11. STOCKHOLDERS' EQUITY

Warrants

As of December 31, 2013, the following warrants to purchase our common stock were outstanding and classified as equity:

Issuance Date	Exercise Price			Exercisable Date	Expiration Date

November 2011⁽¹⁾	$	2.32	461,382	November 2011	November 2021
August 2011⁽¹⁾	$	3.98	537,893	August 2011	August 2021
September 2009	$	9.00	150,000	September 2009	September 2014
April 2005	$	3.75	470,000	April 2005	April 2015


			1,619,275

(1): In connection with each disbursement under the loan agreement with CIRM, we were obligated to issue to CIRM a warrant to purchase Geron common stock. Each of the warrants and the underlying common stock were unregistered. We have no further obligations to issue any additional warrants to CIRM.

Equity Plans

2002 Equity Incentive Plan

The 2002 Equity Incentive Plan, or 2002 Plan, expired in May 2012. Upon the adoption of the 2011 Incentive Award Plan in May 2011 (see below), no further grants of options or stock purchase rights were made from the 2002 Plan. Options granted under the 2002 Plan expired no later than ten years from the date of grant. Option exercise prices were equal to 100% of the fair market value of the underlying common stock on the date of grant. Service-based stock options under the 2002 Plan generally vested over a period of four years from the date of the option grant, with a portion vesting after six months and the remainder vesting ratably over the remaining period. Other stock awards (restricted stock awards and restricted stock units) had variable vesting schedules which were determined by our board of directors on the date of grant.

2011 Incentive Award Plan

In May 2011, our stockholders approved the adoption of the 2011 Incentive Award Plan, or 2011 Plan. Our board of directors administers the 2011 Plan. The 2011 Plan provides for grants to employees (including officers and employee directors) of either incentive stock or nonstatutory stock options and stock purchase rights to employees (including officers and employee directors) and consultants (including non-employee directors). As of December 31, 2013, we had reserved an aggregate of 15,655,348 shares of our common stock for future grants of equity awards under the 2011 Plan. Pursuant to the terms of the 2011 Plan, any shares subject to outstanding stock options originally granted under the 2002 Plan or 1996 Directors' Stock Option Plan, or outstanding unvested restricted stock awards originally granted under the 2002 Plan, that expire or terminate for any reason prior to exercise or settlement or are forfeited because of the failure to meet a contingency or condition required to vest such shares shall become available for issuance under the 2011 Plan. Options granted under the 2011 Plan expire no later than ten years from the date of grant. Option exercise prices shall be equal to 100% of the fair market value of the underlying common stock on the date of grant. If, at the time we grant an option, the optionee directly or by attribution owns stock possessing more than 10% of the total combined voting power of all classes of our stock, the option price shall be at least 110% of the fair market value of the underlying common stock and shall not be exercisable more than five years after the date of grant.

We grant service-based stock options under our 2011 Plan that generally vest over a period of four years from the date of the option grant, with a portion vesting after six months and the remainder vesting ratably over the remaining period. Other stock awards (restricted stock awards and restricted stock units) have variable vesting schedules as determined by our board of directors on the date of grant.

Under certain circumstances, options may be exercised prior to vesting, subject to our right to repurchase shares subject to such option at the exercise price paid per share. Our repurchase rights would generally terminate on a vesting schedule identical to the vesting schedule of the exercised option. During 2013, we did not repurchase any shares under the 2011 Plan. As of December 31, 2013, no shares outstanding were subject to repurchase.

1996 Directors' Stock Option Plan

The 1996 Directors' Stock Option Plan, or 1996 Directors Plan, expired in July 2006 upon which no further option grants were made from the 1996 Directors Plan. The options granted under the 1996 Directors Plan were nonstatutory stock options and expire no later than ten years from the date of grant. The option exercise price was equal to the fair market value of the underlying common stock on the date of grant. Options to purchase shares of common stock generally were 100% vested upon grant, except for options granted upon first appointment to the board of directors, or First Option. The First Option vested annually over three years upon each anniversary date of appointment to the board of directors.

2006 Directors' Stock Option Plan

In May 2006, our stockholders approved the adoption of the 2006 Directors' Stock Option Plan, or 2006 Directors Plan, to replace the 1996 Directors Plan. As of December 31, 2013, we had reserved an aggregate of 551,902 shares of our common stock for future grants of equity awards under the 2006 Directors Plan. The 2006 Directors Plan provides for the automatic grant of the following types of equity awards.

First Director Option. Each person who becomes a non-employee director, whether by election by our stockholders or by appointment by our board of directors to fill a vacancy, will automatically be granted an option to purchase 70,000 shares of common stock on the date such person first becomes a non-employee director, or First Director Option. The First Director Option shall vest annually over three years upon each anniversary date of appointment to our board of directors.

Subsequent Director Option. Each non-employee director (other than any director receiving a First Director Option on the date of the annual meeting) will automatically be granted a subsequent option to purchase 35,000 shares of common stock, a Subsequent Director Option, on the date of the Annual Meeting of Stockholders in each year during such director's service on our board of directors. The Subsequent Director Option vests one year from the date of grant.

The exercise price of all options granted under the 2006 Directors Plan is equal to 100% of the fair market value of the underlying common stock on the date of grant. Options granted under the 2006 Directors Plan have a term of ten years from the date of grant.

Aggregate option and award activity for the 2002 Plan, 2011 Plan, 1996 Directors Plan and 2006 Directors Plan is as follows:

				Outstanding Options

	Shares Available For Grant			Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (In years)		Aggregate Intrinsic Value (In thousands)
Balance at December 31, 2012		13,557,771			17,811,506		$	4.05			$	2
Options granted		(6,366,000	)		6,366,000		$	1.57
Awards granted		(66,853	)		—		$	—
Options exercised		—			(1,960,245	)	$	3.35
Options canceled/forfeited		6,641,045			(6,641,045	)	$	4.25
Awards canceled/forfeited		2,441,287			—		$	—


Balance at December 31, 2013		16,207,250			15,576,216		$	3.04		6.83	$	33,798




Options exercisable at December 31, 2013					8,144,040		$	4.26		5.05	$	11,194




Options fully vested and expected to vest at December 31, 2013					15,122,068		$	3.08		6.77	$	32,402

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on Geron's closing stock price of $4.74 per share as of December 31, 2013, which would have been received by the option holders had all the option holders exercised their options as of that date.

There were no options granted with an exercise price below or greater than fair market value of our common stock on the date of grant in 2013, 2012 or 2011. As of December 31, 2013, 2012 and 2011, there were 8,144,040, 10,410,194 and 10,109,076 exercisable options outstanding at weighted average exercise prices per share of $4.26, $5.49 and $6.02, respectively.

The total pretax intrinsic value of stock options exercised during 2013, 2012 and 2011 was $2,787,000, $100 and $56,000, respectively. Cash received from the exercise of options in 2013, 2012 and 2011 totaled approximately $6,567,000, $1,000 and $184,000, respectively. No income tax benefit was realized from stock options exercised in 2013 since we reported an operating loss.

Information about stock options outstanding as of December 31, 2013 is as follows:

	Options Outstanding

Exercise Price Range	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (In years)
$1.10 - $1.50		4,627,834	$	1.42		8.57
$1.51 - $1.70		4,217,041	$	1.54		9.04
$1.71 - $6.39		4,067,162	$	3.78		6.16
$6.40 - $9.32		2,664,179	$	7.08		1.35


$1.10 - $9.32		15,576,216	$	3.04		6.83

Aggregate restricted stock activity for the 2002 Plan, 2011 Plan and 2006 Directors Plan is as follows:

			Weighted Average Grant Date Fair Value Per Share

Non-vested restricted stock at December 31, 2012	2,917,962		$	4.08	0.90
Granted	66,853		$	2.41
Vested	(134,091	)	$	3.77
Canceled/forfeited	(2,441,287	)	$	3.92


Non-vested restricted stock at December 31, 2013⁽¹⁾	409,437		$	4.84	0.82

(1): Includes 139,000 performance-based restricted stock awards that have not achieved certain strategic goals.

The total fair value of restricted stock that vested during 2013, 2012 and 2011 was $252,000, $936,000 and $7,402,000, respectively.

Employee Stock Purchase Plan

In July 1996, we adopted the 1996 Employee Stock Purchase Plan, or Purchase Plan, and as of December 31, 2013, we had reserved an aggregate of 1,200,000 shares of common stock for issuance under the Purchase Plan. As of December 31, 2013 and 2012, 936,596 and 843,610 shares have been issued under the Purchase Plan, respectively, since its adoption. As of December 31, 2013, 263,404 shares were available for issuance under the Purchase Plan.

Under the terms of the Purchase Plan, employees can choose to have up to 10% of their annual salary withheld to purchase our common stock. An employee may not make additional payments into such account or increase the withholding percentage during the offering period.

The Purchase Plan is comprised of a series of offering periods, each with a maximum duration (not to exceed 12 months) with new offering periods commencing on January 1st and July 1st of each year. The date an employee enters the offering period will be designated as the entry date for purposes of that offering period. An employee may only participate in one offering period at a time. Each offering period consists of two consecutive purchase periods of six months' duration, with the last day of such period designated a purchase date.

The purchase price per share at which common stock is purchased by the employee on each purchase date within the offering period is equal to 85% of the lower of (i) the fair market value per share of Geron's common stock on the employee's entry date into that offering period or (ii) the fair market value per share of Geron's common stock on the purchase date. If the fair market value of Geron's common stock on the purchase date is less than the fair market value at the beginning of the offering period, a new 12 month offering period will automatically begin on the first business day following the purchase date with a new fair market value.

Effective for offering periods beginning July 1, 2009 and thereafter, shares purchased under the Purchase Plan shall be registered and available for trading in an open market transaction one year from the date of purchase, and certificates evidencing such shares shall bear a restrictive legend.

Stock-Based Compensation for Employees and Directors

We measure and recognize compensation expense for all share-based payment awards made to employees and directors, including employee stock options, restricted stock awards and employee stock purchases related to the Purchase Plan, based on grant-date fair values for these instruments. We grant service-based stock options and restricted stock awards under our equity plans to employees, directors and consultants. The vesting period for employee options is generally four years. We use the Black Scholes option-pricing model to estimate the grant-date fair value of our stock options and employee stock purchases. The fair value for service-based restricted stock awards is determined using the fair value of our common stock on the date of grant.

Our board of directors has awarded to our employees and directors performance-based restricted stock awards and market-based restricted stock awards. These restricted stock awards are included in the restricted stock activity table above. We have not recognized any stock-based compensation expense for performance-based restricted stock awards in our consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 as the achievement of the specified performance criteria was not considered probable during that time. The fair value for market-based restricted stock awards is determined using a lattice valuation model with a Monte Carlo simulation. All market-based restricted stock awards have been canceled as of December 31, 2013 as the market conditions were not achieved within the specified performance period.

As stock-based compensation expense recognized in the consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures but at a minimum, reflects the grant-date fair value of those awards that actually vested in the period. Forfeitures have been estimated at the time of grant based on historical data and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

We recognize stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. The following table summarizes the stock-based compensation expense related to stock options, restricted stock awards and employee stock purchases for the years ended December 31, 2013, 2012 and 2011 which was allocated as follows:

	Year Ended December 31,

	2013		2012		2011
	(In thousands)
Research and development	$	1,741	$	2,336	$	5,799
Restructuring charges		28		107		174
General and administrative		2,666		2,868		9,276


Stock-based compensation expense included in operating expenses	$	4,435	$	5,311	$	15,249

Modifications to the post-termination exercise period of outstanding options held by certain members of our executive management team resulted in additional stock-based compensation expense of $205,000 for the year ended December 31, 2013 and have been reflected in the above table. Modifications to outstanding options held by our former Chief Executive Officer and Chief Financial Officer and certain members of our board of directors resulted in additional stock-based compensation expense in 2011 which have been reflected in the above table. In addition, stock-based compensation expense has been recognized for the modification of the post-termination exercise period for certain stock options previously granted to employees affected by the April 2013, December 2012 and November 2011 restructurings, which has been included in restructuring charges in our consolidated statements of operations. See Note 7 on Restructurings for further discussion of the restructurings.

The fair value of stock options granted in 2013, 2012 and 2011 has been estimated at the date of grant using the Black Scholes option-pricing model with the following assumptions:

	2013	2012	2011

Dividend yield	0%	0%	0%
Expected volatility range	0.742 to 0.792	0.631 to 0.740	0.629 to 0.660
Risk-free interest rate range	0.80% to 1.97%	0.81% to 1.25%	0.88% to 2.37%
Expected term	6 yrs	6 yrs	5 yrs

The fair value of employee stock purchases in 2013, 2012 and 2011 under the Purchase Plan has been estimated using the Black Scholes option-pricing model with the following assumptions:

	2013	2012	2011

Dividend yield	0%	0%	0%
Expected volatility range	0.506 to 1.391	0.458 to 0.774	0.278 to 0.584
Risk-free interest rate range	0.09% to 0.21%	0.06% to 0.21%	0.10% to 0.32%
Expected term range	6 mos to 12 mos	6 mos to 12 mos	6 mos to 12 mos

Dividend yield is based on historical cash dividend payments and Geron has paid no dividends to date. The expected volatility range is based on historical volatilities of our stock since traded options on Geron stock do not correspond to option terms and the trading volume of options is limited. The risk-free interest rate range is based on the U.S. Zero Coupon Treasury Strip Yields for the expected term in effect on the date of grant for an award. The expected term of options is derived from actual historical exercise and post-vesting cancellation data and represents the period of time that options granted are expected to be outstanding. The expected term of employees' purchase rights under the Purchase Plan is equal to the purchase period.

Based on the Black Scholes option-pricing model, the weighted average estimated fair value of employee stock options granted during the years ended December 31, 2013, 2012 and 2011 was $1.03, $0.89 and $2.06 per share, respectively. The weighted average estimated fair value of purchase rights under our Purchase Plan for the years ended December 31, 2013, 2012 and 2011 was $0.75, $0.59 and $1.20 per share, respectively. As of December 31, 2013, total compensation cost related to unvested share-based payment awards not yet recognized, net of estimated forfeitures and assuming no probability of achievement for outstanding performance-based restricted stock awards, was $6,921,000, which is expected to be recognized over the next 31 months on a weighted-average basis.

Stock-Based Compensation to Service Providers

We grant stock options and restricted stock awards to consultants from time to time in exchange for services performed for us. In general, the stock options and restricted stock awards vest over the contractual period of the consulting arrangement. We granted stock options to purchase 80,000, 50,000 and 46,000 shares of our common stock to consultants in 2013, 2012 and 2011, respectively. The fair value of stock options and restricted stock awards held by consultants is recorded as operating expenses over the vesting term of the respective equity awards. In addition, we will record any increase in the fair value of the stock options and restricted stock awards as the respective equity award vests. We recorded stock-based compensation expense of $92,000, $135,000 and $114,000 for the vested portion of the fair value of stock options and restricted stock awards held by consultants in 2013, 2012 and 2011, respectively. In 2012, to facilitate the divestiture of our stem cell programs, we entered into consulting agreements with several former employees whose positions were eliminated in connection with the restructuring in November 2011. Under the consulting agreements, the stock options and restricted stock awards previously granted to these individuals as employees continued to vest under the respective equity awards' original vesting schedules during the period the consulting services were provided to us. Accordingly, the stock options and restricted stock awards and related compensation expense were accounted for as consultant share-based payment awards during the respective consulting terms.

We have also issued common stock to consultants and vendors in exchange for services either performed or to be performed for us. For these stock issuances, we record a prepaid asset equal to the fair market value of the shares on the date of issuance and amortize the fair value of the shares to our operating expenses on a pro-rata basis as services are performed or goods are received. In 2013, 2012 and 2011, we issued 66,853, 170,298 and 180,954 shares of common stock, respectively, in exchange for goods or services. In 2013, 2012 and 2011, we recognized approximately $202,000, $1,010,000 and $4,736,000, respectively, of expense in connection with previous stock grants to consultants and vendors. As of December 31, 2013, $7,000 related to consultant and vendor stock issuances remained as a prepaid asset which is being amortized to our operating expenses on a pro-rata basis as services are incurred or goods are received.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance as of December 31, 2013 is as follows:


Outstanding stock options			15,576,216
Options and awards available for grant			16,207,250
Employee stock purchase plan			263,404
Warrants outstanding			1,619,275


Total			33,666,145

401(k) Plan

We sponsor a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code covering all full-time U.S. employees, or the Geron 401K Plan. Participating employees may contribute up to the annual Internal Revenue Service contribution limit. The Geron 401K Plan also permits us to provide discretionary matching and profit sharing contributions. The Geron 401K Plan is intended to qualify under Section 401 of the Internal Revenue Code so that contributions by employees or by us, and income earned on the contributions, are not taxable to employees until withdrawn from the Geron 401K Plan. Our contributions, if any, will be deductible by us when made.

In 2013, our board of directors approved a matching contribution equal to 75% of each employee's 2013 contributions. In 2012 and 2011, our board of directors approved a matching contribution equal to 100% of each employee's contributions, respectively. The matching contributions are made in our common stock and vest ratably over four years for each year of service completed by the employee, commencing from the date of hire, until it is fully vested when the employee has completed four years of service. We provided the 2013 matching contribution in early 2014, following approval by our board of directors.

For the vested portion of the 2013 match, we recorded $156,000 as research and development expense and $157,000 as general and administrative expense. For the vested portion of the 2012 match, we recorded $616,000 as research and development expense and $259,000 as general and administrative expense. For the vested portion of the 2011 match, we recorded $1,179,000 as research and development expense and $288,000 as general and administrative expense. Due to the number of positions eliminated in the recent restructurings, a partial plan termination was triggered in both 2013 and 2012. We accelerated the vesting of unvested prior employer matches for employees affected by the recent restructurings, which resulted in $266,000 and $370,000 of operating expenses in 2013 and 2012, respectively. As of December 31, 2013, approximately $369,000 remained unvested for the 2012, 2011 and 2010 matches which will be amortized to operating expenses as the corresponding years of service are completed by the employees.

Sales Agreement

On October 8, 2012, we entered into an At-the-Market Issuance Sales Agreement, or sales agreement, with MLV & Co. LLC, or MLV, pursuant to which we may elect to issue and sell shares of our common stock having an aggregate offering price of up to $50,000,000 from time to time into the open market at prevailing prices through MLV as our sales agent. We will pay MLV an aggregate commission rate equal to up to 3.0% of the gross proceeds of the sales price per share for common stock sold through MLV under the sales agreement. Pursuant to the sales agreement, sales of common stock will be made in such quantities and on such minimum price terms as we may set from time to time. We are not obligated to make any sales of common stock under the sales agreement. As of December 31, 2013, we had not sold any common stock pursuant to the sales agreement and no sales under the sales agreement can be made during the 60-day lock-up period following the underwritten public offering of our common stock completed in February 2014. See Note 17 on Subsequent Events for information on our February 2014 public offering.