outside Directors shall be granted Options or to determine the number of Shares to be covered by Options granted to Outside Directors. |
(ii) | Each Outside Director shall be automatically granted an Option to purchase 45,000 Shares (the “First Option”) on the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy. |
(iii) | Each Outside Director, other than the Chairman of the Board or an Outside Director whose First Option is being granted on the date of the Annual Meeting of the Company’s stockholders, shall be automatically granted an Option to purchase 20,000 Shares (a “Subsequent Option”) on the date of the Annual Meeting of the Company’s stockholders in each year of his service. The Subsequent Option granted to the Chairman of the Board under this Section 4(b)(iii) shall be an Option to purchase 40,000 Shares. |
(iv) | Each Outside Director who is appointed to serve on the Audit Committee, the Compensation Committee, Nominating Committee or another standing committee of the Board designated by the Board as qualifying for such grant, shall each be automatically granted an Option to purchase 2,500 Shares (a “First Committee Service Option”) on the date on which such person first is appointed to serve on such standing committee. |
(v) | Each Outside Director, other than the Chairman of the Audit Committee, Compensation Committee, Nominating Committee or another so designated standing committee of the Board or an Outside Director whose First Committee Service Option is being granted on the date of the Annual Meeting of the Company’s stockholders, who continues to serve on the Audit Committee, the Compensation Committee, Nominating Committee or another so designated standing committee of the Board, shall be automatically granted an Option to purchase 2,500 Shares (a “Subsequent Committee Service Option”) on the date of the Annual Meeting of the Company’s stockholders. |
(vi) | Each Outside Director, who serves as a Chairman of the Audit Committee, Compensation Committee or Nominating Committee or another standing committee of the Board designated by the Board as qualifying for such grant, shall be automatically granted an Option to purchase Shares (a “Committee Chair Service Option”) on the date of the Annual Meeting of the Company’s stockholders. The Committee Chair Service Option granted to the Audit Committee Chairman under this Section 4(b)(vi) shall be an Option to purchase 10,000 Shares. The Committee Chair Service Option granted to the Compensation Committee Chairman and Nominating Committee Chairman under this Section 4(b)(vi) shall each be an Option to purchase 5,000 Shares. |
(vii) | Notwithstanding the provisions of subsections (ii), (iii), (iv), (v) and (vi) hereof, in the event that a grant would cause the number of Shares subject to outstanding Options plus the number of Shares |
previously purchased upon exercise of Options to exceed the Pool, then each such automatic grant shall be for that number of Shares determined by dividing the total number of Shares remaining available for grant by the number of Outside Directors receiving an Option on such date on the automatic grant date. Any further grants shall then be deferred until such time, if any, as additional Shares become available for grant under the Plan through action of the shareholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder. |
(viii) | The terms of each First Option granted hereunder shall be as follows: |
(1) | the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Section 9 hereof. |
(2) | the exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the First Option, determined in accordance with Section 8 hereof. |
(3) | the First Option shall become exercisable in installments cumulatively as to 33 1/3% of the Shares subject to the First Option on each of the first, second and third anniversaries of the date of grant of the First Option. |
(ix) | The terms of each Subsequent Option granted hereunder shall be as follows: |
(1) | the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Section 9 hereof. |
(2) | the exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the Subsequent Option, determined in accordance with Section 8 hereof. |
(3) | the Subsequent Option shall become exercisable as to one hundred percent (100%) of the Shares subject to the Subsequent Option on the date of grant of the Subsequent Option. |
(x) | The terms of each First Committee Service Option granted hereunder shall be as follows: |
(1) | the First Committee Service Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Section 9 hereof. |
(2) | the exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the First Committee Service Option, determined in accordance with Section 8 hereof. |
(3) | the First Committee Service Option shall become exercisable as to one hundred percent (100%) of the Shares subject to the First Committee Service Option on the date of grant of the First Committee Service Option. |
(xi) | The terms of each Subsequent Committee Service Option granted hereunder shall be as follows: |
(1) | the Subsequent Committee Service Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Section 9 hereof. |
(2) | the exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the Subsequent Committee Service Option, determined in accordance with Section 8 hereof. |
(3) | the Subsequent Committee Service Option shall become exercisable as to one hundred percent (100%) of the Shares subject to the Subsequent Committee Service Option on the date of grant of the Subsequent Committee Service Option. |
(xii) | The terms of each Committee Chair Service Option granted hereunder shall be as follows: |
(1) | the Committee Chair Service Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Section 9 hereof. |
(2) | the exercise price per Share shall be 100% of the fair market value per Share on the date of grant of the Committee Chair Service Option, determined in accordance with Section 8 hereof. |
(3) | the Committee Chair Service Option shall become exercisable as to one hundred percent (100%) of the Shares subject to the Committee Chair Service Option on the date of grant of the Committee Chair Service Option. |
(c) | Powers of the Board. Subject to the provisions and restrictions of the Plan, the Board shall have the authority, in its discretion: (i) to determine, upon review of relevant information and in accordance with Section 8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine the exercise price per share of Options to be granted, which exercise price shall be determined in accordance with Section 8(a) of the Plan; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations relating to the Plan; (v) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option previously granted hereunder; and (vi) to make all other determinations deemed necessary or advisable for the administration of the Plan. |
(d) | Effect of Board’s Decision. All decisions, determinations and interpretations of the Board shall be final and binding on all Optionees and any other holders of any Options granted under the Plan. |
(e) | Suspension or Termination of Option. If the President or his or her designee reasonably believes that an Optionee has committed an act of misconduct, the President may suspend the Optionee’s right to exercise any option pending a determination by the Board of Directors (excluding the Outside Director accused of such misconduct). If the Board of Directors (excluding the Outside Director accused of such misconduct) determines an Optionee has committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the Company, breach of fiduciary duty or deliberate disregard of the Company rules resulting in loss, damage or injury to the Company, or if an Optionee makes an unauthorized disclosure of any Company trade secret or confidential information, engages in any conduct constituting unfair competition, induces any Company customer to breach a contract with the Company or induces any principal for whom the Company acts as agent to terminate such agency relationship, neither the Optionee nor his or her estate shall be entitled to exercise any option whatsoever. In making such determination, the Board of Directors (excluding the Outside Director accused of such misconduct) shall act fairly and shall give the Optionee an opportunity to appear and present evidence on Optionee’s behalf at a hearing before the Board or a committee of the Board. |
5. | Eligibility. |
6. | Term of Plan; Effective Date. |
7. | Term of Options. |
8. | Exercise Price and Consideration. |
(a) | Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be 100% of the fair market value per Share on the date of grant of the Option. |
(b) | Fair Market Value. The fair market value shall be determined by the Board; provided, however, that where there is a public market for the Common Stock, the fair market value per Share shall be the mean of the bid and asked prices of the Common Stock in the over-the-counter market on the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the National Association of Securities Dealers Automated Quotation (“Nasdaq”) System) or, in the event the Common Stock is traded on the Nasdaq National Market or listed on a stock exchange, the fair market value per Share shall be the closing price on such system or exchange on the date of grant of the Option, as reported in The Wall Street Journal. With respect to any Options granted hereunder concurrently with the initial effectiveness of the Plan, the fair market value shall be the Price to Public as set forth in the final prospectus relating to such initial public offering. |
(c) | Form of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option shall consist entirely of cash, check, other Shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised (which, if acquired from the Company, shall have been held for at least six months), or any combination of such methods of payment and/or any other consideration or method of payment as shall be permitted under applicable corporate law. |
9. | Exercise of Option. |
(a) | Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable at such times as are set forth in Section 4(b) hereof; provided, however, that no Options shall be exercisable prior to stockholder approval of the Plan in accordance with Section 17 hereof has been obtained. |
(b) | Termination of Status as a Director. If an Outside Director ceases to serve as a Director, he or she may, but only within ninety (90) days after the date he or she ceases to be a Director of the Company, exercise his or her Option to the extent that he or she was entitled to exercise it at the date of such termination. Notwithstanding the foregoing, in no event may the Option be exercised after its term set forth in Section 7 has expired. To the extent that such Outside Director was not entitled to exercise an Option at the date of such termination, or does not exercise such Option (which he or she was entitled to exercise) within the time specified herein, the Option shall terminate. |
(c) | Disability of Optionee. Notwithstanding Section 9(b) above, in the event a Director is unable to continue his or her service as a Director of the Company as a result of his or her total and permanent disability (as defined in Section 22(e)(3) of the Internal Revenue Code), he or she may, but only within twenty-four (24) months from the date of such termination, exercise his or her Option to the extent of the right to exercise that would have accrued had the Optionee remained in Continuous Status as Director for thirty-six (36) months (or such lesser period of time as is determined by the Board) after the date of such termination. Notwithstanding the foregoing, in no event may the Option be exercised after its term set forth in Section 7 has expired. To the extent that he or she does not exercise such Option (which he or she was entitled to exercise) within the time specified herein, the Option shall terminate. |
(d) | Death of Optionee. In the event of the death of an Optionee: |
(i) | During the term of the Option, if the Optionee is, at the time of his or her death, a Director of the Company and has been in Continuous Status as a Director since the date of grant of the Option, the Option may be exercised, at any time within twenty-four (24) months following the date of death, by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had the Optionee continued living and remained in Continuous Status as Director for thirty-six (36) months (or such lesser period of time as is determined by the Board) after the date of death. Notwithstanding the foregoing, in no event may the Option be exercised after its term set forth in Section 7 has expired. |
(ii) | Within three (3) months after the termination of Continuous Status as a Director, the Option may be exercised, at any time within six (6) months following the date of death, by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination. Notwithstanding the foregoing, in no event may the option be exercised after its term set forth in Section 7 has expired. |
10. | Nontransferability of Options. |
11. | Adjustments Upon Changes in Capitalization; Corporate Transactions. |
(a) | Adjustment. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, and the number of shares of Common Stock to be granted under the provisions set forth in Section 4 of the Plan, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. |
(b) | Corporate Transactions. In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets, (iii) a merger or consolidation in which the Company is not the surviving corporation, or (iv) any other capital reorganization in which more than fifty percent (50%) of the shares of the Company entitled to vote are exchanged, the Company shall give to the Eligible Director, at the time of adoption of the plan for liquidation, dissolution, sale, merger, consolidation or reorganization, a reasonable time thereafter within which to exercise the Option, including Shares as to which the Option would not be otherwise exercisable, prior to the effectiveness of such liquidation, dissolution, sale, merger, consolidation or reorganization, at the end of which time the Option shall terminate. |
12. | Time of Granting Options. |
13. | Amendment and Termination of the Plan. |
(a) | Amendment and Termination. The Board may amend or terminate the Plan from time to time in such respects as the Board may deem advisable; provided that, to the extent necessary and desirable to comply with any applicable law or regulation, the Company shall obtain approval of the stockholders of the Company of Plan amendments to the extent and in the manner required by such law or regulation. |
(b) | Effect of Amendment or Termination. Any such amendment or termination of the Plan that would impair the rights of any Optionee shall not affect Options already granted to such Optionee and such Options shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Board, which agreement must be in writing and signed by the Optionee and the Company. |
14. | Conditions Upon Issuance of Shares. |
15. | Reservation of Shares. |
16. | Option Agreement. |
17. | Stockholder Approval. |
David L. Greenwood
Secretary
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| 1. Election of Class I Directors. |
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| o | FORthe nominees | o | WITHHOLDauthority to vote | x | Please mark your votes | |||||||||||||||||
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| Nominees: Thomas B. Okarma, Ph.D., M.D., John P. Walker and Patrick J. Zenner |
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| 2. | To amend the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s Common Stock to 200,000,000 shares. | 4. | To ratify appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006. | |||||||||||||||||||
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| 3. | To approve the Company’s 2006 Directors’ Stock Option Plan, to replace the 1996 Directors’ Stock Option Plan, which is expiring. | 5. | As said proxies deem advisable on such other matters as may come before the meeting and any adjournment(s) or postponement(s) thereof. | |||||||||||||||||||
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| PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE. | ||||||||||||||||||
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| Note: This proxy should be marked, dated, signed by the stockholder(s) exactly as his or her name appears hereon, and returned in the enclosed envelope. | ||||||||||||||||||
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| Dated: __________________________ , 2006 | ||||||||||||||||||
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| Please sign exactly as name(s) appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. |
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| THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS |
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| GERON CORPORATION |
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| 2006 ANNUAL MEETING OF STOCKHOLDERS |
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| The undersigned stockholder of Geron Corporation, a Delaware corporation (the “Company”), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 3, 2006, and hereby appoints Thomas B. Okarma and David L. Greenwood, or any of them, as proxies and attorneys-in-fact with full power to each of substitution, on behalf and in the name of the undersigned to represent the undersigned at the 2006 Annual Meeting of Stockholders of Geron Corporation to be held on May 24, 2006, at 8:30 a.m. local time, at the Company’s headquarters at 230 Constitution Drive, Menlo Park, CA 94025 and at any adjournment(s) or postponement(s) thereof, and to vote all shares of common stock that the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side, and in their discretion, upon such other matter or matters that may properly come before the meeting and any adjournment(s) or postponement(s) thereof. |
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| This proxy will be voted as directed or, if no contrary direction is indicated, will be voted as follows: (1) for the election of three Class I Directors to hold office until the Annual Meeting of Stockholders in the year 2009; (2) to amend the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s Common Stock to 200,000,000 shares: (3) to approve the Company’s 2006 Directors’ Stock Option Plan, to replace the 1996 Directors’ Stock Option Plan, which is expiring; (4) to ratify appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; and as said proxies deem advisable on such other matters as may come before the meeting and any adjournment(s) or postponement(s) thereof. |
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| CONTINUED AND TO BE SIGNED ON REVERSE SIDE |
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