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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Geron Corporation
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[GERON LOGO]
GERON CORPORATION
230 CONSTITUTION DRIVE
MENLO PARK, CA 94025
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 2001
To the Stockholders of Geron Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of GERON
CORPORATION, a Delaware corporation (the "Company"), will be held on Friday, May
18, 2001, at 9:00 a.m. local time at the Company's headquarters, 230
Constitution Drive, Menlo Park, California 94025 for the following purposes:
1. To elect two Class II directors to hold office until the annual meeting
of stockholders in the year 2004 and until the election and
qualification of their respective successors.
2. To approve an amendment to the Company's 1992 Stock Option Plan to
increase the aggregate number of shares of Common Stock authorized for
issuance under such Plan by 750,000 shares.
3. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 2001.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business, including the nominees for Class II
directors, are more fully described in the Proxy Statement accompanying this
Notice.
The Board of Directors has fixed the close of business on Monday, March 26,
2001, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof. Shares of common stock may be voted at the meeting only if
the holder is present at the meeting in person or by valid proxy.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign and
return the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
By Order of the Board of Directors
/s/ DAVID L. GREENWOOD
David L. Greenwood
Secretary
Menlo Park, California
March 28, 2001
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
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GERON CORPORATION
230 CONSTITUTION DRIVE
MENLO PARK, CA 94025
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PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This proxy statement is being furnished to stockholders of Geron
Corporation, a Delaware corporation (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the Annual Meeting of Stockholders to be held on May 18, 2001, at 9:00 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company headquarters, 230
Constitution Drive, Menlo Park, California 94025. This proxy statement and
accompanying proxy card are being mailed to all stockholders entitled to vote at
the Annual Meeting on or about April 9, 2001.
SOLICITATION AND VOTING OF PROXIES
Only holders of record at the close of business on Monday, March 26, 2001,
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof. At the close of business on
the Record Date, there were 21,784,021 shares of common stock, par value $.001
per share (the "Common Stock") outstanding. Each holder of record of Common
Stock on such date will be entitled to one vote for each share held on all
matters to be voted upon at the Annual Meeting.
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. In addition, the Company may
reimburse persons representing beneficial owners of Common Stock for their costs
of forwarding solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers, or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
In order to constitute a quorum and to transact business at the meeting, a
majority of the outstanding shares of Common Stock on the Record Date must be
represented at the meeting. Shares represented by proxies that reflect
abstentions or "broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the meeting, but not empowered to vote on a particular
proposal) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Directors will be elected by a
favorable vote of a plurality of the aggregate votes present, in person or by
proxy, at the meeting. Accordingly, neither abstentions, nor broker non-votes,
will affect the outcome of the election of candidates for director. The proposal
to approve and adopt the Amendment to the 1992 Stock Option Plan (the "Plan")
requires the affirmative vote of a majority of the aggregate votes present, in
person or by proxy, at the meeting. Accordingly, proxies reflecting abstentions
as to this proposal will be treated as votes against the Plan. Broker non-votes,
however, will be treated as unvoted for purposes of this proposal, and thus will
not be counted as votes for or against the Plan.
VOTING VIA THE INTERNET OR BY TELEPHONE
Most beneficial owners whose stock is held in street name receive voting
instruction forms from their banks, brokers, or other agents, rather than the
Company's proxy card.
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A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. If your shares are held in an account with a broker or bank
participating in the ADP Investor Communication Services program, you may vote
those shares telephonically by calling the telephone number shown on the voting
form received from your broker or bank, or via the Internet at ADP Investor
Communication Services' voting web site http://www.proxyvote.com.
Submitting your proxy via the Internet or by telephone will not affect your
right to revoke your proxy and vote in person should you decide to attend the
Annual Meeting.
The telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. Stockholders voting via the Internet should understand that there may
be costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that must be borne by the stockholder.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary at Geron's offices, 230 Constitution Drive, Menlo Park, California
94025, a written notice of revocation or a duly executed proxy bearing a later
date, or it may be revoked by attending the meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy.
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MATTERS TO BE CONSIDERED AT THE 2001 ANNUAL MEETING
PROPOSAL 1
ELECTION OF DIRECTORS
Geron's Board of Directors currently consists of seven members. Geron's
Certificate of Incorporation provides for the classification of the Board of
Directors into three classes, as nearly equal in number as possible, with
staggered terms of office. Geron's Certificate of Incorporation also provides
that upon expiration of the term of office for a class of directors, nominees
for such class will be elected for a term of three years or until their
successors are duly elected and qualified.
The term of the Class II directors has expired and two nominees for
director are to be elected as Class II directors. The two nominees are Thomas D.
Kiley, Esq. and Edward V. Fritzky, each of whom currently serves as a Class II
director. The Class I directors, Thomas B. Okarma, Ph.D., M.D. and John P.
Walker, have two years remaining on their term of office and the Class III
directors, Alexander E. Barkas, Ph.D. and Robert B. Stein, M.D., Ph.D., have one
year remaining on their term of office.
In February 2001, Gary L. Neil, a Class I director, passed away. Following
Mr. Neil's death, Geron's Board of Directors took action to reduce the number of
Class I directors by one. In addition, Ronald W. Eastman, a current Class II
director, will not stand for re-election and has resigned effective prior to the
2001 Annual Meeting. Geron's Board of Directors has taken action so that upon
the resignation of Mr. Eastman, the number of Class II directors will be reduced
by one.
The Company is actively searching for appropriate candidates to become
Class I and II directors. Once appropriate candidates have been identified, the
Board of Directors will increase the size of both Class I and Class II to three
directors. Following this increase, the two candidates identified by the Company
will be appointed by the Board of Directors to fill the newly created Class I
and Class II director vacancies. Each director so appointed will serve as a
director for the remainder of the term for the Class I or Class II directors, as
applicable.
The Board of Directors has selected two nominees for Class II directors,
both of whom are currently directors of the Company. The two candidates
receiving the highest number of affirmative votes of the shares represented and
entitled to vote at the Annual Meeting will be elected as Class II directors of
the Company. Accordingly, abstentions and broker non-votes will have no effect
on the outcome of the proposal.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the two nominees named below. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected, and management has no reason to believe that any nominee
will be unable to serve.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE ELECTION OF EACH NOMINEE TO THE BOARD OF DIRECTORS
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Set forth below is information regarding the nominees for Class II
director, the periods during which they have served as directors, and
information furnished by them as to principal occupations and directorships held
by them in corporations whose shares are publicly registered.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE YEAR TERM EXPIRING AT THE
2004 ANNUAL MEETING
NOMINEES FOR CLASS II DIRECTOR (TERM EXPIRING AT THE 2004 ANNUAL MEETING)
NAME AGE PRINCIPAL OCCUPATION/POSITION WITH THE COMPANY
---- --- ----------------------------------------------
Thomas D. Kiley, Esq. ................. 57 Attorney-at-law
Edward V. Fritzky...................... 50 Chief Executive Officer and Chairman, Immunex
Corporation
Thomas D. Kiley, Esq., has served as a director of the Company since
September 1992. Mr. Kiley is also a director of Connetics Corp. and certain
privately held biotechnology and other companies. He has been self-employed
since 1988 as an attorney, consultant and investor. From 1980 to 1988, he was an
officer of Genentech, Inc., a biotechnology company, serving variously as Vice
President and General Counsel, Vice President for Legal Affairs and Vice
President for Corporate Development. From 1969 to 1980, he was with the Los
Angeles law firm of Lyon & Lyon and was a partner at the firm from 1975 to 1980.
Mr. Kiley holds a B.S. in Chemical Engineering from Pennsylvania State
University and a J.D. from George Washington University.
Edward V. Fritzky, has served as a director of the Company since July 1998.
He has served as Chief Executive Officer and Chairman of Immunex Corporation
since January 1994. Mr. Fritzky is also a director of Sonosite, Inc. Mr. Fritzky
served as President of Lederle Laboratories, a division of American Cyanamid,
from 1992 to 1994, and as Vice President of Lederle Laboratories from 1989 to
1992. Prior to joining Lederle Laboratories, Mr. Fritzky was an executive of
Searle Pharmaceuticals, Inc., a subsidiary of the Monsanto Company. During his
tenure at Searle, Mr. Fritzky was Vice President of Marketing in the United
States, and later President and General Manager of Searle Canada, Inc. and Lorex
Pharmaceuticals, a joint venture company. Mr. Fritzky holds a B.A. from Duquesne
University and is a graduate of the Advanced Executive Program, J.L. Kellogg
Graduate School of Management at Northwestern University.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Set forth below is information regarding the continuing Class I and Class
III directors of the Company, including their ages, the periods during which
they have served as directors, and information furnished by them as to principal
occupations and directorships held by them in corporations whose shares are
publicly registered.
CLASS III DIRECTORS (TERM EXPIRING AT THE 2002 ANNUAL MEETING)
NAME AGE PRINCIPAL OCCUPATION/POSITION WITH THE COMPANY
---- --- ----------------------------------------------
Alexander E. Barkas, Ph.D. ............ 53 General Partner, Prospect Venture Partners
Robert B. Stein, M.D., Ph.D. .......... 50 Executive Vice President, Research &
Preclinical Development, DuPont
Pharmaceuticals
Alexander E. Barkas, Ph.D., has served as Chairman of the Board since July
1993 and as a director of the Company since March 1992. Dr. Barkas is also a
director of Connetics Corp. and several privately held medical technology
companies. From March 1992 until May 1993, he served as President and Chief
Executive Officer of the Company. He is a founding partner of Prospect Venture
Partners, a venture capital investment firm formed in October 1997. Dr. Barkas
was a partner with Kleiner Perkins Caufield & Byers, a venture capital
investment firm, from 1991 to October 1997. He holds a B.A. from Brandeis
University and Ph.D. from New York University.
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Robert B. Stein, M.D., Ph.D., has served as a director of the Company since
April 1996. Since September 1996, Dr. Stein has been Executive Vice President of
Research & Preclinical Development at DuPont Pharmaceuticals. From August 1993
to September 1996, Dr. Stein was Senior Vice President and Chief Scientific
Officer of Ligand Pharmaceuticals, Inc., a pharmaceutical company, and from May
1990 to August 1993, he was Vice President of Research at Ligand. From 1982 to
1990, Dr. Stein held various positions with Merck, Sharp, and Dohme Research
Laboratories, a pharmaceutical company, including Senior Director and Head of
the Department of Pharmacology from 1989 to 1990. Dr. Stein holds a B.S. in
Biology and Chemistry from Indiana University and a M.D. and Ph.D. in Physiology
and Pharmacology from Duke University.
CLASS I DIRECTORS (TERM EXPIRING AT THE 2003 ANNUAL MEETING)
NAME AGE PRINCIPAL OCCUPATION/POSITION WITH THE COMPANY
---- --- ----------------------------------------------
Thomas B. Okarma, Ph.D., M.D. .................. 55 President and Chief Executive Officer
John P. Walker.................................. 52 Chairman, Axys Pharmaceuticals, Inc.
Thomas B. Okarma, Ph.D., M.D., has served as the Company's President, Chief
Executive Officer and a director since July 1999. He is also a director of Geron
Bio-Med Limited, a United Kingdom company. From May 1998 until July 1999, Dr.
Okarma was the Vice President of Research and Development of Geron. From
December 1997 until May 1998, Dr. Okarma was Vice President of Cell Therapies.
From 1985 until joining Geron, Dr. Okarma, the scientific founder of Applied
Immune Sciences, Inc., served initially as its Vice President of Research and
Development and then as its Chairman and Chief Executive Officer until 1995 when
it was acquired by Rhone-Poulenc Rorer. Dr. Okarma was a Senior Vice President
at Rhone-Poulenc Rorer from the time of the acquisition of Applied Immune
Sciences, Inc. until December 1996. From 1980 to 1985, Dr. Okarma was a member
of the faculty of the Department of Medicine at Stanford University School of
Medicine. Dr. Okarma holds a A.B. from Dartmouth College and a M.D. and Ph.D.
from Stanford University.
John P. Walker has served as a director of the Company since April 1997. He
is currently Chairman and a director of Axys Pharmaceuticals, Inc. Mr. Walker is
also Chairman of Microcide Pharmaceuticals and a director of Discovery Partners
International Inc. and certain other privately held biotechnology companies.
From 1993 to 2000, he was Chairman, Chief Executive Officer and a director of
Axys Pharmaceuticals, Inc. Prior to his association with Arris, Mr. Walker was
the Chairman and Chief Executive Officer of Vitaphore Corporation, a
biomaterials company that was sold to Union Carbide Chemicals and Plastics
Company Inc. in 1990. From 1971 to 1985, Mr. Walker was employed by American
Hospital Supply Corporation in a variety of general management, sales and
marketing positions, most recently serving as President of the American Hospital
Company. He holds a B.A. from the State University of New York at Buffalo and is
a graduate of the Advanced Executive Program, J.L. Kellogg Graduate School of
Management at Northwestern University
There are no family relationships among executive officers or directors of
the Company.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 2000, the Board of Directors held
five meetings. The Board has an Audit Committee, a Compensation Committee, a
Stock Option Committee and a Nominating Committee. During the fiscal year ended
December 31, 2000, all of the incumbent directors attended at least 75% of the
meetings of the Board and the committees, on which they served, during the
period for which they were a director or committee member, respectively.
The Audit Committee, which is comprised of Dr. Barkas and Messrs. Kiley and
Walker met four times in 2000. In February 2001, Mr. Walker replaced Mr. Neil
who served on the Audit Committee in 2000. The Audit Committee's
responsibilities include: (i) recommending the selection of the Company's
independent public auditors to the Board of Directors, (ii) consulting with the
independent auditors with regard to the plan and scope of the audit, (iii)
reviewing, in consultation with the independent auditors, their report of audit
or
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proposed report of audit, and the accompanying management letter, if any, and
(iv) consulting with the independent auditors and management with regard to the
adequacy of the internal controls.
The Compensation Committee, which is comprised of Dr. Barkas and Mr.
Walker, met two times during fiscal 2000 and acted by written consent on two
occasions during fiscal 2000. The Compensation Committee makes recommendations
concerning salaries and incentive compensation, administers the incentive
compensation and benefit plans of the Company, and performs such other functions
regarding compensation as the Board may delegate. In addition, the Compensation
Committee has exclusive authority to administer the 1992 Stock Option Plan with
respect to executive officers and directors. Neither Dr. Barkas nor Mr. Walker
is a former or current officer or employee of the Company or any of its
subsidiaries, and they have no interlocking directorships.
The Stock Option Committee was formed in December 1996 in order to provide
timely option grants to new employees and consultants (other than executive
officers and directors of the Company) and currently consists of one member, Dr.
Okarma. The Stock Option Committee has limited authority to administer the
Company's 1992 Stock Option Plan concurrently with the Compensation Committee.
The Stock Option Committee has the authority to grant options for up to 20,000
shares of Common Stock to new employees and consultants in accordance with
procedures approved by the Board of Directors. The Stock Option Committee acted
by written consent on 15 occasions during fiscal 2000.
The Nominating Committee was formed in February 2001 in order to make
recommendations to the Board for candidates to be nominated for election or
re-election as director by the stockholders or by the Board. The members of the
Nominating Committee are Drs. Barkas and Okarma.
COMPENSATION OF DIRECTORS
Fees
Non-employee directors currently receive $1,000 for each board meeting
attended and are reimbursed for out-of-pocket expenses incurred in connection
with attendance at meetings of the Board of Directors.
Directors' Stock Option Plan
Each non-employee director received periodic option grants for shares of
Common Stock pursuant to the Company's 1996 Directors' Stock Option Plan, as
amended (the "Directors Plan"). The Directors Plan is designed to work
automatically and not to require administration; however, to the extent
administration is necessary, it will be provided by the Board of Directors.
The purpose of the Directors Plan is to provide an incentive for directors
to continue to serve the Company as directors and to assist the Company in
recruiting highly qualified individuals when vacancies occur on the Board of
Directors.
Option Grants. The Directors Plan provides that each person who becomes a
non-employee director after the effective date of the Directors Plan shall be
automatically granted a First Option to purchase 35,000 shares of Common Stock
on the date on which such person first becomes a non-employee director, whether
through election by the stockholders of the Company or appointment by the Board
of Directors to fill a vacancy. A Subsequent Option granted to non-employee
directors, other than the Chairman of the Board of Directors, to purchase 5,000
shares is automatically granted under the Directors Plan, to each non-employee
director on each anniversary date of the election of the non-employee director
to the Board provided the non-employee director is still on the Board. The
Subsequent Option granted to the Chairman of the Board of Directors is for
10,000 shares. In the event that a director terminates his or her service to the
Board of Directors prior to the next anniversary date of his or her election or
appointment, he or she will be granted a prorated Subsequent Option reflecting
the period of service since the last anniversary date. A Re-election Option to
purchase 15,000 shares is also granted to each non-employee director upon such
director's re-election to a subsequent three-year term on the Board of
Directors.
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The Directors Plan provides that each First Option granted thereunder
becomes exercisable in installments cumulatively as to one-third 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; as to 100% of the Shares subject to
each Subsequent Option on the date of grant of each Subsequent Option; and in
installments cumulatively as to one-third of shares subject to each Re-election
Option on each of the first, second and third anniversaries of the date of grant
of such Re-election Option. The options remain exercisable for up to 90 days
following the optionee's termination of service as a director of the Company,
unless such termination is a result of death or permanent and total disability,
in which case the options (both those already exercisable and those that would
have become exercisable had the director remained on the board for an additional
36 months) remain exercisable for up to a 24 month period following death or
disability.
Exercise Price and Term of Options. The exercise price of all stock options
granted under the Directors Plan is equal to the fair market value of a share of
the Company's Common Stock on the date of grant of the option, which is defined
to be the closing sale price of the Company's Common Stock on the Nasdaq
National Market on the date of grant. Options granted under the Directors Plan
have a term of ten years.
Options Granted to Directors. During 2000, options to purchase 5,000 shares
each were issued to Mr. Fritzky, Mr. Kiley, Mr. Neil, Dr. Stein, and Mr. Walker
in connection with their anniversary dates under the Directors Plan. During
2000, an option to purchase 10,000 shares was issued to Dr. Barkas in connection
with his anniversary date as Chairman of the Board under the Directors Plan.
Also during 2000, options to purchase 15,000 shares each were issued to Mr. Neil
and Mr. Walker in connection with their re-election to the Board at the 2000
Annual Meeting under the Directors Plan.
Other Compensation. In April 1996, the Company entered into a Consulting
Agreement with Thomas D. Kiley, a director of the Company, pursuant to which Mr.
Kiley agreed to provide such advice and consultation as reasonably requested by
the Company to its officers and scientists on the direction, implementation and
operations of its scientific programs, business plans and management of
intellectual property. As compensation for his services under this agreement,
Mr. Kiley received an option under the 1992 Stock Option Plan to purchase 7,352
shares of Common Stock at an exercise price of $2.04 per share, with monthly
vesting over a five year period. Unless otherwise terminated by either the
Company or Mr. Kiley, this agreement will expire on April 10, 2001.
In April 1997, the Company entered into a Consulting Agreement with John P.
Walker, a director of the Company, pursuant to which Mr. Walker agreed to
provide such advice and consultation as reasonably requested by the Company to
its officers and scientists on the direction, implementation and operations of
its scientific programs and business plans. As compensation for his services
under this agreement, Mr. Walker received an option under the 1992 Stock Option
Plan to purchase 10,000 shares of Common Stock at an exercise price of $9.25 per
share, with annual vesting over a three year period. In addition, Mr. Walker
received cash compensation in the amount of $10,000 per year, payable quarterly.
This agreement expired on April 3, 2000.
In February 2001, Gary L. Neil, a director of the Company since September
1998, passed away. In recognition of his valuable service to the Company over
the years, the Board accelerated the vesting of all unvested options granted to
Mr. Neil under the 1992 Stock Option Plan. Mr. Neil's unvested options under the
Directors Plan were automatically accelerated pursuant to the Directors Plan. As
a result, Mr. Neil's estate has 24 months from the date of Mr. Neil's death to
exercise options to purchase 46,750 shares of Geron Common Stock.
In February 2001, Ronald W. Eastman submitted his resignation from the
Board, effective May 18, 2001. In recognition of Mr. Eastman's valuable service
to the Company, the Board extended the time period for Mr. Eastman's exercise of
the options previously granted to him under the 1992 Stock Option Plan (all of
which were already immediately exercisable) until the earlier of May 18, 2004 or
the tenth anniversary of the grant of the options.
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PROPOSAL 2
APPROVAL OF AMENDMENT TO THE 1992 STOCK OPTION PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's 1992 Stock Option Plan, as amended (the "Stock Option Plan") to
increase the number of shares issuable thereunder by 750,000 shares. In February
2001, the Board amended the Stock Option Plan, subject to stockholder approval,
to increase the aggregate number of shares authorized for issuance under the
Stock Option Plan from 6,244,362 to 6,994,362. The Board adopted the amendment
to ensure that the Company can continue to grant stock options, at levels
determined appropriate by the Board, to attract and retain qualified employees
and consultants.
The Stock Option Plan was initially adopted by the Board of Directors in
May 1992 and approved by the stockholders in July 1992 and has been amended
several times since then. As of December 31, 2000, a total of 5,944,362 shares
of Common Stock had been authorized for issuance under the Stock Option Plan. In
addition, the Stock Option Plan provided for an automatic increase on the first
trading day of the 1998, 1999, 2000 and 2001 calendar years of an additional
number of shares equal to 2% of the number of shares of Common Stock outstanding
on December 31 of the immediately preceding calendar year, with no such annual
increase to exceed 300,000 shares. Taking into account the annual increase for
2001, a total of 6,244,362 shares of Common Stock have been authorized for
issuance under the Stock Option Plan as of the date of this Proxy Statement. The
last automatic 2% increase, of outstanding shares, in the authorized number of
shares under the Plan occurred as of January 1, 2001.
As of March 26, 2001, options to purchase a total of 3,559,823 shares were
outstanding under the Stock Option Plan (net of canceled or expired options),
and 392,944 shares remained available for future grants under the Stock Option
Plan. As of March 26, 2001, the aggregate fair market value of shares subject to
outstanding options under the Stock Option Plan was $38,047,388.
SUMMARY OF 1992 STOCK OPTION PLAN
The following is a summary of the principal features of the Stock Option
Plan, together with the applicable tax implications, which will be in effect if
the proposed amendment to the Stock Option Plan is approved. The summary,
however, does not purport to be a complete description of all the provisions of
the Stock Option Plan. Any stockholder of the Company who wishes to obtain a
copy of the actual plan document may do so upon written request to the Secretary
to the Company at the Company's principal executive offices at 230 Constitution
Drive, Menlo Park, California 94025.
General
The Stock Option Plan provides for grants to employees of the Company and
any subsidiary of the Company (including officers and employee directors) of
"incentive stock options" ("ISO's") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for grants of
nonstatutory stock options ("NSO's") to employees (including officers and
employee directors) and consultants (including non-employee directors) of the
Company or any affiliate of the Company. As of March 26, 2001, eight executive
officers and approximately 139 other employees and consultants (including
non-employee directors) were eligible to participate in the Stock Option Plan.
See "Federal Income Tax Aspects" below for information concerning the tax
treatment of incentive stock options and nonstatutory stock options.
The Stock Option Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code, and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Purpose
The purposes of the Stock Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility; to give
employees and consultants of the Company a greater personal stake in the
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success of the Company's business; to provide additional incentive to the
employees and consultants of the Company to continue and advance in their
employment and service to the Company; and to promote the success of the
Company's business.
Administration
The Stock Option Plan is administered by the Company's Board of Directors
or a committee of the Board (the "Administrator"). The Stock Option Plan is
currently being administered by the Compensation Committee and the Stock Option
Committee of the Board of Directors. With respect to executive officers of the
Company (including executive officers who are also directors), the Stock Option
Plan will be administered exclusively by the Compensation Committee of the Board
of Directors. The Administrator may determine the terms of the options granted,
including the exercise price, the number of shares subject to each option and
the exercisability of the option. The Administrator also has the authority to
select the individuals to whom options will be granted and to make any
combination of grants to individuals. The Administrator's interpretation and
construction of any provision of the Stock Option Plan are final and binding
upon all participants. Members of the Board receive no additional compensation
for their services in connection with the administration of the Stock Option
Plan.
Eligibility
The Stock Option Plan provides that incentive stock options may be granted
only to employees (including officers and employee directors) of the Company or
any affiliate of the Company, while nonstatutory stock options may be granted
not only to employees (including officers and employee directors), but also
consultants (including non-employee directors) of the Company or any affiliate
of the Company. The Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Stock Option Plan;
the number of shares to be covered by each such grant; whether the granted
option is to be an incentive stock option which satisfies the requirements of
Section 422 of the Code or a nonstatutory stock option not intended to meet such
requirements; the time or times at which each such option is to become
exercisable; and the maximum term for which the option is to remain outstanding.
The Stock Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 500,000 shares subject to adjustment as provided in the Stock
Option Plan. There is also a limit on the aggregate market value of shares
subject to all incentive stock options that may be granted to an optionee during
any calendar year.
Stock Subject to the Stock Option Plan
An aggregate of 6,244,362 shares (6,994,362 shares assuming the proposed
amendment is approved) of Common Stock has been authorized for issuance under
the Stock Option Plan, as amended, including the automatic annual increase for
2001. If stock option awards granted under the Stock Option Plan expire or
otherwise terminate without being exercised, the shares of Common Stock not
purchased pursuant to such award again become available for issuance under the
Stock Option Plan.
Terms of Options
The following is a description of the permissible terms of options under
the Stock Option Plan. Individual option grants may be more restrictive as to
any or all of the permissible terms described below.
Exercise Price; Payment. The exercise price under the Stock Option Plan is
determined by the Administrator and in the case of all incentive stock options
granted under the Stock Option Plan, the exercise price must be at least equal
to the fair market value of the Common Stock of the Company on the date of
grant. The exercise price of all nonstatutory stock options must equal at least
85% of the fair market value of the Common Stock on the date of grant. The
exercise price of any incentive stock option granted to an optionee who owns
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its subsidiaries (a "10% Stockholder")
must equal at least 110% of the fair market value of the Common Stock on the
date of grant. An optionee may satisfy any federal, state or local tax
9
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withholding obligation relating to the exercise of such option by a cash payment
upon exercise, by authorizing Geron to withhold a portion of the stock otherwise
issuable to the optionee, by delivering already owned stock of Geron or by a
combination of these means. At March 26, 2001, the closing sales price of a
share of the Company's Common Stock as reported on the Nasdaq National Market
was $10.69 per share.
The consideration to be paid for shares issued upon exercise of options
granted under the Stock Option Plan, including the method of payment, is
determined by the Administrator and may consist entirely of cash; check;
promissory note; shares of the Company's Common Stock which have been
beneficially owned by the optionee for at least six months or which were not
acquired directly or indirectly from the Company with a fair market value on the
exercise date equal to the aggregate exercise price of the shares purchased;
authorization for the Company to retain from the total number of shares as to
which the option is exercised a number of shares having a fair market value on
the exercise date equal to the aggregate exercise price of the shares issued; or
delivery of a properly executed notice and irrevocable instructions to a broker
to deliver promptly to the Company the amount of sale or loan proceeds required
to pay the exercise price. The Administrator may also authorize payments by any
combination of the above methods or any other consideration and method of
payment permitted by law. In addition, the Stock Option Plan provides that the
Administrator, in its sole discretion, may assist any optionee in the exercise
of an option by permitting such optionee to pay the exercise price in
installments over a period of years.
Option Exercise. Each option may be exercised during the lifetime of the
optionee only by such optionee or in the case of a nonstatutory stock option by
a transferee under a qualified domestic relations order. Options granted under
the Stock Option Plan generally vest in a series of installments at the rate of
12.5% of the total number of shares as of the six month period from the date of
grant, and approximately 2.08% each month thereafter. Under certain
circumstances, options may be exercised prior to vesting, subject to the
Company's right to repurchase shares subject to such option at the exercise
price paid per share. The Company's repurchase rights would terminate on a
vesting schedule identical to the vesting schedule of the exercised option.
Term. The Administrator determines the term of options. The term of a stock
option granted under the Stock Option Plan may not exceed ten years; provided,
however, that the term of an incentive stock option may not exceed five years
for 10% Stockholders.
In the event an optionee ceases to be employed or retained by the Company
for any reason other than death or disability, each outstanding option held by
such optionee will remain exercisable for the three-month period following the
date of such cessation of employment or service. Should the optionee's
employment or service terminate by reason of disability, each outstanding option
will remain exercisable for the six month period following the date of such
cessation of employment. Should the disability be deemed a permanent disability
or should the optionee's employment terminate by reason of death, options held
by such optionee will remain exercisable for 12 months following such cessation
of employment or service. The Board will have full power and authority to extend
the period of time for which the option is to remain exercisable following the
optionee's termination of service.
Adjustment Provisions
In the event any change is made to the Common Stock issuable under the
Stock Option Plan by reason of any stock split, stock dividend, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration, appropriate adjustments shall
be made to (i) the aggregate number and/or class of shares issuable under the
Stock Option Plan, (ii) the maximum number of shares for which any one person
may be granted options per calendar year and (iii) the aggregate number and/or
class of shares and the option price per share in effect under each outstanding
option in order to prevent the dilution or enlargement of benefits thereunder.
The adjustments determined by the Administrator shall be final, binding and
conclusive.
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Effect of Certain Corporate Events
In the event of a transaction involving a change in control of the Company,
the Stock Option Plan provides that each outstanding option will accelerate so
that each option will be fully exercisable for all of the shares subject to such
option immediately prior to the effective date of the transaction. In addition,
upon the occurrence of such a transaction, the Stock Option Plan provides that
all of the outstanding repurchase rights of the Company with respect to shares
of Common Stock acquired upon exercise of options granted under the Stock Option
Plan will terminate.
Duration and Amendment
Unless terminated sooner through action by the Board of Directors, the
Stock Option Plan shall terminate in 2002. The Board shall have complete and
exclusive power and authority to amend or modify the Stock Option Plan in any or
all respects whatsoever; provided, however, that no amendment or modification
shall, without the consent of the holders, adversely affect the rights and
obligations with respect to options outstanding under the Stock Option Plan; and
provided, further, that the Board shall not, without the approval of the
Company's stockholders, (i) increase the maximum number of shares issuable under
the Stock Option Plan or the maximum number of shares for which any person may
be granted options per calendar year, (ii) materially modify the eligibility
requirements for the grant of options under the Stock Option Plan, (iii)
materially increase the benefits accruing to Stock Option Plan participants or
(iv) increase the annual limitation on grants to participants under the Stock
Option Plan.
Restrictions on Transfer
An option is nontransferable by the optionee other than by will or the laws
of descent and distribution, provided, however, that certain nonstatutory stock
options may be transferable. An option is exercisable during the optionee's
lifetime only by the optionee or permitted transferee and in the event of the
optionee's death, by a person who acquires the right to exercise the option by
bequest or inheritance or by reason of death of the optionee or permitted
transferee.
Federal Income Tax Aspects
The following is a brief summary of the U.S. federal income tax
consequences of transactions under the Stock Option Plan based on federal income
tax laws in effect as of the date of this Proxy Statement. This summary is not
intended to be exhaustive and does not address all matters which may be relevant
to a particular optionee based on his or her specific circumstances. The summary
addresses only current U.S. federal income tax law and expressly does not
discuss the income tax law of any state, municipality or non-U.S. taxing
jurisdiction or gift, estate or other tax laws other than federal income tax
law. The Company advises all participants under the Stock Option Plan to consult
their own tax advisors concerning tax implications of option grants and
exercises and the disposition of stock acquired upon such exercises under the
Stock Option Plan.
Options granted under the Stock Option Plan may be either "incentive stock
options," which are intended to qualify for the special tax treatment provided
by Section 422 of the Code, or nonstatutory stock options, which will not so
qualify.
If an option granted under the Stock Option Plan is an incentive stock
option, the optionee will recognize no income upon grant of the incentive stock
option and incur no tax liability due to the exercise, except to the extent that
such exercise causes the optionee to incur alternative minimum tax (see
discussion below). The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an incentive stock option
regardless of the applicability of the alternative minimum tax. Upon the sale or
exchange of the shares acquired upon exercise more than two years after grant of
the option and one year after such exercise, any gain will be treated as
long-term capital gain. If both of these holding periods are not satisfied, the
optionee will recognize ordinary income equal to the difference between the
exercise price and the lower of the fair market value of the stock at the date
of the option exercise or the sale price of the stock. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the
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optionee. Any gain recognized on a disposition of the shares prior to completion
of both of the above holding periods in excess of the amount treated as ordinary
income will be characterized as long-term capital gain if the sale occurs more
than one year after exercise of the option or as short-term capital gain if the
sale is made earlier.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income under U.S. tax laws at the time he or she is granted a
nonstatutory stock option. However, upon its exercise, under U.S. tax laws the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired, the date of taxation under U.S. tax laws may be deferred unless
the optionee files an election with the Internal Revenue Service under Section
83(b) of the Code. The income recognized by an optionee who is also an employee
of the Company will be subject to income and employment tax withholding by the
Company by payment in cash by the optionee or out of the optionee's current
earnings. Upon resale of such shares by the optionee, any difference between the
sales price and the fair market value of the shares as of the date of exercise
of the option will be treated under U.S. tax laws as capital gain or loss, and
will qualify for long-term capital gain or loss treatment if the shares have
been held for more than one year from the date of exercise.
In computing alternative minimum taxable income, shares purchased upon
exercise of an incentive stock option are treated as if they had been acquired
by the optionee pursuant to exercise of a nonstatutory stock option. As a result
there is no taxable income to the holders when the holders are granted an
incentive stock option or when that option is exercised. However, the amount by
which the fair market value of the shares at the time of exercise exceeds the
option price will be an "item of adjustment" for the holders for purposes of the
alternative minimum tax. Gain realized by the holders on the sale of shares of
Common Stock acquired through exercise of an incentive stock option is taxable
at capital gains rates, and no tax deduction is available to the Company, unless
the holders dispose of the shares within (i) two years after the date of grant
of the option or (ii) within one year of the date the shares were transferred to
the holder. If the shares of Common Stock are sold or otherwise disposed of
before the end of the one-year and two-year periods specified above, the
difference between the option exercise price and the fair market value of the
shares on the date of the option's exercise will be taxed at ordinary income
rates, and the Company will be entitled to a deduction to the extent the holders
must recognize ordinary income. If such a sale or disposition takes place in the
year in which the holders exercise the option, the income the holders recognize
upon their sale or disposition of the shares will not be considered income for
alternative minimum tax purposes. Otherwise, if the holders sell or otherwise
dispose of the shares before the end of the one-year and two-year periods
specified above, the maximum amount that will be included as alternative minimum
tax income is the gain, if any, the holders recognize on the disposition of the
shares.
If an optionee pays alternative minimum tax, the amount of such tax may be
carried forward as a credit against any subsequent year's regular tax in excess
of the alternative minimum tax for such year.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code enacted as part of the Omnibus Budget
Reconciliation Act of 1993, provides that a publicly held corporation cannot
deduct compensation of a covered employee (the Chief Executive Officer and the
four other most highly compensated employees for the taxable year whose
compensation is required to be reported to stockholders under the Securities
Exchange Act of 1934, as amended) to the extent the compensation exceeds $1
million per tax year. There is a statutory exception to this limitation for
compensation based on the attainment of performance goals. Income derived from
stock options will qualify for this exception and thus be treated as
performance-based compensation if granted in accordance with the requirements
set forth in Section 162(m). The 1992 Stock Option Plan complies with those
requirements. However, because the 1992 Stock Option Plan is being amended to
increase the number of shares of Common Stock reserved for issuance under the
1992 Stock Option Plan, the Company is again required to obtain stockholder
approval for the amended plan in order for the options to continue to qualify as
performance-based compensation under Section 162(m).
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REQUIRED VOTE
Stockholders are requested in this Proposal 2 to approve the amendment to
the Stock Option Plan to increase the number of shares reserved for issuance
thereunder by 750,000 shares. The affirmative vote of the holders of a majority
of the shares present in person or represented by proxy and entitled to vote on
the proposal at the meeting will be required to approve the proposal.
Accordingly, abstentions and broker non-votes will have no effect on the outcome
of the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 2
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2001 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has served as the Company's independent auditors since 1992. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions from stockholders.
The Company has been informed by Ernst & Young LLP that neither the firm
nor any of its members or their associates has any direct financial interest or
material indirect financial interest in the Company or its affiliates.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
of Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board of Directors in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote on the proposal at the
meeting will be required to ratify the selection of Ernst & Young LLP.
Accordingly, abstentions and broker non-votes will have no effect on the outcome
of the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" PROPOSAL 3
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percentage of the outstanding
shares of the Common Stock, which, according to the information supplied to
Geron, are beneficially owned by (i) each person who, to Geron's knowledge based
exclusively on Schedules 13G filed with the Securities and Exchange Commission,
is the beneficial owner of more than 5% of the outstanding Common Stock, (ii)
each person who is currently a director, two of whom are also nominees for
election as a director, (iii) each Named Executive Officer, as defined on page
16 hereof, and (iv) all current directors and executive officers as a group.
Except for information based on Schedules 13G, as indicated in the footnotes,
beneficial ownership is stated as of March 26, 2001. Except to the extent
indicated in the footnotes to the following table, to Geron's knowledge, the
person or entity listed has sole voting or dispositive power to the shares which
are deemed beneficially owned by such person or entity.
BENEFICIAL OWNERSHIP(1)
-----------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- --------- ----------
DIRECTORS/NOMINEES AND NAMED EXECUTIVE OFFICERS:
Alexander E. Barkas, Ph.D.(2)............................... 126,578 *
Ronald W. Eastman(3)........................................ 298,485 1.36%
Edward V. Fritzky(4)........................................ 33,100 *
Thomas D. Kiley, Esq.(5).................................... 85,900 *
Gary L. Neil(6)............................................. 46,750 *
Robert B. Stein, M.D., Ph.D.(7)............................. -- *
John P. Walker(8)........................................... 25,200 *
David J. Earp, J.D., Ph.D.(9)............................... 38,866 *
David L. Greenwood(10)...................................... 212,474 *
Calvin B. Harley, Ph.D.(11)................................. 201,020 *
Thomas B. Okarma, Ph.D., M.D.(12)........................... 335,618 *
Richard L. Tolman, Ph.D.(13)................................ 39,895 *
All directors and executive officers as a group (15
persons).................................................. 1,515,527 6.55%
5% BENEFICIAL HOLDERS:
3i plc(14).................................................. 1,195,000 5.49%
91 Waterloo Road
London, United Kingdom SE1 8XP
RGC International Investors, LDC(15)........................ 2,393,230 10.68%
251 Saint Asaphs Road, 3 Bala Plaza East, Suite 501
Bala Cynwyd, PA 19004
---------------
* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of March 26, 2001
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of each other person.
The persons named in this table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and except as indicated
in the other footnotes to this table.
(2) Includes 28,593 shares held directly by Alexander E. Barkas, 882 shares
held by Lynda Wijcik, the spouse of Dr. Barkas, and 97,103 shares issuable
upon the exercise of outstanding options held by Dr. Barkas exercisable
within 60 days of March 26, 2001.
(3) Includes an aggregate of 13,000 shares held by Patricia Eastman, the spouse
of Ronald W. Eastman, as custodian for Mr. Eastman's three minor children.
Also includes 65,441 shares held directly by Mr. Eastman and 220,044 shares
issuable upon the exercise of outstanding options held by Mr. Eastman
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exercisable within 60 days of March 26, 2001. Mr. Eastman separated
employment from the Company in July 1999 but has continued as a director
until his resignation from the Board, effective May 18, 2001.
(4) Represents 33,100 shares issuable upon the exercise of outstanding options
held by Edward V. Fritzky exercisable within 60 days of March 26, 2001.
(5) Includes 7,352 shares held directly by Thomas D. Kiley, 9,705 shares held
by the Kiley Family Partnership and 14,302 shares held by the Thomas D.
Kiley and Nancy L.M. Kiley Revocable Trust under Agreement dated August 7,
1981. Also includes 54,541 shares issuable upon the exercise of outstanding
options held by Mr. Kiley exercisable within 60 days of March 26, 2001.
(6) Represents 46,750 shares issuable upon the exercise of outstanding options
held by Gary L. Neil exercisable within 60 days of March 26, 2001. Mr. Neil
passed away in February 2001.
(7) Represents no shares issuable upon the exercise of outstanding options held
by Robert B. Stein exercisable within 60 days of March 26, 2001.
(8) Represents 25,200 shares issuable upon the exercise of outstanding options
held by John P. Walker exercisable within 60 days of March 26, 2001.
(9) Includes 2,721 shares held directly by David J. Earp and 36,145 shares
issuable upon the exercise of outstanding options held by Dr. Earp
exercisable within 60 days of March 26, 2001.
(10) Represents 212,474 shares issuable upon the exercise of outstanding options
held by David L. Greenwood exercisable within 60 days of March 26, 2001.
(11) Includes 12,217 shares held by the Harley Family Trust and 188,803 shares
issuable upon the exercise of outstanding options held by Dr. Harley
exercisable within 60 days of March 26, 2001.
(12) Represents 335,618 shares issuable upon the exercise of outstanding options
held by Thomas B. Okarma exercisable within 60 days of March 26, 2001.
(13) Represents 39,895 shares issuable upon the exercise of outstanding options
held by Richard L. Tolman exercisable within 60 days of March 26, 2001.
(14) Based on information obtained from transfer agent.
(15) Based on Schedule 13G filed by RGC International Investors, LDC.
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EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding the annual and
long-term compensation for services rendered to Geron in all capacities for the
fiscal years ended December 31, 2000, 1999 and 1998 of those persons who were,
at December 31, 2000, (i) the chief executive officer, (ii) the other four most
highly compensated executive officers whose annual salary and bonuses exceeded
$100,000 or (iii) any other executive officer who would have qualified under
sections (i) or (ii) of this paragraph but for the fact that the individual was
not serving as an executive officer of the registrant at the end of the 2000
fiscal year (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------
--------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(#)
--------------------------- ---- --------- -------- --------------- ---------- -------------------
Thomas B. Okarma, M.D., Ph.D.(1).... 2000 $300,000 $95,000 $ -- $ -- --
President and Chief Executive 1999 277,590 41,540 -- -- 335,000
Officer 1998 231,615 60,180 -- -- 370,000
David J. Earp, J.D., Ph.D.(2)....... 2000 205,000 24,600 -- -- --
Vice President of Intellectual 1999 51,250 26,440 3,000(3) -- 85,000
Property
David L. Greenwood.................. 2000 250,000 30,000 -- -- --
Chief Financial Officer, 1999 240,000 35,900 12,000(4) -- 95,000
Senior Vice President of Corporate 1998 205,000 62,280 30,000(5) -- 241,341
Development, Treasurer, and
Secretary
Calvin B. Harley, Ph.D. ............ 2000 239,200 23,900 -- -- --
Chief Scientific Officer 1999 239,200 35,880 -- -- 45,000
1998 223,750 58,190 -- -- 194,805
Richard L. Tolman, Ph.D.(6)......... 2000 185,000 18,500 -- -- --
Vice President of Drug Discovery 1999 76,250 27,170 51,411(7) -- 40,000
---------------
(1) Dr. Okarma joined the Company in December 1997. He was promoted to President
and Chief Executive Officer in July 1999.
(2) Dr. Earp joined the Company in June 1999. He was promoted to Vice President
of Intellectual Property in October 1999.
(3) Other annual compensation consists of monthly housing expenses of $1,500 per
month.
(4) Other annual compensation consists of monthly housing expenses of $1,000 per
month.
(5) Other annual compensation consists of monthly housing expenses of $2,500 per
month.
(6) Dr. Tolman joined the Company in December 1998. He was promoted to Vice
President of Drug Discovery in August 1999.
(7) Other annual compensation consists of monthly housing expenses of $2,000 per
month and moving expenses.
STOCK OPTION GRANTS IN FISCAL YEAR 2000
No stock options were granted to the Chief Executive Officer and the Named
Executive Officers during the year ended December 31, 2000. No stock
appreciation rights were granted during the year.
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AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2000 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to stock options
exercised during the year ended December 31, 2000 by the Chief Executive Officer
and Named Executive Officers and unexercised stock options held as of the end of
such fiscal year by such persons:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS AT
SHARES YEAR-END(2)($) FISCAL YEAR-END(3)($)
ACQUIRED ON VALUE ----------------------- -------------------------
NAME EXERCISE(#) REALIZED(1)($) VESTED UNVESTED VESTED UNVESTED
---- ----------- -------------- ---------- ---------- ----------- -----------
Thomas B. Okarma, Ph.D.,
M.D. ..................... -- $ -- $271,032 $348,968 $2,275,703 $2,244,177
David J. Earp, J.D.,
Ph.D. .................... 5,000 131,800 23,229 56,771 114,862 268,928
David L. Greenwood.......... 40,000 1,069,949 177,678 154,674 1,746,017 1,210,630
Calvin B. Harley, Ph.D. .... 5,000 116,215 164,882 106,406 1,776,902 926,735
Richard L. Tolman, Ph.D. ... -- -- 28,333 46,667 126,471 200,754
---------------
(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 under 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 changes 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 29,
2000, quoted on the Nasdaq National Market ($15.44 per share), minus the per
share exercise price, multiplied by the number of shares underlying the
option.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS
The Company does not have any employment agreements with any of the Named
Executive Officers.
In the event of a change in control of the Company, the 1992 Stock Option
Plan provides that each outstanding option will accelerate so that each option
will be fully exercisable for all of the shares subject to such option
immediately prior to the effective date of the transaction. In addition, upon
the occurrence of such transaction, the Stock Option Plan provides that all of
the outstanding repurchase rights of the Company with respect to shares of
Common Stock acquired upon exercise of options granted under the 1992 Stock
Option Plan will terminate.
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COMPENSATION COMMITTEE REPORT(1)
In 2000, the Compensation Committee of the Board of Directors (the
"Committee") consisted of Dr. Barkas and Mr. Walker, neither of whom is an
officer or an employee of the Company. The Committee is responsible for making
recommendations and taking actions concerning salaries and incentive
compensation of officers and employees of the Company, including the award of
stock options under the Company's stock option plan. In particular, the
Committee evaluates the performance of management and determines the
compensation of the Chief Executive Officer and other executive officers on an
annual basis. Executive officers who are also directors are not present during
the discussion of their compensation.
PHILOSOPHY
The Company's executive compensation philosophy is to attract and retain
executive officers capable of leading the Company to fulfillment of its business
objectives by offering competitive compensation opportunities that reward
individual contributions as well as corporate performance. Accordingly, the
Company's executive compensation policies include:
- competitive pay practices, taking into account the pay practices of life
science and pharmaceutical companies with which the Company competes for
talented executives and are included in the Nasdaq-Pharmaceutical Index;
- annual incentive programs which are designed to encourage executives to
focus on the achievement of specific short-term corporate goals as well
as longer-term strategic objectives; and
- equity-based incentives designed to motivate executives over the long
term, to align the interests of management and stockholders and to ensure
that management is appropriately rewarded for achievements which benefit
the Company's stockholders.
In the biopharmaceutical industry, many traditional measures of corporate
performance, such as earnings per share or sales growth, may not readily apply
in reviewing performance of executives. Because of the Company's current stage
of development, the Committee evaluates other indications of performance, such
as progress of the Company's research and development programs and corporate
development activities, as well as the Company's success in securing capital
sufficient to enable the Company to continue research and development
activities. These considerations necessarily involve an assessment by the
Committee of individual and corporate performance. In addition, total
compensation paid by the Company to its executive officers is designed to be
comparable to compensation packages paid to the management of other companies of
comparable size in the biopharmaceutical industry. Toward that end, the
Committee may review both independent survey data as well as data gathered
internally.
EXECUTIVE OFFICER COMPENSATION
Compensation for each of the Company's executive officers, including the
Chief Executive Officer, generally consists of three elements: a cash salary, a
cash incentive bonus and stock option grants with exercise prices generally set
at the fair market value at the time of the grant. Base salaries are determined
at the beginning of the fiscal year, whereas cash 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 and prospects for the Company.
The Company has used the grant of options under its 1992 Stock Option Plan
to underscore the common interests of stockholders and management. Options
granted to executive officers are intended to provide a
---------------
(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
Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
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21
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.
In January 2001, the Committee met to evaluate the Company and individual
performance against the goals for 2000. These goals included the progressive
development of the Company's scientific programs, establishment of collaborative
partnerships and the obtainment of additional funding for the Company's
operations. The Committee determined that the Company successfully achieved many
of its objectives. As a result, based on corporate performance, the Committee
recommended that individual executive officers receive cash bonuses, depending
on the Committee's assessment of individual performance, of up to 20% of such
officer's eligible 2000 compensation.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the end of 2000, the Committee increased the base salary of Dr. Okarma
by approximately 14%. Dr. Okarma's salary had not been adjusted since July 1999
when he was promoted to President and Chief Executive Officer. Dr. Okarma's
contributions to the performance of the Company included continued development
of the Company's research programs as well as strategy and structure for product
development of the Company's technology platforms. Dr. Okarma's salary was also
reviewed in comparison to compensation paid to chief executive officers of other
companies in the biopharmaceutical industry. In making its determination with
respect to the bonus to be awarded to Dr. Okarma for 2000, the Committee's
assessment was that Dr. Okarma had significant impact in achieving company
performance objectives for 2000.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the U.S. Internal Revenue Code limits the tax
deductibility by a corporation of compensation in excess of $1 million paid to
any of its five most highly compensated executive officers. However,
compensation which qualifies as "performance-based" is excluded from the $1
million limit if, among other requirements, the compensation is payable only
upon attainment of pre-established, objective performance goals under a plan
approved by stockholders.
The Compensation Committee does not presently expect total cash
compensation payable for salaries to exceed the $1 million limit for any
individual executive. Having considered the requirements of Section 162(m), the
Compensation Committee believes that stock option grants to date meet the
requirement that such grants be "performance-based" and are, therefore, exempt
from the limitations on deductibility. The Compensation Committee will continue
to monitor the compensation levels potentially payable under the Company's cash
compensation programs, but intends to retain the flexibility necessary to
provide total cash compensation in line with competitive practice, the Company's
compensation philosophy and the Company's best interests.
Alexander E. Barkas, Ph.D. John P. Walker
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PERFORMANCE GRAPH(1)
The following graph compares total stockholder returns of the Company since
its initial public offering of Common Stock on July 31, 1996 to two indices: the
Nasdaq CRSP Total Return Index for the Nasdaq Stock Market-U.S. Companies (the
"Nasdaq-US") and the Nasdaq Pharmaceutical Index (the "Nasdaq-Pharmaceutical").
The total return for the Company's stock and for each index assumes the
reinvestment of dividends, although dividends have never been declared on the
Company's stock, and is based on the returns of the component companies weighted
according to their capitalizations as of the end of each monthly period. The
Nasdaq-US tracks the aggregate price performance of equity securities of U.S.
companies traded on the Nasdaq National Market (the "NNM"). The
Nasdaq-Pharmaceutical tracks the aggregate price performance of equity
securities of pharmaceutical companies traded on the NNM. The Company's Common
Stock is traded on the NNM and is a component of both the Nasdaq-US and the
Nasdaq-Pharmaceutical.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE
THE COMPANY'S INITIAL PUBLIC OFFERING ON JULY 31, 1996(2)
[PERFORMANCE GRAPH]
NASDAQ US NASDAQ PHARM GERON
--------- ------------ -----
07/31/96 100 100 100
09/30/96 114 115 90
12/31/96 119 111 171
03/31/97 113 106 126
06/30/97 133 114 97
09/30/97 156 128 140
12/31/97 146 115 106
03/31/98 171 126 160
06/30/98 176 117 121
09/30/98 159 110 79
12/31/98 206 146 140
03/31/99 231 161 129
06/30/99 253 164 135
09/30/99 259 188 135
12/31/99 383 275 163
03/31/00 430 338 358
06/30/00 374 375 413
09/29/00 344 412 366
12/29/00 230 342 199
(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
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
July 31, 1996. The cumulative total return on the Company's stock has been
computed based on an initial price of $7.75 per share, the price at which
the Company's shares closed on the first day of trading.
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23
AUDIT COMMITTEE REPORT(1)
The Audit Committee of Geron Corporation's Board of Directors is comprised
of independent directors as required by the listing standards of Nasdaq. The
Audit Committee operates pursuant to a written charter adopted by the Board of
Directors, a copy of which is attached to this Proxy Statement as Appendix A.
The role of the Audit Committee is to oversee the Company's financial
reporting process on behalf of the Board of Directors. Management of the Company
has the primary responsibility for the Company's financial statements as well as
the Company's financial reporting process, principles and internal controls. The
independent auditors are responsible for performing an audit of the Company's
financial statements and expressing an opinion as to the conformity of such
financial statements with generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed the audited
financial statements of the Company as of and for the year ended December 31,
2000 with management and the independent auditors. 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), as
currently in effect. In addition, 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. The Audit Committee has also considered
whether the independent auditor's provision of non-audit services to the Company
is compatible with maintaining the auditor's independence.
The members of the Audit Committee are not engaged in the accounting or
auditing profession and, consequently, are not experts in matters involving
auditing or accounting. In the performance of their oversight function, the
members of the Audit Committee necessarily relied upon the information,
opinions, reports and statements presented to them by management of the Company
and by the independent auditors. As a result, the Audit Committee's oversight
and the review and discussions referred to above do not assure that management
has maintained adequate financial reporting processes, principles and internal
controls, that the Company's financial statements are accurate, that the audit
of such financial statements has been conducted in accordance with generally
accepted auditing standards or that the Company's auditors meet the applicable
standards for auditor independence.
Based on the reports and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000, for filing with the Securities and Exchange Commission.
Submitted on February 23, 2001 by the members of the Audit Committee of the
Company's Board of Directors.
Alexander E. Barkas, Ph.D.
Thomas D. Kiley, Esq.
John P. Walker
---------------
(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
Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
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24
INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP, our independent accountants for the fiscal
year ended December 31, 2000, was selected by the Board of Directors, upon
recommendation of the Audit Committee, to act in the same capacity for the
fiscal year ending December 31, 2001. The Company has been informed by Ernst &
Young LLP that neither the firm nor any of its members or their associates has
any direct financial interest or material indirect financial interest in the
Company or its affiliates.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions from the
stockholders.
AUDIT FEES
The aggregate fees billed for professional services rendered by Ernst &
Young LLP for the audit of the Company's annual financial statements for the
2000 fiscal year and the reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for the 2000 fiscal year were $97,600.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not render any professional services to the Company
of the type described in Rule 2-01(c)(4)(ii) of Regulation S-X during the 2000
fiscal year.
ALL OTHER FEES
The aggregate fees billed for services rendered by Ernst & Young LLP other
than fees for the services referenced under the captions "Audit Fees" and
"Financial Information Systems Design and Implementation Fees," during the 2000
fiscal year were $144,702. The Audit Committee of the Company's Board of
Directors has concluded that the provision of these non-audit services is
compatible with maintaining Ernst & Young LLP's independence.
CERTAIN TRANSACTIONS
In December 1993, the Company provided an interest-free loan to Calvin B.
Harley, Chief Scientific Officer, in the principal amount of $150,000, due
December 1, 1996, pursuant to a note secured by a second deed of trust to Dr.
Harley's residence in Palo Alto, California. On December 1, 1996, the Company
agreed to extend the due date of the interest-free loan to December 31, 1998. In
February 1999, the Company agreed to restructure the loan and extend the due
date to December 31, 2002. The loan will be paid through annual installments of
$37,500. As of December 31, 2000, the outstanding balance on this loan was
$87,500.
In August 1999, the Company provided an interest-free loan to David J.
Earp, Vice President of Intellectual Property, in the principal amount of
$100,000 due in two installments: one-half of the principal balance in August
2002 and the remainder in August 2003. As of December 31, 2000, the outstanding
balance on this loan was $100,000.
In addition, the Company has entered into consulting arrangements with
Messrs. Kiley and Walker. Also, the Board accelerated the vesting schedule for
options previously granted to Mr. Neil and extended the term of exercisability
for Mr. Neil's outstanding options and Mr. Eastman's outstanding options. See
"Compensation of Directors."
The Company has entered into indemnity agreements with all of its officers
and directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines, settlements he or she may be
required to pay in actions or proceedings which he or she is or may be made a
party by reason for his position as a director, officer or other agent of the
Company, and otherwise to the full extent permitted under Delaware law and the
Company's Bylaws.
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25
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities (collectively "Reporting Persons"), to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Reporting Persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that during fiscal year ended
December 31, 2000, all Reporting Persons complied with the applicable filing
requirement, except that (i) Mr. Eastman failed to timely file two Form 4's
reporting twenty-one transactions, (ii) Dr. Harley failed to timely file a Form
4 reporting four transactions, (iii) Mr. Greenwood failed to timely file a Form
4 reporting twelve transactions, (iv) Mr. Neil failed to timely file a Form 4
reporting one transaction, and (v) Dr. Stein failed to timely file a Form 4
reporting twenty-three transactions. All of such late or incorrect reports were
ultimately filed or were corrected in subsequent filings.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The Company expects to hold its 2002 Annual Meeting of Stockholders in May
2002. All proposals of stockholders intended to be presented at the 2002 Annual
Meeting of Stockholders must be directed to the attention of Geron's Secretary,
at the address set forth on the first page of this proxy statement, so that it
is received by December 14, 2001, if they are to be considered for possible
inclusion in the proxy statement and form of proxy used in connection with such
meeting. In compliance with the Securities Exchange Act Rule 14a-8, stockholders
wishing to submit proposals or director nominations that are not to be included
in such proxy statement and proxy must do so not less than 10 and nor more than
60 days prior to the date of the meeting. In addition, the Company's Bylaws
provide for notice procedures to recommend a person for nomination as a director
and to propose business to be considered by stockholders at a meeting. Copies of
the Company's Bylaws may be obtained from Geron's Secretary.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ DAVID L. GREENWOOD
DAVID L. GREENWOOD
Secretary
March 28, 2001
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APPENDIX A
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall be composed of Directors who are
independent of the management of Geron Corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The Audit Committee shall provide assistance to the corporate Directors in
fulfilling their responsibility to the stockholders, potential stockholders, and
investment community relating to corporate accounting, reporting practices of
Geron Corporation, and the quality of the financial reports of Geron
Corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the Directors, the
independent auditors and the financial management of Geron Corporation.
Responsibilities
In carrying out its responsibilities, the Audit Committee will act to
ensure to the Directors and stockholders that the corporate accounting and
reporting practices of Geron Corporation are in accordance with all requirements
and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
- review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of Geron Corporation and its
divisions and subsidiaries.
- review with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of Geron Corporation, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of such internal controls to
expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper.
- review with financial management and the independent auditors the results
of their timely analysis of significant financial reporting issues and
practices, including changes in, or new adoptions of, accounting
principles and disclosure practices. Also review with financial
management and the independent auditors their qualitative judgments about
the appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be used, and
particularly, the degree of aggressiveness or conservatism of the
Company's accounting principles and underlying estimates.
- report the results of the annual audit to the Board of Directors. If
requested by the Board, invite the independent auditors to attend the
full Board of Directors meeting to assist in reporting the results of the
annual audit or to answer other Directors' questions (alternatively, the
other Directors, particularly the other independent Directors, may be
invited to attend the Audit Committee meeting during which the results of
the annual audit are reviewed).
- review the financial statements contained in the annual report to
stockholders with management and independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the stockholders. Any changes
in accounting principles should be reviewed.
- provide sufficient opportunity for the independent auditors to meet with
members of the Audit Committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of Geron Corporation's financial, accounting, and
A-1
27
auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.
- submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each Committee meeting with, the Board of
Directors.
- investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
A-2
28
GERON CORPORATION
1992 STOCK OPTION PLAN
(AS AMENDED THROUGH FEBRUARY 2001)
I. PURPOSES OF THE PLAN
This 1992 Stock Option Plan (the "Plan") is intended to promote the
interests of Geron Corporation, a Delaware corporation (the "Corporation"), by
providing a method whereby eligible individuals who provide valuable services to
the Corporation (or its parent or subsidiary corporations) may be offered
incentives and rewards which will encourage them to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
and continue to render services to the Corporation (or its parent or subsidiary
corporations).
For purposes of the Plan, the following provisions shall be applicable
in determining the parent and subsidiary corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to be a
parent corporation of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION OF THE PLAN
A. A Committee comprised of non-employee members of the Board who
satisfy the requirements of Rule 16b-3 of the Securities Exchange Act of 1934
(the "1934 Act") as it is then in effect to exempt stock awards made hereunder
from the short-swing profit recovery rules of Section 16(b) of the 1934 Act (the
"Primary Committee") shall have sole and exclusive authority to administer the
Plan with respect to Section 16 Insiders.
B. Administration of the Plan with respect to all other persons eligible to
participate in the Plan may, at the Board's discretion, be vested in the Primary
Committee or a second committee comprised of one or more Board members ( the
"Secondary Committee"), or the Board may retain the power to administer the Plan
with respect to all
1
29
such persons. The members of the Secondary Committee may be individuals who are
Employees eligible to receive option grants under the Plan or any stock option,
stock appreciation, stock bonus or other stock plan of the Corporation (or any
Parent or Subsidiary) or who have any other business relationship with the
Company outside their roles as members of the Board.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the provisions of the
Plan and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan under its jurisdiction or any option
thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any grants under the Plan.
III. ELIGIBILITY FOR OPTION GRANTS
A. The persons eligible to receive option grants under the Plan are as
follows:
(i) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations);
(ii) the non-employee members of the Board or the non-employee
members of the board of directors of any parent or subsidiary corporation; and
(iii) those Consultants who provide valuable services to the
Corporation (or its parent or subsidiary corporations).
B. Each Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each such grant, whether the granted option is to be an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option not intended
to meet such requirements, the time
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or times at which each such option is to become exercisable, and the maximum
term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The aggregate
number of shares which may be issued over the term of the Plan shall not exceed
6,994,362 shares. The total number of shares issuable under the Plan shall be
subject to adjustment from time to time in accordance with the provisions of
this Section IV.
B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of the 1997, 1998,
1999, 2000 and 2001 calendar years by an amount equal to two percent (2%) of the
shares of Common Stock outstanding on December 31 of the immediately preceding
calendar year; but in no event shall any such annual increase exceed 300,000
shares.
C. No one person participating in the Plan may receive options for more
than 500,000 shares of Common Stock per calendar year, beginning with the 1996
calendar year.
D. Shares subject to outstanding options shall be available for
subsequent option grants under the Plan to the extent (i) options expire or
terminate for any reason prior to exercise in full and (ii) options are
cancelled in accordance with the cancellation-regrant provisions of Section VIII
of the Plan. Shares subject to outstanding options shall not be available for
subsequent option grants under the Plan to the extent options are surrendered in
accordance with the limited cash-out rights provisions of Section IX of the
Plan. Shares repurchased by the Corporation pursuant to its repurchase rights
under the Plan shall not be available for subsequent option grants.
E. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without receipt of consideration, appropriate adjustments shall be made to
(i) the aggregate number and/or class of shares issuable under the Plan, (ii)
the number of shares for which any one person may be granted options per
calendar year and (iii) the aggregate number and/or class of shares and the
option price per share in effect under each outstanding option in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.
V. TERMS AND CONDITIONS OF OPTIONS
A. Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees (as defined in subsection D.3 below) may only be granted non-statutory
options. Each granted option
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shall be evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however, that each such instrument shall comply with
and incorporate the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, be subject to the applicable
provisions of Section VI.
B. Option Price.
1. The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall the option price per share be less
than eighty-five percent (85%) of the Fair Market Value (as defined below) of a
share of Common Stock on the date of the option grant.
2. The option price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section X and the instrument
evidencing the grant, be payable in one or more of the forms specified below:
(i) cash or check drawn to the Corporation's order;
(ii) in shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date; or
(iii) to the extent the option in exercised for vested
shares, through a special sale and remittance procedure pursuant to which the
optionee is to provide irrevocable written instructions (I) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, an amount sufficient to cover the aggregate
option price payable for the purchased shares plus all applicable Federal, state
and local income and employment taxes required to be withheld by the Corporation
by reason of such purchase and (II) concurrently to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm in
order to effect the sale transaction.
For purposes of this subparagraph 2, the Exercise Date shall
be the first date on which there shall have been delivered to the Corporation
both written notice of the exercise of the option and, except to the extent such
sale and remittance procedure is utilized, payment of the option price for the
purchased shares.
3. The Fair Market Value of a share of Common Stock on any
relevant date under subparagraphs 1 or 2 above (and for all other valuation
purposes under the Plan) shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the Nasdaq National
Market, the Fair Market Value shall be the closing selling price of one share of
Common Stock on the date in question, as such price is reported by the National
Association of Securities Dealers through its Nasdaq system or any successor
system. If there is no closing selling price for
4
32
the Common Stock on the date in question, then the closing selling price on the
last preceding date for which such quotation exists shall be determinative of
Fair Market Value.
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question on the
stock exchange determined by the Plan Administrator to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-counter
market, or if the Plan Administrator determines that the value determined
pursuant to subparagraphs (i) and (ii) above does not accurately reflect the
Fair Market Value of the Common Stock, then such Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors as
the Plan Administrator shall deem appropriate, including one or more independent
professional appraisals.
C. Term and Exercise of Options.
Each option granted under the Plan shall be exercisable at such
time or times, during such period, and for such number of shares as shall be
determined by the Plan Administrator and set forth in the instrument evidencing
such option. No such option, however, shall have a maximum term in excess of ten
(10) years from the grant date and no Incentive Option granted to a 10%
Stockholder shall have a maximum term in excess of five (5) years from the grant
date. During the lifetime of the optionee, the option shall be exercisable only
by the optionee and shall not be assignable or transferable by the optionee
otherwise than by will or by the laws of descent and distribution.
D. Effect of Termination of Employment.
1. Except to the extent otherwise provided pursuant to
subparagraph 4 below, the following provisions shall govern the exercise period
applicable to any options held by the optionee at the time of cessation of
Service or death.
- Should the optionee cease to remain in Service for any
reason other than death or Disability, then the period during which each
outstanding option held by such optionee is to remain exercisable shall be
limited to the three (3)-month period following the date of such cessation of
Service.
- Should the optionee's Service terminate by reason of
Disability, then the period during which each outstanding option held by the
optionee is
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to remain exercisable shall be limited to the six (6)-month period following the
date of such cessation of Service. However, should such Disability be deemed to
constitute Permanent Disability, then the period during which each outstanding
option held by the optionee is to remain exercisable shall be extended by an
additional six (6) months so that the exercise period shall be limited to the
twelve (12)-month period following the date of the optionee's cessation of
Service by reason of such Permanent Disability. For the purposes of the Plan,
Disability shall mean the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute Permanent Disability in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months.
- Should the optionee die while holding one or more
outstanding options, then the period during which each such option is to remain
exercisable shall be limited to the twelve (12)-month period following the date
of the optionee's death. During such limited period, the option may be exercised
by the personal representative of the optionee's estate or by the person or
persons to whom the option is transferred pursuant to the optionee's will or in
accordance with the laws of descent and distribution.
- During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of vested
shares for which the option is exercisable on the date of the optionee's
cessation of Service. Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall terminate
and cease to be exercisable for any vested shares for which the option has not
been exercised. However, the option shall, immediately upon the optionee's
cessation of Service, terminate and cease to be outstanding with respect to any
option shares for which the option is not at that time exercisable or in which
the optionee is not otherwise at that time vested.
2. Under no circumstances shall any option be exercisable after
the specified expiration date of the option term.
3. For all purposes under the Plan, unless specifically provided
otherwise in the option agreement evidencing the option grant and/or the
purchase agreement evidencing the purchased shares, the optionee shall be deemed
to remain in Service for so long as such individual renders services on a
periodic basis to the Corporation or any parent or subsidiary corporation in the
capacity of an Employee, a non-employee member of the Board of Directors or a
consultant. The optionee shall be considered to be an Employee for so long as
such individual remains in the employ of the Corporation or one or more of its
parent or subsidiary corporations, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
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4. The Board shall have full power and authority to extend the
period of time for which the option is to remain exercisable following the
optionee's termination of Service from the three (3)-month (six (6) months in
the case of Disability or twelve (12) months in the case of death or Permanent
Disability) or shorter period set forth in the option agreement to such greater
period of time as the Board shall deem appropriate; provided, that in no event
shall such option be exercisable after the specified expiration date of the
option term.
E. Stockholder Rights. An optionee shall have none of the rights of a
stockholder with respect to the shares subject to the option until such
individual shall have exercised the option and paid the option price.
F. Repurchase Rights. The shares of Common Stock acquired upon the
exercise of options granted under the Plan may be subject to one or more
repurchase rights of the Corporation in accordance with the following
provisions:
1. The Plan Administrator may in its discretion determine that it
shall be a term and condition of one or more options exercised under the Plan
that the Corporation (or its assignees) shall have the right, exercisable upon
the optionee's cessation of Service, to repurchase at the option price all or
(at the discretion of the Corporation and with the consent of the optionee) part
of the unvested shares of Common Stock at the time held by the optionee. Any
such repurchase right shall be exercisable by the Corporation (or its assignees)
upon such terms and conditions (including the establishment of the appropriate
vesting schedule and other provision for the expiration of such right in one or
more installments over the optionee's period of Service) as the Plan
Administrator may specify in the instrument evidencing such right.
2. All of the Corporation's outstanding repurchase rights shall
automatically terminate upon the occurrence of any Corporate Transaction under
Section VII.
G. Limited Transferability of Options. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a Non-Statutory Option may
be assigned in accordance with the terms of a Qualified Domestic Relations
Order. The assigned option may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to such Qualified Domestic
Relations Order. The terms applicable to the assigned option (or portion
thereof) shall be the same as those in effect for the option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals
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who are Employees of the Corporation. Options which are specifically designated
as "non-statutory" options when issued under the Plan shall not be subject to
such terms and conditions.
A. Option Price. The option price per Share of the Common Stock subject
to an Incentive Option shall in no event be less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date of grant. If the
individual to whom the option is granted is the owner of stock (as determined
under Section 424(d) of the Internal Revenue Code) possessing ten percent (10%)
or more of the total combined voting power of all classes of stock of the
Corporation or any one of its parent or subsidiary corporations (such person to
be herein referred to as a 10% Stockholder), then the option price per share
shall not be less than one hundred and ten percent (110%) of the Fair Market
Value of one share of Common Stock on the grant date.
B. Dollar Limitation. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Corporation or its parent or subsidiary corporations) may for the first time
become exercisable as incentive stock options under the Federal tax laws during
any one calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability thereof as incentive stock options under the
Federal tax laws shall be applied on the basis of the order in which such
options are granted.
Except as modified by the preceding provisions of this Section
VI, all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.
VII. CORPORATE TRANSACTIONS
A. In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State of the Corporation's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which all of the Corporation's outstanding voting stock
is transferred to the acquiring entity or its wholly-owned subsidiary,
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then each option outstanding under the Plan shall automatically accelerate so
that each such option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to such option and may be exercised for any or all of
those shares as fully-vested shares of Common Stock.
B. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extent assumed by the successor Corporation (or parent thereof).
C. Each outstanding option which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would be issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction, and appropriate adjustments shall also be made to
the option price payable per share, provided the aggregate option price payable
for such securities shall remain the same. Appropriate adjustments shall also be
made to the class and number of securities available for issuance under the Plan
following the consummation of such Corporate Transaction.
D. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
E. The grant of options under this Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
VIII. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than eighty-five percent (85%) of Fair Market Value of the Common Stock on the
new grant date (or one hundred percent (100%) of such Fair Market Value in the
case of an Incentive Option or, in the case of an Incentive Option granted to a
10% Stockholder, not less than one hundred and ten percent (110%) of such Fair
Market Value).
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IX. CASH-OUT OF OPTIONS
A. Once the Corporation's outstanding Common Stock is registered under
Section 12(g) of the 1934 Act, one or more optionees subject to the short-swing
profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited cash-out rights to operate
in tandem with their outstanding options under the Plan. Any option with such a
limited right in effect for at least six (6) months shall automatically be
cancelled upon the acquisition of fifty percent (50%) or more of the
Corporation's outstanding Common Stock (excluding the Common Stock holdings of
officers and directors of the Corporation who participate in this Plan) pursuant
to a tender or exchange offer made by a person or group of related persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by or is under common control with the Corporation) which the Board
does not recommend the Corporation's stockholders to accept. In return for the
cancelled option, the optionee shall be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Cash-Out Price of the
shares of Common Stock in which the optionee is vested under the cancelled
option over (ii) the aggregate option price payable for such vested shares. The
cash distribution payable upon such cancellation shall be made within five (5)
days following the completion of such tender or exchange offer, and neither the
approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such cancellation and distribution.
B. For purposes of calculating the cash distribution, the Cash-Out Price
per share of the vested Common Stock subject to the cancelled option shall be
deemed to be equal to the greater of (i) the Fair Market Value per share on the
date of surrender, as determined in accordance with the valuation provisions of
subsection V.B.3, or (ii) the highest reported price per share paid in effecting
the tender or exchange offer. However, if the cancelled option is an Incentive
Option, then the Cash-Out Price shall not exceed the value per share determined
under clause (i) above.
C. The shares of Common Stock subject to any option cancelled for an
appreciation distribution in accordance with this Section IX shall not be
available for subsequent option grants under the Plan.
X. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or upon the vesting of such shares under the Plan shall
be subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by
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such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(i) Stock Withholding. The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
(ii) Stock Delivery. The election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
XI. LOANS
A. The Plan Administrator may assist any optionee (including an optionee
who is an officer or director of the Corporation) in the exercise of one or more
options granted to such optionee, including the satisfaction of any Federal,
state and local income and employment tax obligations arising therefrom, by
(i) authorizing the extension of a loan from the Corporation
to such optionee, or
(ii) permitting the optionee to pay the option price for the
purchased Common Stock in installments over a period of years.
B. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Loans or installment payments may be
granted with or without security or collateral. However, any loan made to a
consultant or other non-employee advisor must be secured by property other than
the purchased shares of Common Stock. In all events, the maximum credit
available to each optionee may not exceed the sum of (i) the aggregate option
price payable for the purchased shares plus (ii) any Federal, state and local
income and employment tax liability incurred by the optionee in connection with
such exercise.
C. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Board in its discretion deems appropriate.
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XII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the optionee any right to continue
in the service or employ of the Corporation (or any parent or subsidiary
corporation of the Corporation employing or retaining such optionee) for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any parent or subsidiary corporation of the
Corporation employing or retaining such optionee) or of the optionee, which
rights are hereby expressly reserved by each, to terminate the Service of the
optionee at any time for any reason, with or without cause.
XIII. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever; provided, however,
that no such amendment or modification shall, without the consent of the
holders, adversely affect the rights and obligations with respect to options at
the time outstanding under the Plan; and provided, further that the Board shall
not, without the approval of the Corporation's stockholders, (i) increase the
maximum number of shares issuable under the Plan or the maximum number of shares
for which any person may be granted options per calendar year, except for
permissible adjustments under Section IV, (ii) materially modify the eligibility
requirements for the grant of options under the Plan or (iii) materially
increase the benefits accruing to Plan participants.
B. Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one (1) year thereafter such amendment is approved by
the Corporation's stockholders and (ii) each option granted is not to become
exercisable, in whole or in part, at any time prior to the obtaining of such
stockholder approval.
XIV. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective when adopted by the Board on May 21, 1992
and was approved by the Corporation's stockholders on July 8, 1992. On November
13, 1992 the Board adopted an increase in the maximum aggregate number of shares
issuable over the term of the Plan from 650,000 to 1,650,000 shares. The
increase was approved by the Corporation's stockholders on December 8, 1992. On
August 11, 1993 the Board adopted a further increase in the maximum aggregate
number of shares issuable over the term of the Plan from 1,650,000 to 2,150,000
shares. The increase was approved by the Corporation's stockholders on October
8, 1993. On January 13, 1994, the Board approved a further increase in the
aggregate number of shares issuable over the term of the Plan from 2,150,000 to
2,500,000 shares. The increase was approved by the Corporation's stockholders on
June 28, 1994. On September 14, 1994, the Board approved a further increase of
3,385,000 shares in the aggregate number of shares
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issuable over the term of the Plan bringing the new aggregate to 5,885,000
shares. The increase was approved by the Corporation's stockholders on October
5, 1994. On April 25, 1996, the Board approved a further increase of 2,800,000
shares in the aggregate number of shares issuable over the term of the Plan
bringing the new aggregate to 8,685,000 shares, subject to stockholder approval
of the 2,800,000-share increase within twelve (12) months of the date of
approval by the Board. On May 22, 1996, the Board approved certain amendments to
the Plan in connection with the filing of a Registration Statement for the
initial public offering of the Company's Common Stock, subject to shareholder
approval of such changes within twelve (12) months of the date of approval by
the Board. Options may be granted in reliance on the 2,800,000 share increase
prior to approval of such increase by the Corporation's stockholders but no
option granted in reliance on such increase shall become exercisable, in whole
or in part, unless and until the increase shall have been approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the increase, then
all options previously granted in reliance on such increase shall terminate and
no further options shall be granted. Subject to such limitation, the Plan
Administrator may grant options under the Plan at any time after the effective
date and before the date fixed herein for termination of the Plan. In July 1996,
in conjunction with the 3.4 for one reverse stock split, the aggregate number of
shares issuable over the term of the Plan became 2,554,412 shares from 8,685,000
shares. In April 1997, the Board approved a further increase of 800,000 shares
in the aggregate number of shares issuable over the term of the Plan. On May 23,
1997, the stockholders approved the amendment bringing the new aggregate number
of shares issuable over the term of the Plan to 3,555,219 shares, taking into
account the annual increase for 1997. In March 1998, the Board approved a
further increase of 500,000 shares in the aggregate number of shares issuable
over the term of the Plan. On May 29, 1998, the stockholders approved the
amendment bringing the new aggregate number of shares issuable over the term of
the Plan to 4,271,137 shares, taking into account the annual increase for 1998.
In March 1999, the Board approved a further increase of 600,000 shares in the
aggregate number of shares issuable over the term of the Plan. On May 28, 1999,
the stockholders approved the amendment bringing the new aggregate number of
shares issuable over the term of the Plan to 5,144,362, taking into account the
annual increase for 1999. In March 2000, the Board approved a further increase
of 500,000 shares in the aggregate number of shares issuable over the term of
the Plan. On May 26, 2000, the stockholders approved the amendment bringing the
new aggregate number of shares issuable over the term of the Plan to 5,944,362,
taking into account the annual increase for 2000. In February 2001, the Board
approved a further increase of 750,000 shares in the aggregate number of shares
issuable over the term of the Plan.
B. Unless sooner terminated in accordance with Section VII, the Plan
shall terminate upon the earlier of (i) the expiration of the ten (10) year
period measured from the date of the Board's adoption of the Plan, (ii) the date
on which all shares available for issuance under the Plan shall have been issued
pursuant to the exercise or surrender of options granted hereunder or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. If the date of termination is determined under clause (i) or
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41
(iii) above, then options outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such options.
XV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
XVI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Corporation of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
42
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GERON CORPORATION
2001 ANNUAL MEETING OF STOCKHOLDERS
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 March 28, 2001, and hereby appoints
Thomas B. Okarma and David L. Greenwood, or either 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 2001 Annual Meeting
of Stockholders of Geron Corporation to be held on May 18, 2001, at 9:00 a.m.,
at the headquarters of the Company at 230 Constitution Drive, Menlo Park,
California 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) thereof.
This proxy will be voted as directed or, if no contrary direction is
indicated, will be voted as follows: (1) for the election of two Class II
Directors to hold office until the annual meeting of stockholders in the year
2004; (2) for the approval and ratification of an amendment to the Company's
1992 Stock Option Plan to increase the aggregate number of shares of Common
Stock authorized for issuance thereunder by 750,000 shares; (3) for ratification
of the selection of Ernst & Young LLP as independent auditors for the fiscal
year ending December 31, 2001 and as said proxies deem advisable on such other
matters as may come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
43
[X] Please mark your votes as in this example.
1. Election of Class II Directors. [ ] FOR all nominees (except as
indicated) [ ] WITHHOLD authority to vote for all nominees
Nominees: Thomas D. Kiley and Edward V. Fritzky
If you wish to withhold authority to vote for any individual nominee, strike
a line through that individual's name.
2. To approve and ratify an amendment to the Company's 1992 Stock Option Plan to
increase the aggregate number of shares of Common Stock authorized for
issuance thereunder by 750,000 shares. [ ] FOR [ ] AGAINST [
] ABSTAIN
3. To ratify the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
SIGNATURE(s):
------------------------
DATE:
---------------------------
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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE.