Patent License Agreement

TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
Agreement No. 99-0027


LICENSE AGREEMENT


This Agreement is made effective the 23rd day of April, 1999, by and between Wisconsin Alumni Research Foundation (hereinafter called "WARF"), a nonstock, nonprofit Wisconsin corporation, and Geron Corporation (hereinafter called "Geron"), a corporation organized and existing under the laws of Delaware;


WHEREAS, WARF owns certain inventions that are described in the "Licensed Patents" defined below;


WHEREAS, WARF and Geron had previously entered into a license agreement, Agreement No. 95-0208 dated January 1, 1996, as amended on March 19, 1997 and March 1, 1998, (the "Previous License");


WHEREAS, WARF and Geron desire to enter into this Agreement to clarify and refine the agreement between the parties; and


WHEREAS, WARF and Geron agree that this Agreement shall supersede the Previous License in its entirety.


NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, the parties covenant and agree as follows:


Section 1. Definitions.


For the purpose of this Agreement, the Appendix A definitions shall apply.


Section 2. Grant.


A. License.


(i) WARF hereby grants to Geron an exclusive license, limited to the Licensed Field and the Licensed Territory, under the Licensed Patents to make, have made, develop, have developed, use, sell, offer for sale, and import Products.


(ii) WARF hereby grants to Geron an exclusive license, limited to the Licensed Field and the Licensed Territory, under the Licensed Patents to make, have made, develop, have developed, use, sell, offer for sale, and import Research Products.


(iii) WARF hereby grants to Geron a nonexclusive license, limited to the Licensed Territory, to use the Licensed Patents for internal research purposes. In the event that Geron identifies a research collaborator that Geron desires to obtain Materials for research purposes, Geron shall submit a written request to WARF asking that WARF arrange to transfer Materials to such research collaborator. WARF shall then enter into negotiations directly with such research collaborator using its standard Materials Transfer Agreement for the Materials and shall arrange for transfer of the Materials thereunder.


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B. Sublicenses.


(i) Geron may grant written sublicenses to third parties under the exclusive licenses granted herein. Any agreement granting a sublicense shall state that the sublicense is subject to the termination of this Agreement. Geron shall require that its sublicensee(s) comply with all requirements of this Agreement and Geron shall have the same responsibility for the activities of any sublicensee as if the activities were directly those of Geron.


(ii) In respect to sublicenses granted by Geron under this Section 2B, Geron shall pay to WARF an amount equal to what Geron would have been required to pay to WARF had Geron sold the amount of Products sold by such sublicensee. In addition, if Geron receives any fees, minimum royalties, or other payments in consideration for any rights granted under a sublicense, except for payments received by Geron upon achievement of the milestones set forth in Section 4E (provided that Geron makes payment to WARF upon achievement of such milestones pursuant to Section 4E), and such payments are not based directly upon the amount or value of Products sold by the sublicensee, then Geron shall pay WARF [...***...] percent ([...***...]%) of such payments in the manner specified in Section 4F. WARF recognizes that dollars received from sublicensees to fund research are not consideration for rights granted under the sublicense and as such research funds are not subject to sharing with WARF hereunder. However, Geron shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement without the express prior written permission of WARF. Both parties agree to act in good faith when negotiating the consideration to be paid for sublicensing and when assessing whether such consideration is subject to sharing with WARF under this Section 2B(ii).


C. First Option to Negotiate.


WARF hereby grants Geron the first option to negotiate an exclusive license for addition of cell types to the Licensed Field. Geron may exercise its option under this Section 2C by providing WARF with written notice of its desire to add a cell type to the License Field including a Development Plan detailing Geron's plan and timeline for bringing Products to market incorporating the new cell type and by paying WARF an upfront license fee to be negotiated in good faith between the parties factoring in commercially reasonable terms given the advancement of cell therapy in therapeutics and diagnostics and the value added by Geron. The terms of the exclusive license, other than the upfront license fee, shall be identical to the terms set forth in this Agreement, unless otherwise negotiated and agreed to by the parties. If the parties fail to agree on an upfront license fee for an additional cell type, WARF agrees that it will not offer such cell type to any third party on terms more favorable as a whole to such licensee than were offered to Geron hereunder for a period of [...***...] ([...***...]) months from the date Geron first exercised its option to add a cell type to the Licensed Field. In the context of this Agreement, "terms more favorable as a whole" shall mean that the combination of the commercial terms, for example the license fee, royalty rate, milestones, minimum royalties, and other fees required as consideration for the rights granted under the license are not more favorable when taken together than the package offered to Geron. The option to add cell types shall expire on [...***...] unless extended for an additional period by written agreement on terms mutually agreeable to the parties.


D. License to WARF.


To the extent permitted by applicable law, Geron hereby grants WARF (and to the University of Wisconsin - Madison) a nonexclusive, royalty-free, paid-up research license under any and all inventions hereafter made or acquired by Geron to the extent any such inventions are Improvements. Such license


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shall be nontransferable as long as Geron remains an existing and solvent entity but may be transferable upon bankruptcy or dissolution of Geron other than in the event of the sale of substantially all of Geron's assets pursuant to Section 8. "Improvements" shall mean any modification of an invention described in Licensed Patents which, if unlicensed, would infringe one or more claims of the Licensed Patents. Geron shall provide WARF with a written, enabling disclosure of each such invention (such as a U.S. patent application), unambiguously identifying it as an invention governed by this paragraph, within six (6) months of filing a patent application thereon.


Section 3. Development Plans and Reporting


Geron must provide WARF with a broad development plan (see Appendix E) outlining its general plan and timeline for developing Products in the Licensed Field. In addition, Geron shall provide WARF with a specific development plan, acceptable to WARF, including key milestones dates for submission of IND or comparable filing to the United States Food and Drug Administration or its foreign equivalent, date of NDA approval or comparable approval, and the projected date of first commercial sale for Products related to each cell type in the Licensed Field. Geron shall provide the development plan to WARF upon execution of this Agreement. Furthermore, Geron agrees to and warrants that: it has, or will obtain, the expertise necessary to independently evaluate the inventions of the Licensed Patents; it will establish and actively and diligently pursue the development plan to the end that the inventions of the Licensed Patents will be utilized to provide Products for sale. Within one month following the end of each calendar quarter ending on March 31, June 30, September 30 and December 31 and until commercial sales of Products begin, Geron will supply WARF with a written Development Report showing Geron's progress toward bringing Products to market in the Licensed Field. All development activities and strategies and all aspects of Product design and decisions to market and the like are entirely at the discretion of Geron, and Geron shall rely entirely on its own expertise with respect thereto. WARF's review of Geron's development plan and Development Reports shall be considered confidential information subject to the obligations set forth in Section 19 hereto and shall be solely to verify the existence of Geron's commitment to development activity and to assure compliance with Geron's obligations to utilize the inventions of the Licensed Patents to make Products available for sale in the marketplace, as set forth above. WARF may within thirty (30) days of its request, review all documentation and records relating to Geron's development of the cell lines. Geron shall make such records available at a single United States location. Such review may be performed by any employee of WARF, or any agent designated by WARF. The parties recognize that the development plans are likely to change as Geron's research and development of Products advances; therefore, the parties agree to negotiate in good faith with regard to any revisions to the development plans submitted to WARF. Failure to meet key milestones for development of Products set forth in the development plan shall be subject to review by WARF and may result in termination of the license under Section 7D for any cell types Geron cannot demonstrate diligence and commitment to developing.


Section 4. Consideration.


A. License Fee.


Geron agrees to pay to WARF a license fee comprised of $[...***...] cash; 100,000 options, granted pursuant to Geron's 1994 Stock Option Plan, a copy of which is attached hereto as Appendix F; provided that such options shall have an exercise period of ten years and that the strike price of said options shall be equal to the closing price of Geron stock as of the day prior to the effective date of this Agreement; and 20,000 shares of common stock within thirty (30) days after executing this Agreement as consideration for the exclusive rights granted in the Licensed Field hereunder. In the event that WARF is determined to be ineligible to participate in Geron's 1994 Stock Option Plan by a governmental agency or


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body, Geron agrees to replace such options with Shares of Geron's common stock having the equivalent value of the options issued to WARF within thirty (30) days of such determination. The value of the options shall be as of the date of issuance to WARF hereunder using the Black-Scholes Model for valuation of such options.


B. Extension of Patent Term.


Geron and WARF hereby agree that they will make all necessary filings and provide all necessary documentation to allow WARF to apply for an extension of the patent term for each of the Licensed Patents pursuant to 37 CFR 1.710 et seq.


C. Filing of Foreign Applications.


(i) Geron agrees to pay to WARF patent reimbursement to reimburse WARF for a portion of the costs associated with filing, prosecuting and maintaining the Licensed Patents. Geron has paid some patent reimbursement under the terms of the Previous License. However, Geron agrees to pay to WARF patent reimbursement of $[...***...] per United States patent application within thirty (30) days of adding a patent to Licensed Patents hereunder. In addition, Geron shall notify WARF of which countries outside the United States Geron desires foreign patent protection and Geron shall pay to WARF patent reimbursement of $[...***...] per PCT application and $[...***...] per patent application per country outside the United States upon nationalization from the PCT application. WARF reserves the right to file and maintain foreign patent applications in jurisdictions outside those requested by Geron at its own expense; however, for any jurisdiction in which WARF files patent applications without patent reimbursement from Geron, the exclusive license granted to Geron under this Agreement shall be converted into a nonexclusive license subject to all the terms of this Agreement.


(ii) WARF will prosecute all applications until WARF determines that continued prosecution is unlikely to result in the issuance of a patent in that country. WARF will timely provide copies of all patent communications with the US Patent Office or its foreign counterpart to Geron and allow Geron the opportunity to comment on the prosecution of the Licensed Patents and patent applications. However, if WARF decides to abandon prosecution of the application in a particular country, Geron shall be given notification that WARF is terminating prosecution in that country. If Geron desires to acquire rights in the application then WARF will cooperate with Geron as reasonably requested by Geron to facilitate acquisition of such rights.


D. Royalty.


(i) Geron agrees to pay to WARF as "earned royalties" a royalty calculated as a percentage of the Selling Price of Products in accordance with the terms and conditions of this Agreement. The royalty is deemed earned as of the earlier of the date the Product is actually sold and paid for, the date an invoice is sent by Geron, or the date a Product is transferred to a third party for any promotional reasons. The royalty shall remain fixed while this Agreement is in effect at a rate of [...***...] percent ([...***...]%) of the Selling Price for Therapeutic Products and [...***...] percent ([...***...]%) of the Selling Price for Diagnostic Products and Research Products.


(ii) If Geron must make payments to one or more third parties during any calendar year to obtain a license or similar right in the absence of which Geron could not legally make, use or sell the Products or Research Products, then Geron may deduct [...***...] percent ([...***...]%) of such third party payments from royalties payable to WARF with respect to that calendar year, provided that such deduction


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does not exceed [...***...] percent ([...***...]%) of the royalties payable to WARF under this Agreement during such calendar year.


E. Minimum Royalty and Milestone Payment.


(i) Geron agrees to pay to WARF a minimum royalty per calendar year or part thereof during which this Agreement is in effect starting in calendar year 2003, against which any earned royalty paid for the same calendar year will be credited. The minimum royalty shall be $[...***...] in 2003, $[...***...] in 2004, $[...***...] in 2005 and in each calendar year thereafter. The minimum royalty payment for a given year shall be due at the time payments are due for the calendar quarter ending on December 31. It is understood that the minimum royalties will apply on a calendar year basis, and that sales of Products requiring the payment of earned royalties made during a prior or subsequent calendar year shall have no effect on the annual minimum royalty due WARF for any given calendar year.


(ii) Geron further agrees to pay to WARF milestone payments as outlined below within thirty (30) days from the specified event set forth below whether achieved by Geron or its sublicensee(s). These payments are not creditable against running royalties or other payments due hereunder.


EVENT CASH OPTIONS SHARES --------------------------------------------------- -------------- ------------------------------- --------------------- IND or comparable regulatory filing for the first $[...***...] [...***...] options pursuant to [...***...] shares of Product developed from each cell type the 1994 Stock Option Plan Geron Common Stock --------------------------------------------------- -------------- ------------------------------- ------------ ...