GENENTECH, INC.
460 Point San Bruno Boulevard
South San Francisco, CA 94080
As of July 7, 1995
Mr. G. Kirk Raab
2250 Reddington Road
Hillsborough, CA
Dear Kirk:
This Letter Agreement sets forth certain changes to the letter agreement
between you and Genentech, Inc. (the "Company") dated October 25, 1989 (the
"1989 Letter"), as amended by the letter agreement between you and the
Company dated July 31, 1990 (the "1990 Letter") and the letter agreement
between you and the Company dated October 17, 1991 (the "1991 letter") (the
1989 Letter, as amended by the 1990 letter and the 1991 Letter, being
hereinafter referred to as the "Prior Letter Agreement"). These changes are
being made in connection with your resignation, effective as of today, from
your employment with the Company and from the Board of Directors of the
Company. It is agreed that this resignation will be treated as an Involuntary
Termination under the Prior Letter Agreement occurring on the date of this
Letter Agreement.
1. The last sentence of Paragraph 3.A.(b) of the Prior Letter Agreement is
amended to read in its entirety as follows:
Such health and life insurance coverage will continue through the earlier of
(i) the date of your death and (ii) any date on which you breach either of the
Covenants (as defined below).
2. Paragraph 3.A.(c) of the Prior Letter Agreement (as set forth in the 1991
Letter Agreement) is amended to read in its entirety as follows:
Loan Payments. You have currently outstanding from the Company the following
loans (the "Loans"): a loan in the principal amount of $1.5 million pursuant
to a promissory note dated April 14, 1995 (the "Note") and a loan from the
Company in the principal amount of $450,000 pursuant to a memorandum to you
from Bob Swanson dated May 14, 1985, as amended February 7, 1995 (the "Amended
Memo"). The first sentence of Paragraph 1 of the Note is hereby amended to
read in its entirety as follows: "Unless extended by Genentech's Board of
Directors, the entire principal amount of this promissory note and any accrued
but unpaid interest ("Note") shall be due and payable on the earliest of (i)
April 15, 1998, (ii) any date on which the undersigned breaches either of the
Covenants (as defined in the Letter Agreement dated July 7, 1995 between
Genentech and the undersigned), and (iii) the date Roche Holdings, Inc. or any
affiliate thereof causes Genentech to redeem its Special Common Stock ("SCS")
or any other security issued in exchange for such SCS." Paragraph 4 of the
Amended Memo is hereby deleted and Paragraph 3 of the Amended Memo is hereby
amended to read in its entirety as follows: "The loan described in paragraph
2 above shall be repaid on the earliest of: (1) the date Roche Holdings, Inc.
or any affiliate thereof causes Genentech to redeem its Special Common Stock
("SCS") or any other security issued in exchange for such SCS, (2) April 15,
1998, and (3) any date on which you breach either of the Covenants (as defined
in the Letter Agreement dated July 7, 1995, between Genentech and you)." In
consideration of such extension of the terms of the Loans, you agree that with
respect to such of your stock options as may vest after the Involuntary
Termination of your employment (the "Pledged Options"), (i) you will give the
Company a security interest for repayment of the Loans, in a form satisfactory
to the Company, in all stock acquired by exercise of the Pledged Options and
shall not dispose of such stock unless you simultaneously repay to the Company
the lesser of (x) the excess of the then fair market value of such stock over
the aggregate exercise price paid by you to acquire such stock (the "Spread")
and (y) the then outstanding balance of the Loans (including accrued
interest), and (ii) if as of the close of business on the date the Loans
become due and payable there is an outstanding balance (including accrued
interest) due with respect thereto, the Company shall have the right, at its
election, to take immediate possession of any stock then in your possession
that you acquired by exercise of the Pledged Options having a fair market
value equal to such balance, or cancel any then outstanding Pledged Options
(whether then vested or unvested) having a Spread equal to such unpaid
balance, or a combination thereof, in satisfaction of such balance. In
addition, you further agree that if any payments are made or other
consideration given in respect of a cancellation or disposition of any of the
Pledged Options, such payments or other consideration shall, if requested by
the Company, be applied to the reduction of the Loans. Without limiting the
foregoing, the Company shall be entitled to place a legend on the certificates
representing shares issued upon exercise of Pledged Options and/or upon the
Pledged Options to reflect the foregoing and any such security interest and/or
to make arrangements in connection with any disposition of such shares and/or
Pledged Options to assure the application of the proceeds thereof as
aforesaid.
3. The following additional provisions are added to the Prior Letter
Agreement:
(a) Following the Involuntary Termination of your employment, the Company
shall provide you with outplacement services, consistent with its past
practice with other departing executives of the Company, for a period not
greater than six months and at a cost to the Company not to exceed $50,000;
provided, that such coverage shall cease in any event upon the earliest of (i)
the date you obtain new employment, (ii) any date on which you breach either
of the Covenants (as defined below) and (iii) the Company's incurring expenses
of $50,000 for such purposes as aforesaid.
(b) For a period of five years following the Involuntary Termination of your
employment, you shall be subject to the following covenants (the "Covenants")
in the manner set forth below: (i) you will not in any capacity work for, or
knowingly acquire or maintain a financial interest, over which you have
investment control, that is in excess of 5% of the outstanding equity in, any
business or entity, wherever located, that (1) markets or is developing a
product that is or competes with one of the following, or any analogs thereof:
human growth hormone; tPA; DNase; and gamma interferon; (2) markets or is
developing one of the following that Genentech markets or is developing, or
any analogs thereof: inhibitors of the gP IIbIIIa receptor; IGF-1; anti-HER2;
ANP; anti-CD2O; nerve growth factor; anti-IgE; gP120 vaccine; TNF; and TNF
receptor-IgG; or (3) markets or is developing (including research activities)
one of the following that Genentech markets or is developing (including
research activities), or any analogs thereof: VEGF; anti-VEGF; lymphotoxin;
TNK; anti-CD11a; and thrombopoietin (the "Noncompetition Covenant") (for
purposes of the foregoing, an "analog" shall mean: (a) in the instance of
nonproteinous molecules, two or more chemical compounds each sharing a core
chemical structure that is the same or substantially and functionally similar;
and (b) in the instance of proteinous molecules, any compound with either (i)
greater than eighty-five (85%) amino acid sequence homology and specificity
for the same binding site(s) or (ii) with respect to an antibody to a
molecule, the receptor to that molecule and with respect to a receptor to a
molecule, the antibody to that molecule); (ii) you will not (1) solicit,
attempt to solicit, induce or otherwise cause any person who is at that time
an employee of the Company to terminate his or her employment in order to
become an employee, consultant, or independent contractor to or for any entity
by whom you are employed, with whom you are affiliated, or in whom you or any
entity with which you are affiliated, have any financial interest or with whom
you or any entity with which you are affiliated are discussing the possibility
of taking a financial interest, or (2) use, reproduce, or disclose to any
other person or company any confidential or proprietary information belonging
to the Company that would enable or assist that person or company to solicit,
attempt to solicit, induce or otherwise cause any person who is at the time an
employee of the Company to terminate his or her employment with the Company
(the "No-Raid Covenant"). From and after any date on which you breach the
Non-competition Covenant, the cessation of health and life insurance coverage
and outplacement services and the acceleration of your loans set forth above
in this Letter Agreement shall occur, but the Company's other obligations to
you under the Prior Letter Agreement as amended by this Letter Agreement
(including without limitation the obligation to provide you with severance pay
and benefits and to permit the continued vesting and exercisability of your
options) shall continue in effect. From and after any date on which you
breach the No-Raid Covenant, the cessation of health and life insurance
coverage and outplacement services and the acceleration of your loans set
forth above in this Letter Agreement shall occur, and in addition the
Company's other obligations to you under the Prior Letter Agreement as amended
by this Letter Agreement (including without limitation the obligation to
provide you with severance pay and benefits and to permit the continued
vesting and exercisability of your options) shall cease and be of no further
force and effect. In addition, you and the Company agree that your breach of
either of the Covenants would cause harm to the Company that is not capable of
remedy through money damages and accordingly that the Company shall be
entitled to injunctive relief from a court of competent jurisdiction against
such a breach. Notwithstanding anything else in this Letter Agreement, the
Company shall not assert that you have breached either of the Covenants unless
its Board of Directors so determines. The Company shall give you oral or
written notice either (i) that management is considering recommending to the
Board that the Board make such a determination, or (ii) that the Board is
considering whether to make such a determination, which notice shall describe
the breach or possible breach in question and shall give you at least three
business days to provide a response to such notice and/or propose a remedy for
such breach or possible breach to the Chief Executive Officer of the Company
(in the case of a notice described in clause (i) above) or the Board (in the
case of a notice described in clause (ii) above). Notwithstanding the
foregoing, in no event shall any failure or alleged failure of the Company to
comply with the requirements of the preceding sentence or any aspect thereof
preclude the Company from enforcing, or delay the enforcement of, any remedy
for such breach to which it may otherwise be entitled, or relieve you of any
obligation for any such breach; except that the Company shall not enforce the
remedies set forth in the second and third sentences of this paragraph until
the expiration of three business days from the date on which it gives you
notice pursuant to the preceding sentence.
(c) Counsel for the parties in In Re Genentech Shareholder Litigation, C.A.
No. 14265 (Cons.) (the "Actions"), have today entered into a Memorandum of
Understanding with respect to the settlement of the Actions, which Memorandum
of Understanding provides for the entry of judgment and a release of all
claims against you and other defendants. The provisions of this paragraph
shall not become effective unless and until you are released from the claims
asserted in the Actions pursuant to final court approval of the proposed
settlement. In consideration of the Company's execution of this Letter
Agreement, and except with respect to such obligations as the Company may have
(i) pursuant to the Prior Letter Agreement as amended by this Letter
Agreement, (ii) your stock option agreements, (iii) the Company's Tax
Reduction Investment Plan, (iv) the Company's Supplemental Plan, (v) to
indemnify you pursuant to its charter, by-laws or Delaware law, (vi) under any
other existing written agreement pursuant to which it may be obligated to pay
you any compensation for services and (vii) with respect to Directors and
Officers insurance, you hereby waive and release any common law, statutory or
other complaints, claims, charges or causes of action, both known and unknown,
in law or in equity, which you may now have or ever had against the Company,
any directors or officers of the Company, and any of their respective
predecessors, successors, parents, subsidiaries, affiliates and agents
(including, without limitation, any investment bankers or attorneys)
("Claims"). You and the Company stipulate and agree that you shall be deemed
to have, and by operation of the releases contemplated hereby shall have,
waived and relinquished, to the fullest extent permitted by law, the
provisions, rights, and benefits of section 1542 of the California Civil Code,
which provides
A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his
settlement with the debtor.
You shall be deemed to have, and by operation of the releases contemplated
hereby shall have, waived any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principle of common law, which is similar, comparable or equivalent to
section 1542 of the California Civil Code. You acknowledge that you may
hereafter discover facts in addition to or different from those which you
now know or believe to be true with respect to the subject matter of the
releases contemplated hereby, but you shall be deemed to have, and by
operation of the releases contemplated hereby shall have, fully, finally,
and forever settled and released any and all Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not
concealed or hidden, which now exist, or heretofore have existed upon any
theory of law or equity now existing or coming into existence in the
future, including, but not limited to, claims arising under the Age
Discrimination in Employment Act, conduct which is negligent, intentional,
with or without malice, or a breach of any duty, law or rule, without
regard to the subsequent discovery or existence of such different or
additional facts. You acknowledge that the foregoing waiver was separately
bargained for and is an integral element of this Letter Agreement of which
this release is a part and that you were represented by counsel in
connection with your execution of this Letter Agreement.
4. Any notice by the Company to you pursuant to paragraph 3(b) of this
Letter Agreement shall be given orally by telephone or in person, or in
writing as set forth below. Any notice by you to the Company or by you to
the Company designating a different facsimile number or address shall be
given in writing as set forth below. Written notices to either party to
this Letter Agreement shall be given:
(i) by facsimile to the party's facsimile number set forth below, or such
other facsimile number as such party may designate in accordance with this
paragraph 4, in which event such notice shall be considered to have been
given at the time it is transmitted by the party giving notice;
(ii) by U.S. mail to the party's address set forth below, or such other
address as such may designate in accordance with this paragraph 4, in which
event such notice shall be considered to have been given two business days
after it is sent;
(iii) by Federal Express or another overnight courier service to the
party's address set forth below, or such other address as such party may
designate in accordance with this paragraph 4, in which event such notice
shall be considered to have been given one business day after it is sent;
or
(iv) by hand delivery to the party's address at the address set forth
below, or such other address as such party may designate in accordance with
this paragraph 4, in which event such notice shall be considered to have
been given when delivered to such address.
Your present address and facsimile number are:
Mr. G. Kirk Raab
999 Mountain Home Rd.
Woodside, CA 94062
Facsimile number: (415)
The Company's present address and facsimile number are:
Genentech, Inc.
460 Point San Bruno Boulevard
South San Francisco, CA 94080
Facsimile number: (415) 952-9881
Attention: General Counsel
5. Except as modified by this Letter Agreement, the terms and provisions
of the Prior Letter Agreement will continue in full force and effect.
Please indicate your acceptance of the foregoing by signing and dating the
enclosed copy of this Letter Agreement and returning it to the Company at
your earliest convenience.
Very truly yours,
GENENTECH, INC.
/S/ JOHN P. MCLAUGHLING
_______________________
By: John P. McLaughlin
AGREED TO AND ACCEPTED BY:
/S/ G. KIRK RAAB
__________________
G. Kirk Raab
Dated: As of July 7, 1995
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