EXHIBIT 10.1
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated January 20, 2001, is made by and between
Genentech, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Executive").
WHEREAS, the Company considers it essential to the best interests of its
shareholders to ▇▇▇▇▇▇ the continuous employment of key management personnel;
and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of members
of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. DEFINED TERMS. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. COMPANY'S COVENANTS SUMMARIZED. In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 3 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the Severance
Payments and the other payments and benefits described herein in the event
the Executive's employment with the Company is (or, under the terms of this
Agreement, is deemed to have been) terminated following a Change in Control
and during the term of this Agreement. Except as provided herein, no amount
or benefit shall be payable under this Agreement unless there shall have been
(or, under the terms of this Agreement, there shall be deemed to have been) a
termination of the Executive's employment with the Company following a Change
in Control and during the term of this Agreement. This Agreement shall not be
construed as creating an express or implied contract of employment and,
except as otherwise agreed in writing between the Executive and the Company,
the Executive shall not have any right to be retained in the employment of
the Company.
3. THE EXECUTIVE'S COVENANTS. The Executive agrees that, subject to
the terms and conditions of this Agreement, in the event of a Potential
Change in Control during the term of this Agreement, the Executive will
remain in the employ of the Company until the earliest of (i) a date which is
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six (6) months from the date of such Potential Change in Control, (ii) the
date of a Change in Control, (iii) the date of termination by the Executive
of the Executive's employment for Good Reason or by reason of death,
Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
4. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect for a period of twenty-four (24) months
beyond the month in which a Change of Control occurs (or, if later, twenty-
four (24) months beyond the consummation of the transaction the approval of
which by the Company's shareholders constitutes a Change in Control under
Section 15(E) hereof), provided that a Change of Control occurs by May 15,
2005, and if no Change in Control occurs by May 15, 2005, this Agreement
shall terminate.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 Following a Change in Control and during the term of this
Agreement, if the Executive fails to perform the Executive's full-time duties
with the Company as a result of incapacity due to physical or mental illness,
the Company shall pay the Executive's full salary to the Executive at the
rate in effect at the commencement of the relevant period, together with all
compensation and benefits payable to the Executive under the terms of any
compensation or benefits plan, program or arrangement maintained by the
Company during such period, until the Executive's employment is terminated by
the Company for Disability.
5.2 If the Executive's employment is terminated for any reason
following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits to which
the Executive is entitled in respect of all periods preceding the Date of
Termination under the terms of the Company's compensation and benefits plans,
programs or arrangements.
5.3 If the Executive's employment is terminated for any reason
following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's normal post-termination compensation and
benefits, if any, to the Executive as such payments become due. Such post-
termination compensation and benefits shall be determined under, and paid in
accordance with, the Company's retirement, insurance and other compensation
or benefit plans, programs and arrangements.
6. SEVERANCE PAYMENTS.
6.1 Subject to Section 6.2 hereof, the Company shall pay the
Executive the payments described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control and during the term of this Agreement, in addition to any
payments and benefits to which the Executive is entitled under Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by
reason of the Executive's death or Disability, or (iii) by the Executive
without Good Reason. For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated by the Company without
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Cause or by the Executive with Good Reason following a Change in Control if
(i) the Executive's employment is terminated without Cause prior to a Change
in Control and such termination was at the request or direction of a Person
who has entered into an agreement with the Company the consummation of which
would constitute a Change in Control, (ii) the Executive terminates her
employment with Good Reason prior to a Change in Control and the circumstance
or event which constitutes Good Reason occurs at the request or direction of
such Person, or (iii) the Executive's employment is terminated without Cause
prior to a Change in Control and such termination is otherwise in connection
with or in anticipation of a Change in Control which actually occurs. For
purposes of any determination regarding the applicability of the immediately
preceding sentence, any position taken by the Executive shall be presumed to
be correct unless the Company establishes to the Board that such position is
not correct, and the Board, acting in good faith, affirms such determination
by a vote of not less than a majority of its entire membership.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination and in lieu of
any severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to two
times the sum of (i) the greater of the Executive's annual base salary in
effect immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or the Executive's annual base
salary in effect immediately prior to the Change in Control, and (ii) the
greater of the average of the annual bonuses earned or received by the
Executive from the Company or its subsidiaries in respect of the two (2)
consecutive fiscal years immediately preceding that in which the Date of
Termination occurs or the average of the annual bonuses so earned or received
in respect of the two (2) consecutive fiscal years immediately preceding that
in which the Change in Control occurs (or if no bonuses have been paid, the
Executive's minimum bonus for 2001).
(B) Notwithstanding any provision of any annual or long-
term incentive plan to the contrary, the Company shall pay to the Executive a
lump sum amount, in cash, equal to the sum of (i) any incentive compensation
which has been allocated or awarded to the Executive for a completed fiscal
year or other measuring period preceding the Date of Termination under any
such plan but which, as of the Date of Termination, is contingent only upon
the continued employment of the Executive to a subsequent date or otherwise
has not been paid, and (ii) a pro rata portion to the Date of Termination of
the aggregate value of all contingent incentive compensation awards to the
Executive for all then uncompleted periods under any such plan, calculated as
to each such award by multiplying the award that the Executive would have
earned on the last day of the performance award period, assuming the
achievement, at the target level of the individual and corporate performance
goals established with respect to such award, by the fraction obtained by
dividing the number of full months and any fractional portion of a month
during such performance award period through the Date of Termination by the
total number of months contained in such performance award period.
(C) Notwithstanding any provision of the Company's
supplemental pension and thrift plans (the "Supplemental Plans") to the
contrary, upon the termination of the Executives employment by the Executive
for Good Reason or by the Company, in either case at any time following the
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occurrence of a Change in Control and during the term of this Agreement, the
Executive shall be deemed to have an additional 24 months of benefit credit
under each of the Supplemental Plans and shall be entitled to receive such
additional credit either (1) as part of the benefit otherwise payable under
the Supplemental Plan or (2) as a lump sum.
(D) For the twenty-four (24) month immediately following
the Date of Termination, the Company shall arrange to provide the Executive
with life, disability, accident and health insurance benefits substantially
similar to those which the Executive is receiving immediately prior to the
Notice of Termination (without giving effect to any amendment to such
benefits made subsequent to a Change in Control which amendment adversely
affects in any manner the Executive's entitlement to or the amount of such
benefits); provided, however, that, unless the Executive consents to a
different method (after taking into account the effect of such method on the
calculation of "parachute payments" pursuant to Section 6.2 hereof), such
health insurance benefits shall be provided through a third-party insurer.
Benefits otherwise receivable by the Executive pursuant to this Section 6. 1
(D) shall be reduced to the extent comparable benefits are actually received
by or made available to the Executive without cost during the twenty-four
(24) month period following the Executive's termination of employment (and
any such benefits actually received by or made available to the Executive
shall be reported to the Company by the Executive). If the benefits provided
to the Executive under this Section 6. 1 (D) shall result in a decrease,
pursuant to Section 6.2 hereof, in the Severance Payments and these Section
6.1 (D) benefits are thereafter reduced pursuant to the immediately preceding
sentence because of the receipt or availability of comparable benefits, the
Company shall, at the time of such reduction, pay to the Executive the lesser
of (i) the amount of the decrease made in the Severance Payments pursuant to
Section 6.2 hereof, or (ii) the maximum amount which can be paid to the
Executive without being, or causing any other payment to be, nondeductible by
reason of section 280G of the Code.
6.2 (A) If the Severance Payments are subject (in whole or
part) to the Excise Tax, then, subject to the provisions of subsection (B) of
this Section 6.2, the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Severance Payments and any federal,
state and local income and employment tax and Excise Tax upon the Gross-Up-
Payment, shall be equal to the Severance Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income an employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive's residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.
(B) In the event that, after giving effect to any
redetermination described in subsection (D) of this Section 6.2, a reduction
of the Severance Payments to the largest amount that would result in no
portion of the Severance Payments being subject to the Excise Tax (after
taking into account any reduction in the Severance Payments provided by
reason of section 28OG of the Code in such other plan, arrangement or
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agreement) would produce a net amount (after deduction of the net amount of
federal, state and local income tax on such reduced Severance Payments) that
would be greater than the net amount of unreduced Severance Payments (after
deduction of the net amount of federal, state and local income tax and the
amount of Excise Tax to which the Executive would be subject in respect of
such unreduced Severance Payments), then subsection (A) of this Section 6.2
shall not apply and the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other noncash Severance Benefits shall
thereafter be reduced (if necessary, to zero); PROVIDE , HOWEVER, that the
Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
(C) For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Severance Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, unless in the
opinion of tax counsel (the "Tax Counsel") reasonably acceptable to the
Executive and selected by the accounting firm (the "Auditor") which was,
immediately prior to the Change in Control, the Company's independent
auditor, such other payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of section 280G(b)(4)(A)
of the Code, (ii) all "excess parachute payments" within the meaning of
section 28OG(b)(1) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of Tax Counsel, such excess parachute payments (in
whole or part) represent reasonable compensation for services actually
rendered, within the meaning of section 28OG(b)(4)(B) of the Code, in excess
of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the
Auditor in accordance with the principles of section 280G(d)(3) and (4) of
the Code. Prior to the payment date set forth in Section 6.3 hereof, the
Company shall provide the Executive with its calculation of the amounts
referred to in this Section 6.2(C) and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's
calculations. If the Executive disputes the Company's calculations (in whole
or in part), the reasonable opinion of Tax Counsel with respect to the matter
in dispute shall prevail.
(D) In the event that (i) amounts are paid to the
Executive pursuant to subsection (A) of this Section 6.2, (ii) the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of the Executive's employment, and (iii)
after giving effect to such redetermination, the Severance Payments are to be
reduced pursuant to subsection (B) of this Section 6.2, the Executive shall
repay to the Company, at the time that the amount of such reduction in Excise
Tax is finally determined, the portion of the Gross-Up Payment attributable
to such reduction plus the portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income tax imposed on the Gross-
Up Payment being repaid by the Executive to the extent that such repayment
results in a reduction in the Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the
rate provided in section 1274(b)(2)(B) of the Code. In the event that (x) the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be determined
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at the time of the Gross-Up Payment) and (y) after giving effect to such
redetermination, the Severance Payments should not have been reduced pursuant
to subsection (B) of this Section 6.2, the Company shall make an additional
Gross-Up Payment in respect of such excess in respect of any portion of the
Excise Tax with respect to which the Company had not previously made a Gross-
Up Payment (plus any interest, penalties or additions payable by the
Executive with respect to such excess and such portion) at the time that the
amount of such excess is finally determined.
6.3 The payments provided for in subsections (A) and (B) of
Section 6.1 hereof and Section 6.2 hereof shall be made not later than the
fifth day following the Date of Termination; PROVIDE, HOWEVER, that if the
amounts of such payments, and the limitation of such payments set forth in
Section 6.2 hereof, cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined in
good faith by the Executive or, in the case of payments under Section 6.2
hereof, in accordance with Section 6.2 hereof, of the minimum amount of such
payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the Date
of Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the fifth
(5th) business day after demand by the Company (together with interest at the
rate provided in section 1274(b)(2) (B) of the Code). At the time that
payments are made under this Section, the Company shall provide the Executive
with a written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without limitation,
any opinions or other advice the Company has received from outside counsel,
auditors or consultants (and any such opinions or advice which are in writing
shall be attached to the statement). In the event the Company should fail to
pay when due the amounts described in subsections (A) and (B) of Section 6.1
hereof or Section 6.2 hereof, the Executive shall also be entitled to receive
from the Company an amount representing interest on any unpaid or untimely
paid amounts from the due date, as determined under this Section 6.3, to the
date of payment at a rate equal to the prime rate of Citibank as in effect
from time to time after such due date.
6.4 The Company also shall pay to the Executive all reasonable
legal fees and expenses incurred by the Executive in disputing in good faith
any issue relating to the termination of the Executive's employment following
a Change in Control (including a termination of employment following a
Potential Change in Control if the Executive alleges in good faith that such
termination will be deemed to have occurred following a Change in Control
pursuant to the second sentence of Section 6.1 hereof) or in seeking in good
faith to obtain or enforce any benefit or right provided by this Agreement or
in connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit
provided hereunder. Such payments shall be made as such fees and expenses are
incurred by the Executive, but in no event later than five (5) business days
after delivery of the Executive's written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably
may require.
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7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUT.
7.1 NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purpose of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include
a copy of a resolution that has been duly adopted by an affirmative vote of
not less than the majority of the entire membership of the Board.
7.2 DATE OF TERMINATION. "Date of Termination," with respect
to any purported termination of the Executive's employment after a Change in
Control and during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, (30) days after Notice
of Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than fifteen (15) days nor
more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
8. NO MITIGATION. The Company agrees that, if the Executive's
employment with the Company terminates during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way
to reduce any amounts payable to the Executive by the Company pursuant to
Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or
benefit provided for in this Agreement (other than Section 6.1 (D) hereof)
shall not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. SUCCESSORS: BINDING AGREEMENT.
9.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate
the Executive's employment for Good Reason after a Change in Control, except
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that, for purposes of implementing the foregoing, the date on which such
succession becomes effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon
the death of the Executive) if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or mailed by
United States registered mail, return receipt requested, postage prepaid or
sent by overnight delivery (e.g., Federal Express), and addressed, if to the
Executive, to the address shown for the Executive in the personnel records of
the Company and, if to the Company, to the address set forth below, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:
To the Company:
Genentech, Inc.
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
To the Executive:
▇▇▇▇▇▇ ▇▇▇▇▇▇
11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and an authorized officer of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any -condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of a similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof (i.e., benefits payable to the Executive by reason of
the occurrence of a Change in Control) which have been made by either party.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of California. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has
agreed. The obligations of the Company and the Executive under Sections 6 and
7 hereof shall survive the expiration of the term of this Agreement.
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12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPART. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. SETTLEMENT OF DISPUTES; ARBITRATION. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that the
Executive's claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall be entitled to seek specific
performance of the Executive's rights under Section 5.3 during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
15. DEFINITIONS. For purposes of this Agreement the following terms
shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning set forth in
section 28OG(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the
Company.
(D) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and continued gross neglect
by the Executive of the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination for Good Reason by the Executive pursuant to
Section 7.1 hereof) or a willful and continuing failure to perform such
duties, which continues for more than thirty (30) days after a written demand
for substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties, or (ii)
the Executive's material breach of any written Company policy, including
without limitation the Executive's confidentiality and other obligations to
the Company, as described in the Proprietary Rights and Inventions Agreement
between the parties, or (iii) the Executive's embezzlement from or fraud
against the Company, or other conduct that poses a material conflict of
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interest. For purposes of this definition, (x) no act, or failure to act, on
the Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company and (y) in the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect
unless the Board, acting in good faith, affirms such determination by a vote
of not less than a majority of its entire membership.
(E) A "Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(I) the acquisition by another person or group of
affiliated persons, other than Roche Holdings, Inc. and its affiliates, in
one transaction or a series of transactions of control of more than 50% of
the Company's outstanding voting stock; or
(II) the acquisition by Roche Holdings, Inc. or its
affiliates of control of 90% or more of the Company's outstanding voting
stock.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Genentech, Inc., and, except in
determining under Section 15(E) hereof whether or not any Change in Control
of the Company has occurred, shall include its subsidiaries and any successor
to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's
duties with the Company for a period of six (6) consecutive months, the
Company shall have given the Executive a Notice of Termination for
Disability, and within thirty (30) days after such Notice of Termination is
given, the Executive shall not have returned to the full-time performance of
the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(L) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
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express written consent) after any Change in Control, or after any Potential
Change in Control under the circumstances described in the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) and (VE) below
to a "Change in Control" as references to a "Potential Change in Control"),
of any one of the following acts by the Company, or failures by the Company
to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof, or Executive consents in writing to
such act or failure to act.
(I) the assignment to the Executive of duties which
are in the aggregate materially inconsistent with the Executive's
responsibilities from those in effect immediately prior to the Change in
Control other than any such alteration primarily attributable to the fact
that the Company may no longer be a public company;
(II) a reduction by the Company in the Executive's
compensation (annual base salary plus bonus) as in effect on the date hereof
or as the same may be increased from time to time except for across-the-board
salary reductions similarly affecting all or substantially all executives of
the Company who are at the level of Executive Vice President or above;
(III) the relocation of the Company's principal
executive offices to a location such that Executive's commute distance
exceeds the greater of (i) Executive's commute distance just prior to the
Change of Control or (ii) 30 miles or the Company's requiring the Executive
to be based anywhere other than the Company's principal executive offices
except for required travel on the Company's business to an extent
substantially consistent with the Executive's then current business travel
obligations;
(IV) the failure by the Company, without the
Executive's consent, to pay to the Executive any portion of the Executive's
then current salary, bonus or incentive compensation except pursuant to an
across-the-board compensation deferral similarly affecting all or
substantially all executives of the Company at the level of Executive Vice
President or above, or to pay to the Executive any portion of an installment
of deferred compensation under any defer-red compensation program of the
Company, within seven (7) days of the date such compensation is due;
(V) the failure by the Company to continue in effect
any compensation plan which the Executive participates immediately prior to
the Change in Control which is material to the Executive's total
compensation, including but not limited to the Company's stock option,
restricted stock, stock appreciation right, incentive compensation, bonus and
other plans or any substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan or unless such plan
itself provides for the consequence of a Change in Control, or the failure by
the Company to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the Change in Control, unless all or substantially all
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executives of the Company at the level of Executive Vice President or above
are treated similarly;
(VI) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical, health
and accident, or disability plans in which the Executive was participating
immediately prior to the Change in Control, unless, all or substantially all
executives of the Company at the level of Executive Vice President or above
are treated similarly; the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the time
of the Change in Control, unless all or substantially all executives of the
Company at the level of Executive Vice President or above are treated
similarly; or the failure by the Company to maintain a vacation policy with
respect to the Executive that is at least as favorable as the vacation policy
(whether formal or informal) in place with respect to the Executive
immediately prior to the Change in Control unless all or substantially all
executives of the Company at the level of Executive Vice President or above
are treated similarly;
(VII) the failure by the Company to provide Executive
with a total compensation package, that is, in the aggregate, not materially
less favorable to the Executive than the compensation package enjoyed by the
Executive immediately prior to the Change in Control; or
(VIII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1 hereof, provided further, that for
purposes of this Agreement, no such purported termination shall be effective.
Executive's employment for Good Reason shall not be affected by the
Executive's incapacity due to physical or mental illness. The Executive's
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason
hereunder. For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed
to be correct unless the Company establishes to the Board that Good Reason
does not exist, and the Board, acting in good faith, affirms such
determination by a vote of not less than a majority of its entire membership.
(N) "Gross-Up Payment" shall have the meaning set forth in
Section 6.2 hereof.
(O) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(P) "Pension Plan" shall mean any tax-qualified, supplemental or
excess benefit pension plan maintained by the Company and any other agreement
entered into between the Executive and the Company which is designed to
provide the Executive with supplemental retirement benefits.
(Q) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
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affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act),
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company.
(R) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(III) any Person becomes the Beneficial Owner, directly or
indirectly, or securities of the Company representing 10% or more of either
the then outstanding shares of common stock of the Company or the combined
voting power of the Company's then outstanding securities; or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(S) "Retirement " shall be deemed the reason for the termination
of the Executive's employment if such employment is terminated in accordance
with the Company's retirement policy generally applicable to its salaried
employees, as in effect immediately prior to the Change in Control, or in
accordance with any retirement arrangement established with the Executive's
consent with respect to the Executive.
(T) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(U) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
GENENTECH, INC.
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