Exhibit 10.5

STANDSTILL AND REGISTRATION RIGHTS AGREEMENT

 

Dated as of July 23, 2003

Among

Cell Genesys, Inc.,

Novartis AG

and

Genetic Therapy, Inc.

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS

1.1 Certain Definitions

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ARTICLE 2 STANDSTILL AND RELATED COVENANTS

2.1 Standstill Provisions

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2.2 Significant Event

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ARTICLE 3 RESTRICTIONS ON TRANSFER OF SECURITIES; COMPLIANCE WITH SECURITIES
LAWS

3.1 Restrictions on Transfer.

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3.2 Restrictive Legends

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3.3 Procedures for Certain Transfers

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3.4 Covenant Regarding Exchange Act Filings

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ARTICLE 4 REGISTRATION RIGHTS

4.1 Demand Registration

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4.2 Registration Procedures, Rights and Obligations

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4.3 Expenses

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4.4 Indemnification

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4.5 Information by the Holders

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4.6 Assignment of Registration Rights

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4.7 Termination

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4.8 Market Stand-Off Agreement

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ARTICLE 5 MISCELLANEOUS

5.1 Notices

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5.2 Governing Law

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5.3 Consent to Jurisdiction

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5.4 Language

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5.5 Entire Agreement

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5.6 Amendment

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5.7 Waiver

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5.8 Successors and Assigns

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5.9 Severability

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5.10 Headings

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5.11 Counterparts

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5.12 No Third Party Beneficiaries

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5.13 Specific Performance

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SCHEDULES

Schedule 4.3(a) Fees and Expenses

ARTICLE 1

DEFINITIONS

1.1 Certain Definitions.

  As used in this Agreement:

(a) "Affiliate" means, with respect to any Person, any other Person which
directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common control
with, such Person. For purposes of this Agreement, neither Novartis nor any of
its Affiliates shall be deemed an Affiliate of the Company, and neither the
Company nor any of its Affiliates shall be deemed an Affiliate of Novartis.

(b) "Assignment and License Agreement" means the Patent Assignment and License
Agreement between Novartis, GTI and the Company dated as of the date hereof,
relating to the assignment and transfer to the Company of certain patents,
patent applications, technology and know-how owned by Novartis and GTI.

(c) "Beneficial ownership" or "beneficial owner" has the meaning provided in
Rule 13d-3 promulgated under the Exchange Act.

(d) "Business Day" means any day that is not a Saturday, a Sunday or other day
on which the NASDAQ Stock Market (or, if different, the principal exchange on
which the Shares are traded) is not open for trading.

(e) "Company Securities" means all shares of capital stock of the Company, and
all direct or indirect options, warrants, convertible securities or other rights
to acquire any shares of capital stock of the Company or securities or
instruments exchangeable or exercisable for, or convertible into, shares of
capital stock of the Company.

(f) "control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.

(g) "Demand Registration Statement" shall have the meaning set forth in Section
4.1(a) hereof.

(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(i) "Form S-3" means such form under the Securities Act as in effect on the date
hereof or any similar registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.

(j) "Group" or "group" shall have the meaning provided in Section 13(d)(3) of
the Exchange Act and the rules and regulations promulgated thereunder.

(k) "Holder" or "Holders" means Novartis, GTI or a Permitted Holder.

(l) "Novartis Subsidiary" means any corporation or other entity of which a
majority of the capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
Novartis.

(m) "Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any syndicate or
group that would be deemed to be a person under Section 13(d)(3) of the Exchange
Act.

(n) "Permitted Holder" means any Person to whom Novartis or GTI has (i) assigned
any of its rights under this Agreement in accordance with Section 5.8 of this
Agreement (subject to Section 4.6 of this Agreement), or (ii) Transferred any of
its Shares in accordance with Article 3 of this Agreement (subject to Section
4.6 of this Agreement).

(o) "Product Development and Option Agreement" means the Product Development and
Option Agreement between Novartis and the Company, relating to the development
of certain oncolytic virus therapies products, dated as of the date hereof.

(p) "Option Agreements" means the Product Development and Option Agreement, the
Development License and Commercialization Agreement, to be entered into as of a
future date in accordance with the terms of the Product Development and Option
Agreement, and the Manufacturing and Supply Agreement, to be entered into as of
a future date in accordance with the terms of the Product Development and Option
Agreement.

(q) "Register," "registered" and "registration" refer to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

(r) "Registrable Securities" means (i) the Shares and (ii) any shares of capital
stock of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of the Shares. Notwithstanding the
foregoing, Registrable Securities shall exclude any Registrable Securities sold
by a Person in a transaction in which rights under Article 4 hereof are not
assigned in accordance with this Agreement or any Registrable Securities sold to
a Person who receives such securities free of all transfer restrictions under
applicable federal and state securities laws, whether sold pursuant to Rule 144
promulgated under the Securities Act, in a registered public offering, or
otherwise.

(s) "Representative" means, as to any Person, its directors, officers,
employees, agents and advisors (including, without limitation, financial
advisors, attorneys and accountants).

(t) "Rights Plan" means the Amended and Restated Preferred Shares Rights
Agreement, dated as of July 26, 2000, between the Company and Fleet National
Bank, as amended.

(u) "Rule 144" means Rule 144 promulgated under the Securities Act.

(v) "SEC" means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.

(w) "Securities Act" means the Securities Act of 1933, as amended.

(x) "Significant Event" means, with respect to the Company, (i) the announcement
or commencement by any Person or Group of a tender or exchange offer to acquire
Voting Securities which, if successful, would result in such Person or Group
owning, when combined with any other Voting Securities owned by such Person or
Group, 25% or more of the then outstanding Voting Securities of the Company;
(ii) the resolution by the Board of Directors of the Company to cause the
Company to execute a definitive agreement to effect a merger, business
combination or other extraordinary change of control transaction involving the
Company, that would result in the Voting Securities of the Company outstanding
as of immediately prior to such transaction ceasing to represent at least 50% of
the combined voting power of the surviving entity immediately following such
transaction; (iii) the consummation of any transaction that constitutes a
Triggering Event or a Section 13 Event (each as defined in the Rights Plan)
under the Rights Plan of the Company in effect at the time of the consummation
of such transaction; (iv) the removal and the replacement at any annual or
special meeting of stockholders of a majority of the current directors of the
Company; or (v) the sale or transfer of all or substantially all of the assets
of the Company. References to "Person" or "Group" within the definition of
Significant Event excludes, in each instance, Novartis and any of its
Affiliates.

(y) "Transaction Agreements" means, collectively, the Option Agreements and the
Assignment and License Agreement.

(z) "Voting Securities" means the Company Securities entitled, in the ordinary
course, to vote in the election of directors of the Company generally. Voting
Securities shall not include stockholder rights or other comparable securities
having Voting Power only upon the happening of a trigger event or comparable
contingency and which can only be transferred together with the Voting
Securities to which they attach or the right to vote for a class director only.
References herein to meetings of holders of Voting Securities shall include
meetings of any class or type thereof.

ARTICLE 2
STANDSTILL AND RELATED COVENANTS

2.1 Standstill Provisions.

  During the period commencing on the date hereof and ending at 11:59 p.m.
(California time) on the second anniversary of the date hereof, Novartis shall
not, without the prior written consent of the Company, directly or indirectly,
alone or in concert with any other Affiliate, Group or Person:

(a) other than the Shares (and any securities of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of the Shares), acquire, offer or propose to acquire or agree to
acquire, directly or indirectly, whether through market purchases, tender or
exchange offer, acquisition of control (including by way of merger or
consolidation) or otherwise, record or beneficial ownership of, or the right to
vote, any Company Securities, except for the purchase of Company Securities
solely in the ordinary course of business effected by Novartis' passive
investment trusts;

(b) propose or seek to effect a merger, consolidation, recapitalization,
reorganization, restructuring, sale, lease, exchange or other disposition of all
or substantially all of the assets of or other business combination involving,
or a tender or exchange offer for securities of, the Company or any of its
subsidiaries or any material portion of the Company's or such subsidiary's
business or assets or any other type of transaction that would result in a
change in control of the Company;

(c) except as may be specifically contemplated by the Transaction Agreements,
seek to exercise any control or influence over the management of the Company or
its Board of Directors or any of the businesses, operations or policies of the
Company;

(d) solicit proxies (or written consents) or assist or participate in any other
way, directly or indirectly, in any solicitation of proxies (or written
consents), or otherwise become a "participant" in a "solicitation," or assist
any "participant" in a "solicitation" (as such terms are defined under the
Exchange Act) in opposition to the recommendation or proposal of the Board of
Directors of the Company;

(e) form, join in or in any other way (including by deposit of any Company
Securities) participate in a Group with unaffiliated Persons, or in a
partnership, syndicate or voting trust, with respect to any of the Company
Securities, or enter into any agreement or arrangement or otherwise act in
concert with any other unaffiliated Person, for the purpose of acquiring,
holding, voting or disposing of any of the Company Securities;

(f) take any action that could reasonably be expected to require the Company to
make a public announcement regarding the possibility of any of the events
described in clauses (a) through (e) above; or

(g) request the Company or any of its Representatives, directly or indirectly,
to amend or waive any provision of this Article 2.

2.2 Significant Event

.  The Standstill restrictions set forth in Section 2.1 above shall not apply in
the event of, and with respect to, a Significant Event, but shall remain in
effect at all times prior to, and after the withdrawal, abandonment or
termination of, a Significant Event. Notwithstanding anything to the contrary
contained herein, if Novartis announces or commences any transaction that is
permitted by this Section 2.2 and the Significant Event is withdrawn, abandoned
or terminated, Novartis shall nevertheless be permitted to pursue its
transaction.

ARTICLE 3
RESTRICTIONS ON TRANSFER OF
SECURITIES; COMPLIANCE WITH SECURITIES LAWS

3.1 Restrictions on Transfer.

(a) Novartis agrees that, prior to the first anniversary of the date hereof, it
shall not, and shall not cause or permit any Affiliate of Novartis to, directly
or indirectly, offer to sell, contract to sell, make any short sale of, or
otherwise sell, dispose of, loan, gift, pledge or grant any options or rights
with respect to, the Shares (including any securities of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of the Shares) (each, a "Transfer") except that Novartis or GTI may
Transfer the Shares:

(i) to the Company, or any Person or Group approved in writing in advance by the
Board of Directors of the Company;

(ii) to any Affiliate of Novartis, so long as such Affiliate agrees in writing
to hold such Shares subject to all the provisions of this Agreement;

(iii) pursuant to a public offering of the Shares registered under the
Securities Act; and

(iv) pursuant to any tender offer, exchange offer, merger or business
combination which is recommended by the Board of Directors of the Company.

(b) After the first anniversary of the date hereof, there shall be no
restrictions on the Transfer of the Shares other than those required by law.

3.2 Restrictive Legends.

  Each of Novartis and GTI agree that the certificate or certificates
representing (i) the Shares, and (ii) any securities of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of the Shares (collectively, the "Restricted Securities") shall be
stamped or otherwise imprinted with the following legends:

(a) "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SHARES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THESE SHARES UNDER SAID ACT OR IN THE
ABSENCE OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT."

(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS (INCLUDING TRANSFERABILITY RESTRICTIONS) SET FORTH IN THAT CERTAIN
STANDSTILL AND REGISTRATION RIGHTS AGREEMENT BETWEEN THE ISSUER, NOVARTIS AND
GTI, A COPY OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER AT THE
ISSUER'S PRINCIPAL EXECUTIVE OFFICES."

(c) Each certificate evidencing the Shares shall bear the legend set forth in
Section 3.2(a) hereof, except that such certificate shall not bear such legend
if: (i) the Shares are Transferred by a Holder pursuant to Rule 144 (as
permitted hereunder) and, prior to such Transfer, such Holder has delivered or
caused to be delivered to the Company or counsel for the Company (w) a customary
Rule 144 seller's representation letter, (x) a customary Rule 144 broker's
representation letter, (y) a copy of the certificate evidencing the Shares to be
Transferred, and (z) a copy of Form 144, if required (collectively, the
"Transfer Documents"), and such Holder has delivered or caused to be delivered
the original certificate evidencing the Shares to be Transferred to the
Company's transfer agent; or (ii) the Shares have been Transferred pursuant to a
Demand Registration Statement. Upon receipt of the Transfer Documents, the
Company shall use best efforts to promptly, but in any event not later than five
(5) Business Days from the later of (A) the date the Company receives the
Transfer Documents and (B) the date of Transfer of the Shares, instruct and
cause its transfer agent to remove the legend specified in Section 3.2(a) hereof
in connection with any Transfer of the Shares in compliance with clause (i).
With respect to a Transfer of the Shares in compliance with clause (ii) above,
the Company shall instruct and cause its transfer agent (by delivery of a
customary blanket legend removal instruction letter) to remove the legend
specified in Section 3.2(a) hereof in connection with such Transfer of such
Shares promptly after the Demand Registration Statement is declared effective by
the SEC. Notwithstanding anything herein to the contrary, after the second
anniversary of the date hereof, in the event Holder delivers to the Company a
customary Rule 144(k) representation letter with respect to such Holder and the
Shares, promptly following its receipt, the Company shall instruct and cause its
transfer agent to remove the legend specified in Section 3.2(a) hereof as
permitted by Rule 144(k).

(d) With respect to the legend set forth in Section 3.2(b) hereof, after the
first anniversary of the date hereof, upon the request of any Holder, the
Company shall promptly instruct and cause its transfer agent to (i) remove such
legend and (ii) issue new certificates to such Holder.

(e) In addition to and not in limitation of the foregoing, the respective
obligations and restrictions of the Company and each of Novartis and GTI set
forth in this Section 3.2 shall survive the Transfer of the Shares pursuant to
any private sale of the Shares not registered under the Securities Act. The
provisions of this Section 3.2 shall be binding upon and inure to the benefit of
any transferee (and its respective successors and permitted assigns) who
receives the Shares via a private sale of the Shares not registered under the
Securities Act.

3.3 Procedures for Certain Transfers.

At any time prior to the second anniversary of the date hereof, immediately
prior to any proposed private sale (or series of related sales) of more than 50%
of the Registrable Securities, Novartis or GTI, as applicable, shall give oral
notice to the Company of its intention to effect such sale.

3.4 Covenant Regarding Exchange Act Filings.

  With a view to making available to Novartis and its Affiliates the benefits of
Rule 144 promulgated under the Securities Act, and any other rules or
regulations of the SEC which may at any time permit Novartis or its Affiliates
to sell any Restricted Securities without registration, until the date of
termination of this Agreement, the Company agrees to use its commercially
reasonable efforts to file with the SEC in a timely manner all reports and other
documents required to be filed under the Exchange Act.

ARTICLE 4
REGISTRATION RIGHTS

4.1 Demand Registration.

(a) Subject to Section 4.2(a), if, at any time after the date which is eleven
(11) months from the date hereof, the Company shall receive from a Holder or
Holders beneficially owning in the aggregate more than 50% of the Registrable
Securities a written request (a "Demand Request") that the Company register
under the Securities Act the Registrable Securities, then the Company shall use
its commercially reasonable efforts to cause all Registrable Securities
specified in such Demand Request to be registered as soon as reasonably
practicable so as to permit the offering and sale thereof and, in connection
therewith, shall, as expeditiously as possible, but in any event not later than
thirty (30) days (excluding any days which occur during the period of a
permitted Suspension Condition under Section 4.2 below) after receipt of a
Demand Request, prepare and file with the SEC, a registration statement, which
may, at the option of such Holder(s), be a shelf registration statement on Form
S-3 (if such Form S-3 is available for use by the Company to effect the
registration and distribution of the Registrable Securities) pursuant to Rule
415(a)(1)(i) under the Securities Act (a "Demand Registration Statement") and
use its commercially reasonable efforts to cause such Demand Registration
Statement to be declared effective; provided, however, that such Demand Request
shall: (i) specify the number of Registrable Securities intended to be offered
and sold by the Holder(s) pursuant thereto; (ii) express the present intention
of the Holder(s) to offer or cause the offering of such Registrable Securities
pursuant to such Demand Registration Statement; (iii) describe the nature or
method of distribution of such Registrable Securities pursuant to such Demand
Registration Statement, including by means of an underwritten offering; and
(iv) contain the undertaking of the Holder(s) to provide all such information
and materials and take all such actions as may be required in order to permit
the Company to comply with all applicable requirements of the Securities Act,
the Exchange Act and the rules and regulations of the SEC thereunder, and to
obtain any desired acceleration of the effective date of such Demand
Registration Statement.

(b) Notwithstanding anything herein to the contrary, if a Form S-3 is available
for use by the Company to effect the registration and distribution of the
Registrable Securities, the Demand Registration Statement shall be on Form S-3,
and no Holder shall make a Demand Request that the Company register any
Registrable Securities on Form S-1 or other form of registration under the
Securities Act.

(c) The procedures to be followed by the Company and the Holders, and the
respective rights and obligations of the Company and the Holders, with respect
to the preparation, filing and effectiveness of the Demand Registration
Statement and the distribution of Registrable Securities pursuant to the Demand
Registration Statement under this Section 4.1 are set forth in Section 4.2
hereof.

4.2 Registration Procedures, Rights and Obligations.

  The procedures to be followed by the Company and the Holders, and the
respective rights and obligations of the Company and the Holders, with respect
to the preparation, filing and effectiveness of the Demand Registration
Statement and the distribution of Registrable Securities pursuant thereto, are
as follows:

(a) The Holders shall be entitled to make one Demand Request hereunder which
shall result in actual registration of the Registrable Securities; provided,
however, that no such Demand Request may be made (i) prior to the date which is
eleven (11) months from the date hereof, or (ii) that requests to register less
than fifty percent (50%) of the Registrable Securities (as adjusted for any
stock splits, stock dividend, stock combination or other reclassification).

(b) In the event of a Demand Request that: (i) does not result in the
corresponding Demand Registration Statement being declared effective by the SEC;
(ii) does not result in the corresponding Demand Registration Statement
remaining effective for the applicable period set forth in Section 4.2(c);
(iii) is withdrawn by the Holder(s) following the imposition of a stop order,
injunction or other order or requirement of the SEC with respect to the
corresponding Demand Registration Statement; or (iv) is withdrawn by the
Holder(s) as a result of the exercise by the Company of its suspension rights
pursuant to Sections 4.2(e) or (f) hereof; the Demand Request shall not be
counted against the one (1) Demand Request to which the Holders are entitled.
Any Demand Request that is withdrawn by the Holder(s) for any reason other than
as set forth in the previous sentence shall count for purposes of determining
the Demand Request to which such Holder(s) is entitled.

(c) The Company shall use its commercially reasonable efforts to cause the
Demand Registration Statement to be declared effective promptly and to keep such
Demand Registration Statement continuously effective until the earlier to occur
of: (i) the sale or other disposition of the Registrable Securities so
registered; (ii) twelve (12) months after the effective date of such Demand
Registration Statement; and (iii) the termination of the registration rights of
the Holders pursuant to Section 4.7 hereof. The Company shall prepare and file
with the SEC such amendments and supplements to the Demand Registration
Statement and prospectus used in connection therewith as may be necessary to
make and to keep such Demand Registration Statement effective and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all Registrable Securities proposed to be distributed pursuant
thereto until the earlier to occur of: (i) the sale or other disposition of the
Registrable Securities so registered; (ii) twelve (12) months after the
effective date of such Demand Registration Statement; and (iii) the termination
of the Holders' registration rights pursuant to Section 4.7 hereof. The Company
shall, to the extent practicable, at least five (5) Business Days prior to
filing any registration statement or prospectus or any amendments or supplements
thereto, furnish to the Holder(s) and its counsel copies of all such documents
proposed to be filed and the Holder(s) shall have the opportunity to comment on
any information pertaining solely to it and its plan of distribution that is
contained therein and the Company shall make the corrections reasonably
requested by the Holder(s) with respect to such information prior to filing the
Demand Registration Statement or amendment or supplement thereto.

(d) The Holder(s) shall not be entitled to offer or sell any securities pursuant
to a Demand Registration Statement unless and until the Company has made all
required filings with the SEC with respect to the distribution of the
Registrable Securities, such filings have become effective, and the Company has
notified the Holder(s) of the foregoing and that no Suspension Condition then
exists.

(e) Notwithstanding any other provision of this Agreement, in the event that the
Company receives the Demand Request, at a time when the Company (i) shall have
filed, or has a bona fide intention to file, a registration statement with
respect to a proposed public offering of equity or equity-linked securities or
(ii) has commenced, or has a bona fide intention to commence, a public offering
of equity or equity-linked securities pursuant to an existing effective shelf or
other registration statement, then the Company shall be entitled to defer the
filing of any Demand Registration Statement in accordance with Section 4.2(g)
hereof.

(f) Notwithstanding any other provision of this Agreement, in the event that the
Company's Board of Directors determines that: (x) (i) non- public material
information regarding the Company exists, the immediate disclosure of which
would be significantly disadvantageous to the Company; (ii) the prospectus
constituting a part of any Demand Registration Statement covering the
distribution of any Registrable Securities contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or (iii) an offering of Registrable
Securities would materially and adversely affect or interfere with any proposed
material acquisition, disposition or other similar corporate transaction or
event involving the Company (each of the events or conditions referred to in
clauses (i), (ii) and (iii) of this sentence is hereinafter referred to as a
"Suspension Condition") and (y) the Company furnishes to the Holder(s) a
certificate signed by the Chief Executive Officer or the Chief Financial Officer
of the Company stating that the Company's Board of Directors has determined that
a Suspension Condition exists and providing an approximation of the anticipated
delay (and Holder(s) acknowledge(s) that any such information shall be deemed to
be Confidential Information of the Company), then the Company shall have the
right to suspend the filing or effectiveness of the Demand Registration
Statement or to suspend any distribution of Registrable Securities pursuant
thereto for so long as such Suspension Condition exists. The Company will as
promptly as practicable provide written notice to the Holder(s) when a
Suspension Condition arises and when it ceases to exist. Upon receipt of notice
from the Company of the existence of any Suspension Condition, the Holder(s)
shall forthwith discontinue efforts to: (i) file or cause the Demand
Registration Statement to be declared effective by the SEC (in the event that
such Demand Registration Statement has not been filed, or has been filed but not
declared effective, at the time the Holder(s) receive(s) notice that a
Suspension Condition has arisen); or (ii) offer or sell Registrable Securities
(in the event that such Demand Registration Statement has been declared
effective at the time the Holder(s) receive(s) notice that a Suspension
Condition has arisen). In the event that the Holder(s) had previously commenced
or was about to commence the distribution of Registrable Securities pursuant to
a prospectus under an effective Demand Registration Statement then the Company
shall, as promptly as practicable after the Suspension Condition ceases to
exist, make available to the Holder(s) an amendment or supplement to such
prospectus. If so directed by the Company, the Holder(s) shall deliver to the
Company all copies, other than permanent file copies then in the Holders'
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice.

(g) Notwithstanding any other provision of this Agreement, the Company shall not
be permitted to postpone (i) the filing or effectiveness of the Demand
Registration Statement or (ii) the distribution of the Registrable Securities
pursuant to the effective Demand Registration Statement pursuant to Sections
4.2(e) or (f) hereof, for an aggregate period of more than sixty (60) days in
any three hundred and sixty-five day (365) day period; provided, however, that
no single such postponement period shall last for more than thirty (30)
consecutive days.

(h) The Company shall promptly notify the Holder(s) of any stop order,
injunction or other order or requirement of the SEC issued or, to the Company's
knowledge, threatened to be issued by the SEC with respect to any Demand
Registration Statement and will use its commercially reasonable efforts to
prevent the entry of such stop order, injunction or other order or requirement
of the SEC or to remove it if entered at the earliest possible date.

(i) The Company shall furnish to the Holder(s) such number of copies of any
prospectus, including any preliminary prospectus and any amended or supplemented
prospectus (including in each case all exhibits, but subject to any applicable
confidential treatment thereof), in conformity with the requirements of the
Securities Act, as the Holder(s) shall reasonably request in order to effect the
offering and sale of any Registrable Securities to be offered and sold. The
Company shall use its commercially reasonable efforts to provide to the
Holder(s) or any underwriter participating in any disposition pursuant to the
Demand Registration Statement (and any attorney, accountant or other agent
retained by such Representative or any such underwriter for the purpose of
effecting the Demand Registration Statement) relevant financial and other
corporate records of the Company reasonably necessary for the Holder(s) to
effect the registration of the Registrable Securities pursuant to the Demand
Registration Statement.

(j) The Company shall use its commercially reasonable efforts to register or
qualify the Registrable Securities covered by the Demand Registration Statement
under the state securities or "blue sky" laws of such jurisdictions as the
Holder(s) shall reasonably request, to maintain any such registration or
qualification in effect for so long as such Demand Registration Statement
remains in effect, and to take any other action which may be reasonably
necessary to enable the Holder(s) to consummate the disposition in such
jurisdiction of the Registrable Securities owned by the Holder(s) until the
earlier to occur of: (i) the sale or other disposition of the Registrable
Securities so registered; (ii) twelve (12) months after the effective date of
such Demand Registration Statement; and (iii) the termination of the
registration rights of the Holder(s) pursuant to Section 4.7 hereof; provided,
however, that the Company shall not be required to take any action that would
subject it to the general jurisdiction of the courts of any jurisdiction in
which it is not so subject or to qualify as a foreign corporation in any
jurisdiction where the Company is not so qualified.

(k) The Company shall use its commercially reasonable efforts to furnish, at the
Holders' request, if the method of distribution is by means of an underwritten
offering, on the date that the shares of Registrable Securities are delivered to
the underwriters for sale pursuant to such registration, or if such Registrable
Securities are not being sold through underwriters, on the date that the Demand
Registration Statement with respect to such shares of Registrable Securities
becomes effective, (1) a signed opinion (in customary form for a transaction of
such nature and size), dated such date, of the independent legal counsel
representing the Company, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the
Holder(s); and (2) letters dated such date and the date the offering is priced,
from the independent certified public accountants of the Company, addressed to
the underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder(s) and, if such accountants refuse to
deliver such letters to such Holder(s), then to the Company stating that they
are independent certified public accountants within the meaning of the
Securities Act and covering such financial matters as would be customary in such
a transaction.

(l) The Company shall use its commercially reasonable efforts to enter into
customary agreements (including if the method of distribution is by means of an
underwritten offering, an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities as contemplated herein.

(m) The Company shall use its commercially reasonable efforts to cause the
Registrable Securities covered by the Demand Registration Statement to be listed
on each securities exchange or quotation system on which similar securities
issued by the Company are listed or traded.

(n) The Company shall use its commercially reasonable efforts to prevent the
issuance or obtain the withdrawal of any order suspending the effectiveness of
such Demand Registration Statement.

(o) The Company shall, in connection with any underwritten offering of the
Registrable Securities, use its commercially reasonable efforts to make
appropriate officers of the Company available to the Holder(s) for meetings with
prospective purchasers of the Registrable Securities and prepare and present to
potential investors customary "road show" material in each case in accordance
with the recommendations of the underwriters and in all respects in a manner
consistent with the resale of securities in an offering of a similar size to
such offering of the Registrable Securities.

(p) The Company shall use its commercially reasonable efforts to procure the
cooperation of the Company's transfer agent in settling any offering or sale of
Registrable Securities, including with respect to the transfer of physical stock
certificates into book-entry form in accordance with any procedures reasonably
requested by the Holder(s) or the underwriters.

(q) In the event a Holder has notified the Company that the method of
distribution pursuant to the Demand Request is by means of an underwritten
offering, the underwriter or underwriters shall be selected by the Company and
shall be approved by the Holder(s), which approval shall not be unreasonably
withheld or delayed, provided, (i) that all of the representations and
warranties by the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of the Holder(s), (ii) that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of the
Holder(s), and (iii) that the Holder(s) shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements (x) that are
customary for a transaction of such nature, (y) regarding the Holder(s), the
Registrable Securities and the Holders' intended method of distribution, and (z)
any other representations required by law. Subject to the foregoing, the
Holder(s) shall enter into an underwriting agreement in customary form with the
underwriter or underwriters. If the Holder(s) disapprove(s) of the terms of the
underwriting, the Holder(s) may elect to withdraw all its Registrable Securities
by written notice to the Company and the managing underwriter. The securities so
withdrawn shall also be withdrawn from registration.

(r) The Company shall not hereafter enter into any agreement with respect to its
securities, which conflicts with the rights granted to the Holders in this
Agreement.

4.3 Expenses.

(a) All documented fees and expenses incurred in connection with the Demand
Registration Statement, including without limitation all registration, filing
and qualification fees, printers' and accounting fees (including the expenses of
and special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, all fees and expenses of complying with state
securities or "blue sky" laws, and the fees and disbursements of counsel for the
Company, shall be paid in accordance with Schedule 4.3(a) attached hereto.

(b) The Holders shall bear and pay the (i) underwriting commissions and
discounts applicable to securities offered for its account in connection with
any registrations, filings and qualifications made pursuant to this Agreement
and (ii) any fees and expenses incurred in respect of counsel or other advisors
to the Holders.

4.4 Indemnification.

(a) In the case of any offering registered pursuant to this Article 4, to the
extent permitted by law, the Company will indemnify and agree to hold harmless
each Holder, its respective directors, officers, employees and agents, each
Person who participates in the offering of such Registrable Securities,
including underwriters (as defined in the Securities Act), and each Person, if
any, who controls such Holder within the meaning of Section 15 of the Securities
Act against any losses, claims, damages or liabilities, joint or several, to
which any such Persons may become subject, under the Securities Act or
otherwise, and to reimburse any of such Persons for any legal or other expenses
reasonably incurred by them in connection with investigating any claims or
defending against any actions (including any amounts paid pursuant to or in
settlement of claims made under the indemnification or contribution provisions
of any underwriting or similar agreement entered into by the Holders in
connection with any offering or sale of securities covered by this Agreement),
insofar as such losses, claims, damages or liabilities arise out of or are based
upon (a) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which such Registrable Securities
were registered under the Securities Act pursuant to this Article 4, the
prospectus contained therein (during the period that the Company is required to
keep such prospectus current), or any amendment or supplement thereto, or the
omission or alleged omission to state therein, if so used, a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading or
(b) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement, except insofar as such losses, claims, damages or liabilities arise
out of or are (i) based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon information furnished to the
Company in writing by the Holders specifically for use therein or (ii) made in
any preliminary prospectus, and the prospectus contained in the registration
statement as declared effective or in the form filed by the Company with the SEC
pursuant to Rule 424 under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not have been sent or
otherwise delivered to such Person at or prior to the confirmation of such sale
to such Person.

(b) The Holders hereby agree, if Registrable Securities held by such Holders are
included in the securities as to which such registration is being effected, and
each underwriter shall agree, in substantially the same manner and to
substantially the same extent as set forth in the preceding paragraph, to the
extent permitted by law, to indemnify and to hold harmless the Company its
directors, officers, employees and agents and each Person, if any, who controls
the Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which any of such Persons may be
subject under the Securities Act or otherwise, and to reimburse any of such
Persons for any legal or other expenses incurred in connection with
investigating or defending against any such losses, claims, damages or
liabilities, but only to the extent it arises out of or is based upon (a) an
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact in any registration statement under which the Registrable
Securities were registered under the Securities Act pursuant to this Article 4,
any prospectus contained therein, or any amendment or supplement thereto, which
was based upon and made in conformity with information furnished to the Company
in writing by such Holders expressly for use therein or (b) any violation or
alleged violation by such Holders of the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement.

(c) Each party entitled to indemnification under this Section 4.4 (the
"Indemnified Party") shall give notice in writing to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld or delayed), and the Indemnified Party may participate in
such defense at its own expense, provided, further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.4 unless such failure
is materially prejudicial to the Indemnifying Party's ability to defend such
claim. No Indemnifying Party, (i) in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, which
consent shall not be unreasonably withheld or delayed, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation, or
(ii) shall be liable for amounts paid in any settlement if such settlement is
effected without the consent of the Indemnifying Party, which consent shall not
be unreasonably withheld or delayed.

(d) In order to provide for just and equitable contribution to joint liability
under the Securities Act or the Exchange Act in any case in which either (i) any
Person exercising rights under this Agreement, or any controlling Person of any
such Person, makes a claim for indemnification pursuant to this Section 4.4 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 4.4 provides
for indemnification in such case, or (ii) contribution under the Securities Act
or the Exchange Act may be required on the part of any such selling Person or
any such controlling Person in circumstances for which indemnification is
provided under this Section 4.4; then, and in each such case, the Company and
such Person will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that such Person is responsible for the portion represented
by the percentage that the public offering price of its Registrable Securities
offered by and sold under the registration statement bears to the public
offering price of all securities offered by and sold under such registration
statement, and the Company and other selling Persons are responsible for the
remaining portion; provided, however, that, in any such case: (A) no such Person
will be required to contribute any amount in excess of the foregoing public
offering price of all such Registrable Securities offered and sold by such
Person pursuant to such registration statement; and (B) no Person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any Person or entity
who was not guilty of such fraudulent misrepresentation.

(e) The agreements contained in this Section 4.4 shall survive the transfer of
the Registered Securities by the Holders and sale of all the Registrable
Securities pursuant to any registration statement and shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Holders
or such director, officer or participating or controlling Person.

4.5 Information by the Holders.

  The Holders shall furnish to the Company such information regarding it in the
distribution of Registrable Securities proposed by such Holders as the Company
may reasonably request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Article 4.

4.6 Assignment of Registration Rights.

  The registration rights set forth in this Agreement are not transferable or
assignable by Novartis or GTI to any transferee or assignee of Registrable
Securities from Novartis or GTI, other than an Affiliate of Novartis that agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement or a Novartis Subsidiary pursuant to Section 5.8 hereof; provided that
GTI or any Novartis Subsidiary may transfer or assign its registration rights
set forth in this Agreement to Novartis.

4.7 Termination.

The provisions of this Article 4 (other than Sections 4.3 and 4.4) shall
terminate upon the earlier to occur of: (i) such time as the Holders are capable
of selling all of their Registrable Securities under Rule 144(k) of the
Securities Act, and (ii) such time as Novartis, GTI or their respective
permitted assignees no longer hold any Registrable Securities.

4.8 Market Stand-Off Agreement.

In addition to any other provision set forth in this Agreement, prior to the
second anniversary of the date hereof, in connection with the public
underwritten offering by the Company of any Company Securities, each Holder
agrees that, in the event Novartis beneficially owns greater than 5% of the then
outstanding Company Securities, upon the request of the underwriters managing
any such public underwritten offering of the Company Securities, such Holder
shall agree in writing (the "Public Offering Lock-Up") that it will not effect
any disposition of any Registrable Securities (other than those included in such
registration statement, if any), without the prior written consent of such
underwriters for such period of time (not to exceed ninety (90) days from the
closing of such public underwritten offering) as may be requested by such
underwriters; provided, however, that any such Holder shall not be bound by such
Public Offering Lock-Up more than once during the period commencing on the date
hereof and ending on the second anniversary of the date hereof.

ARTICLE 5
MISCELLANEOUS

5.1 Notices.

  All notices and other communications hereunder shall be in writing and shall
be deemed duly given (i) on the date of delivery if delivered personally,
(ii) on the date of confirmation of receipt (or, the first Business Day
following such receipt if the date is not a Business Day) of transmission by fax
or (iii) on the date of confirmation of receipt (or, the first Business Day
following such receipt if the date is not a Business Day) if delivered by a
nationally recognized courier service. All notices hereunder shall be delivered
as set forth below, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice:

(a) if to Novartis, to it at:

Novartis AG
Lichtstrasse 35
4056 Basel
Switzerland
Attention: General Counsel
Facsimile: +41 61 324 80 01

(b) if to GTI, to it at:

Genetic Therapy, Inc.
c/o Novartis Finance Corporation
608 Fifth Avenue
New York, NY 10020
Attention: General Counsel
Facsimile: (212) 957-8367

(c) if to the Company, to it at:

Cell Genesys, Inc.

500 Forbes Boulevard

South San Francisco, CA 94080

Attention: Stephen A. Sherwin, M.D.

Chairman and Chief Executive Officer

Facsimile: (650) 266-3010

5.2 Governing Law.

  This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.

5.3 Consent to Jurisdiction.

The parties hereto irrevocably consent to the exclusive jurisdiction and venue
of any federal court within the County of New York, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agree that process may be served upon them in any manner authorized by
the laws of the State of New York for such Persons and waive and covenant not to
assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.

5.4 Language.

This Agreement is in the English language only, which language shall be
controlling in all respects, and all versions hereof in any other language shall
not be binding on the parties hereto. All communications and notices to be made
or given pursuant to this Agreement, and any dispute resolution with respect to
this Agreement (including all evidence relevant to such dispute resolution),
shall be in the English language.

5.5 Entire Agreement.

  This Agreement constitutes the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and supersedes all
prior negotiations, representations, agreements and understandings, written or
oral, that the parties may have reached with respect to the subject matter
hereof.

5.6 Amendment.

This Agreement may not be amended, modified or supplemented except (a) by an
instrument in writing signed by, or on behalf of, the Company, Novartis and GTI
or (b) by a waiver in accordance with Section 5.7.

5.7 Waiver.

  No provision of this Agreement may be waived except as set forth in an
instrument in writing signed by the party to be bound thereby. Any waiver of any
term or condition shall not be construed as a waiver of any subsequent breach or
a subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any such rights.

5.8 Successors and Assigns.

  Novartis or GTI may not assign this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of the Company;
provided that no such approval shall be required in the event Novartis or GTI
assigns this Agreement or any of its rights hereunder to a Novartis Subsidiary
or GTI or any Novartis Subsidiary assigns this Agreement or any of its rights
hereunder to Novartis; provided further that no such approval shall be required
in the event either Novartis or GTI assigns this Agreement or any of its rights
hereunder to an Affiliate of Novartis who agrees to execute a counterpart hereof
and expressly agrees to be bound by all obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

5.9 Severability.

  In the event that any provision of this Agreement or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extent possible, the economic, business and other
purposes of such void or unenforceable provision.

5.10 Headings.

Headings included herein are for convenience only, do not form a part of this
Agreement and shall not be used in any way to construe or interpret this
Agreement.

5.11 Counterparts.

  This Agreement may be executed in counterparts, each of which shall be deemed
an original, but both of which together shall constitute one and the same
instrument.

5.12 No Third Party Beneficiaries.

This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person (other than as
contemplated by Sections 3.2 and 4.4 hereof), any legal or equitable right,
benefit or remedy of any nature whatsoever.

5.13 Specific Performance.

The parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity, without the
necessity of demonstrating the inadequacy of money damages.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective authorized officers as of the date set forth above.

CELL GENESYS, INC.

By: ____________________

Name:

Title:

 

NOVARTIS AG

By: ____________________

Name:

Title:

By: ____________________

Name:

Title:

 

GENETIC THERAPY, INC.

By: ____________________

Name:

Title:

 

Schedule 4.3(a)

Fees and Expenses

Novartis shall be responsible for, and shall pay, any and all documented fees
and expenses related to a Demand Request, as specified in Section 4.3 of the
Agreement.

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