EXHIBIT 4.1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS *. A COMPLETE, UNREDACTED VERSION OF THIS EXHIBIT
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT.
Warrant No.: MRK-01
Date of Issuance: July 15, 2005
GERON CORPORATION
COMMON STOCK WARRANT AGREEMENT
Geron Corporation (the "Company"), for the value received of one hundred dollars
($100) receipt of which is hereby acknowledged by the Company, hereby certifies
that Merck & Co., Inc. (the "Registered Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company the number of shares of
Common Stock of the Company that shall equal eighteen million dollars
($18,000,000) (the "Warrant Exercise Price") divided by the Purchase Price (as
defined below), pursuant to the terms of this Common Stock Warrant Agreement
("Warrant"). The per share exercise price of this Warrant (the "Purchase Price")
shall be the price per share equal to the price of the Common Stock sold in the
Company's Next Financing. The "Next Financing" refers to the sale by the
Company, after September 13, 2005 and prior to the second anniversary of the
Date of Issuance, of its Common Stock in an underwritten public offering
pursuant to an effective registration statement on Form S-3, or any similar
form, under the Securities Act of 1933, as amended (the "Securities Act")
wherein the total value of the underwritten public offering together with the
Warrant Exercise Price is equal to or greater than fifty million dollars
($50,000,000). The shares of Common Stock of the Company purchasable upon
exercise of this Warrant shall be subject to an effective registration statement
on Form S-3, or any similar form, under the Securities Act and are hereinafter
referred to as the "Warrant Stock."
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1. EXERCISE.
(a) TERM; MANDATORY EXERCISE.
(i) This Warrant shall be exercised, in whole, on the
date of the closing of the Next Financing (the "Exercise Date"). This Warrant
(and the right to purchase securities upon exercise hereof) shall terminate
immediately following the Exercise Date; provided, however, notwithstanding
anything to the contrary, this Warrant shall terminate and the Registered Holder
shall have no further obligation hereunder (i) *; or (ii) in the event of the
filing or institution of bankruptcy, reorganization, liquidation or receivership
proceedings, or in the event of an assignment of a substantial portion of the
assets for the benefit of creditors by the Company. Furthermore, if the Next
Financing does not occur within 24 months of the Date of Issuance of this
Warrant, then this Warrant shall automatically without further action cease to
be exercisable and shall become void and of no value.
(ii) In connection with and conditional upon the
closing of the Next Financing, the Registered Holder shall exercise this Warrant
and surrender it to the Company together with payment of the full Warrant
Exercise Price on the Exercise Date. Except as set forth in paragraph 1(a)(i)
above, the obligations of the Registered Holder are absolute and unconditional,
irrespective of any action or inaction by the Company to enforce the same, any
waiver or consent with respect to any provision hereof, or any breach or alleged
breach by the Company of any obligation to the Registered Holder or any
violation or alleged violation of law by the Company, and irrespective of any
other circumstance which might otherwise limit such obligation. Nothing herein
shall limit the Company's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Registered
Holder's failure to timely exercise this Warrant and surrender this Warrant to
the Company on the Exercise Date.
(b) MANNER OF EXERCISE. This Warrant may be exercised by the Registered
Holder, in whole but not in part, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit A duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney-in-fact, at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full by cash, check or wire
transfer of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise.
(c) EFFECTIVE TIME OF EXERCISE. The exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
day on which this Warrant shall have been surrendered to the Company, with
payment of the applicable Purchase Price, as provided in Section 1(a) above. At
such time, the person or persons in whose name or names any certificates for
Warrant Stock shall be issuable upon such exercise as provided in Section 1(d)
below shall be deemed to have become the holder or holders of record of the
Warrant Stock represented by such certificates.
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* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(d) DELIVERY TO REGISTERED HOLDER. As soon as practicable after the
exercise of this Warrant, and in any event within ten (10) business days
thereafter, the Company, at its expense, will cause to be issued in the name of,
and delivered to, the Registered Holder, or as such Registered Holder (upon
payment by such Registered Holder of any applicable transfer taxes) may direct,
a certificate or certificates for the number of shares of Warrant Stock to which
such Registered Holder shall be entitled.
2. TRANSFERABILITY OF WARRANT. This Warrant may not be transferred or
assigned in whole or in part without the prior consent of the Company and
compliance with applicable federal and state securities laws.
3. RESTRICTED SECURITIES; REPRESENTATIONS.
(a) The Registered Holder of this Warrant acknowledges that this
Warrant has not been registered under the Securities Act, and agrees not to
sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant. It is understood and agreed that the preceding sentence does not apply
to, or limit the sale, pledge, distribution, offers for sale, transfer or other
disposition of Warrant Stock after any exercise thereof pursuant to Section 1
hereof.
(b) The Registered Holder hereby further represents and warrants to the
Company with respect to the issuance of the Warrant and the purchase of the
Warrant Stock as follows:
(i) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Warrant is issued to
the Registered Holder in reliance upon such Registered Holder's representation
to the Company, which by such Registered Holder's execution of this Warrant such
Registered Holder hereby confirms, that the Warrant will be acquired for
investment for such Registered Holder's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and that
such Registered Holder has no present intention of selling, granting any
participation in, or otherwise distributing such Warrant.
(ii) KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC RISKS. The
Registered Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
contemplated by this Warrant and such party is able to bear the economic risk of
its investment in the Company (including a complete loss of its investment). The
Registered Holder is an "accredited investor" as defined by Rule 501 of the
Securities Act.
(iii) RESALE. The Registered Holder understands that the Warrant
being issued hereunder is characterized as a "restricted security" under the
federal securities laws.
(c) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change the Registered Holder's address as shown on the warrant register by
written notice to the Company requesting such change.
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(d) The Company hereby represents and warrants to the Registered Holder
as follows:
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(ii) The Company has requisite corporate right, power and
authority (including the due authorization by all necessary corporate action) to
enter into this Warrant and to perform its obligations hereunder without the
need for the consent of any other person; and this Warrant has been duly
authorized, executed and delivered and constitutes legal, valid and binding
obligations of the Company enforceable against it in accordance with the terms
hereof. The execution, delivery and performance of this Warrant by the Company
do not contravene or violate any laws, rules or regulations applicable to it.
(iii) The Company has taken such corporate action as is necessary
or appropriate to enable it to perform its obligations hereunder, including, but
not limited to, the issuance, sale and delivery of the Warrant.
(iv) The Warrant Stock, when issued and paid for in compliance
with the provisions of this Warrant, will be validly issued, fully paid and
non-assessable.
(v) The Company shall promptly secure the listing of the Warrant
Stock upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all Warrant
Stock; and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon the exercise
of this Warrant if and so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(vi) The Company shall deliver a prospectus supplement to the
Registered Holder in connection with the issuance of the Warrant Stock.
4. LOCK-UP AGREEMENT.
(a) The Registered Holder hereby agrees not to sell or otherwise
transfer, loan, make any short sale of, grant any option for the purchase of, or
enter into any hedging or similar transaction with the same economic effect as a
sale, of any Warrant Stock without the prior written consent of the Company, for
a period of thirty (30) days from the earlier of (a) the exercise of the
Over-allotment Option by the underwriters or (b) the expiration of
Over-allotment Option (the "Lock-Up Period"); provided, however, that the
Lock-Up Period shall not exceed sixty (60) days from the closing of the Next
Financing. The "Over-allotment Option" shall mean an option granted to the
underwriters in the Next Financing to purchase additional shares of Common
Stock, exercisable to cover over-allotments.
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(b) In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the shares of Warrant Stock subject
to the foregoing restriction of the Registered Holder until the end of such
period and may stamp each such certificate with the legend set forth in Section
6 below with respect to the shares of Warrant Shares subject to the foregoing
restriction until the end of such thirty (30) day period.
5. LIMITS ON SALES OF WARRANT STOCK. After this Warrant has been exercised and
the Registered Holder has been issued the Warrant Stock, the Registered Holder
may liquidate the Warrant Stock through the use of an investment banker or
brokerage firm of the Registered Holder's choosing, subject to the following
limitation: The Registered Holder shall only liquidate each trading day, public
market sales not exceeding * percent (*%) of the average of the Company's daily
trailing trading volume as reported by Bloomberg L.P., or any successor
performing similar functions, for a period of 10 consecutive trading days
immediately prior to the date of sale; provided, however, that the Registered
Holder may liquidate shares beyond such limits if such sales are made where the
following conditions have been satisfied: (1) the Company's Common Stock price
is trading above the opening trade price as quoted on Nasdaq, and (2) the sale
transaction is at a price per share in excess of the price per share of the
preceding trade of the Company's Common Stock on Nasdaq.
6. LEGEND. The certificates representing the Warrant Stock shall have
affixed thereto a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD OF AT LEAST 30 DAYS BUT
NO MORE THAN 60 DAYS AND A LIMITATION ON SALES, AS SET FORTH IN A WARRANT, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY."
7. RESERVATION OF STOCK. The Company shall at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock or other stock or securities, as from time
to time shall be issuable upon the exercise of this Warrant.
8. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, upon delivery of an
indemnity agreement, with surety if reasonably required, in an amount reasonably
satisfactory to the Company, or, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
warrant in a form substantially similar to this Warrant.
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* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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9. MAILING OF NOTICES. Any notice required or permitted by this Warrant
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by a nationally-recognized delivery service (such as Federal
Express or UPS) or confirmed facsimile, or forty-eight (48) hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid,
if such notice is addressed to the party to be notified at such party's address
or facsimile number as set forth below or as subsequently modified by written
notice.
10. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company (including without limitation the
right to notification of stockholder meetings or the right to receive any notice
or other communication concerning the business or affairs of the Company).
11. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder.
12. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or waived
only by an instrument in writing signed by the Company and the Registered
Holder.
13. HEADINGS. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
14. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Registered
Holder and their respective permitted successors and assigns (in the case of the
Registered Holder, in accordance with Section 2 hereof).
15. GOVERNING LAW. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law thereof.
16. REMEDIES. The Company and the Registered Holder each acknowledge that a
breach by either party of their respective obligations hereunder will cause
irreparable harm to the Company or the Registered Holder, as the case may be, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company and the Registered Holder each acknowledge that the
remedy at law for a breach of either party's obligations under this Warrant will
be inadequate and agrees, in the event of a breach or threatened breach by the
Company or the Registered Holder of the provisions of this Warrant, that the
Company or the Registered Holder, as the case may be, shall be entitled, in
addition to all other available remedies in law or in equity, to an injunction
or injunctions to prevent or cure any breaches of the provisions of this Warrant
and to enforce specifically the terms and provisions of this Warrant, without
the necessity of showing economic loss and without any bond or other security
being required.
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GERON CORPORATION REGISTERED HOLDER
By: /s/ Thomas B. Okarma By: /s/ Richard T. Clark
--------------------------------- --------------------------------
Name: Thomas B. Okarma Name: Richard T. Clark
Title:Chief Executive Officer Title: Chief Executive
and President Officer and President
Address: Geron Corporation
230 Constitution Drive Address: Merck & Co., Inc.
Menlo Park, CA 94025 One Merck Drive
P.O. Box 100
Whitehouse Station,
NJ 08889-0100
Dated: July 14, 2005 Dated:
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EXHIBIT A
PURCHASE FORM
To: GERON CORPORATION
Date: ___________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably elects to purchase shares of the Common Stock
covered by such Warrant and herewith makes payment of $18,000,000, representing
the full purchase price for such shares at the price per share provided for in
such Warrant.
The undersigned hereby affirms and acknowledges the investment representations
and warranties made in the Warrant are true and correct as of the date hereof,
and accepts such shares subject to the restrictions set forth in the Warrant,
copies of which are available from the Secretary of the Company.
Signature: _______________________________________
Name:
Title:
Address:
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