GENENTECH, INC.
DEFERRED COMPENSATION PLAN
GENENTECH, INC., a Delaware corporation, hereby adopts the
Genentech, Inc. Deferred Compensation Plan. The Plan will become effective
upon the occurrence of a Redemption or Delisting, whichever shall first occur.
SECTION 1
DEFINITIONS
The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:
1.1 "Account" or "Account(s)" means as to any Participant the
separate account(s) maintained on the books of the Company in order to reflect
his or her interest under the Plan.
1.2 "Affiliate" means any Parent or Subsidiary of the Company,
but only for the period during which such other entity actually qualifies as a
Parent or Subsidiary.
1.3 "Beneficiary" means the person or persons entitled (under
Section 5.4) to receive any vested balance credited to a Participant's Account
upon the death of the Participant.
1.4 "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.
1.5 "Committee" shall have the same meaning as assigned from time
to time to the identical term under the Stock Option Plan.
1.6 "Company" means Genentech, Inc., a Delaware corporation.
1.7 "Consultant" means a Consultant (as defined from time to time
under the Stock Option Plan) who, on the Effective Date, possesses one or more
unvested, in-the-money Options which, on the Effective Date, will be cancelled
under Article Six of the Stock Option Plan due to the occurrence of a
Redemption or Delisting.
1.8 "Delisting" means the failure of the Special Common Stock to
be listed for trading on at least one of: (a) the New York Stock Exchange, (b)
the Nasdaq National Market, or (c) any other national exchange.
1.9 "Delisting Value" means the greater of (a) the arithmetic
mean of the Closing Selling Prices (as defined in the Stock Option Plan) of
the Special Common Stock on the twenty trading days immediately preceding the
date on which Delisting occurs, or (b) $60 per share of Special Common Stock
(adjusted for any reorganizations, consolidations, recapitalizations, stock
dividends, split-ups, or other changes in the corporate structure of the
Company which affect the Special Common Stock).
1.10 "Disability" or "Disabled" means permanent and total
disability as defined in section 22(e)(3) of the Internal Revenue Code of
1986, as amended, including any valid regulation promulgated thereunder, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
1.11 "Effective Date" means the date on which the Plan becomes
effective. The Plan shall become effective on the first to occur of a
Redemption or Delisting. The Plan shall not be effective prior to the
occurrence of either such event.
1.12 "Employee" means an employee of an Employer who, on the
Effective Date, possesses one or more unvested, in-the-money Options which, on
the Effective Date, will be cancelled under Article Six of the Stock Option
Plan due to the occurrence of a Redemption or Delisting, irrespective of
whether employment services are actually provided by the individual.
1.13 "Employer" means the Company and each of its Affiliates that
adopts the Plan as a participating Employer. With respect to an individual
Participant, Employer means the Company or the Affiliate that has adopted the
Plan and that directly employs the Participant.
1.14 "Employer Contributions" means the amounts credited to
Participants' Accounts under the Plan pursuant to Section 3.
1.15 "Nonemployee Director" means any individual who is a member
of the Board of Directors of the Company (but who is an employee of neither
the Company nor of any Affiliate) who, on the Effective Date, possesses one or
more unvested, in-the-money Options which, on the Effective Date, will be
cancelled under Article Six of the Stock Option Plan due to the occurrence of
a Redemption or Delisting.
1.16 "Option" means a stock option granted pursuant to the Stock
Option Plan.
1.17 "Parent" shall have the same meaning as assigned from time to
time to the identical term under the Stock Option Plan.
1.18 "Participant" means a Consultant, Employee or Nonemployee
Director who (a) has become a Participant in the Plan pursuant to Section 2.1
and (b) has not ceased to be a Participant pursuant to Section 2.2.
1.19 "Plan" means the Genentech, Inc. Deferred Compensation Plan,
as set forth in this instrument and as hereafter amended from time to time.
1.20 "Redemption" means the redemption of the Special Common Stock
as provided in Section (c)(ii) of Article Third of the Certificate of
Incorporation of the Company.
1.21 "Redemption Value" means the value specified for redemption
of the Special Common Stock as set forth in Section (c)(ii)(A) of Article
Third of the Certificate of Incorporation of the Company (and as adjusted
pursuant to Section (c)(ii)(C) of Article Third of the Certificate of
Incorporation).
1.22 "Retirement" means the Participant's termination of
employment with the Company and all of its Affiliates on account of his or her
retirement at or after age 65.
1.23 "Special Common Stock" shall have the same meaning as
assigned from time to time to the identical term under the Stock Option Plan.
1.24 "Stock Option Plan" means the Genentech, Inc. 1996 Stock
Option/Stock Incentive Plan, as hereafter amended from time to time.
1.25 "Subsidiary" shall have the same meaning as assigned from
time to time to the identical term under the Stock Option Plan.
SECTION 2
PARTICIPATION
2.1 Participation. Each individual who is a Consultant, Employee
or Nonemployee Director on the Effective Date automatically shall become a
Participant in the Plan on such date.
2.2 Termination of Participation. An individual who has become a
Participant shall remain a Participant until his or her entire vested Account
balance is distributed.
SECTION 3
EMPLOYER CONTRIBUTIONS
3.1 Employer Contributions. On the Effective Date, each
Participant shall have Employer Contributions credited to his or her
Account(s) in an amount determined in the manner prescribed in this Section
3.1. If the Effective Date occurs due to a Delisting, such amount shall be
determined in accordance with Section 3.1.1. If the Effective Date occurs due
to a Redemption, such amount shall be determined in accordance with Section
3.1.2. For each Participant, the calculation under Section 3.1.1 or Section
3.1.2 (as the case may be) shall be performed for each of the Participant's
unvested, in-the-money Options which are cancelled on the Effective Date due
to the Delisting or Redemption. Options which are not in-the-money (i.e.,
which have exercise prices greater than the Delisting Value or Redemption
Value, whichever is applicable) shall not be considered for purposes of
determining Employer Contributions.
3.1.1 Delisting. With respect to any Option, the amount
credited to a Participant's Account shall equal the product of:
(a) The amount by which the Delisting Value of a share exceeds
the exercise price of the Option, times
(b) The number of shares covered by the Option.
3.1.2 Redemption. With respect to any Option, the amount
credited to a Participant's Account shall equal the product of:
(a) The amount by which the Redemption Value of a share exceeds
the exercise price of the Option, times
(b) The number of shares covered by the Option.
3.2 Crediting of Employer Contributions. The Employer
Contributions on any Option shall be credited to a separate Account created
for each such Option. All Employer Contributions shall be credited as of the
Effective Date (but may or may not become vested, as provided in Section 6).
The exact dollar amount to be credited shall be determined by the Committee
under such formulas (consistent with the Plan) as the Committee shall adopt.
3.3 Deemed Interest on Accounts. Each Account shall be credited
with deemed interest as of the end of each calendar quarter. The annual rate
for crediting deemed interest during any quarter (which rate shall be adjusted
quarterly) shall be the rate paid by two-year U.S. Treasury notes (at
issuance) which are last issued during such quarter. Deemed interest under
this Section 3.3 shall be calculated using a 360-day year and shall be
compounded on a quarterly basis.
3.4 Form and Timing of Payment. On or prior to the Effective
Date, each Participant shall elect the form and timing of payment for the
vested portion (if any) of his or her Account(s). A Participant may elect (a)
payment as of each March 31, June 30, September 30 and December 31 (of all
amounts which are then vested), (b) payment as of each June 30 and December 31
(of all amounts which are then vested) or (c) payment of all vested amounts as
soon as administratively practicable after the Participant's last scheduled
vesting date. A Participant later may change his or her election as to the
form and timing of payment with respect to amounts which are scheduled to vest
in any future calendar year. However, any election under the preceding
sentence will be effective only if (1) the election is received by the
Committee (or its delegate) no later than last day of the calendar year prior
to the year in which the amounts with respect to which the election is being
made become vested, and (2) the Participant acknowledges in writing (in a form
acceptable to the Committee) that any income tax consequences from the
Participant's election will be solely the responsibility of the Participant.
A Participant may not change his or her election with respect to already
vested amounts. Each election under this Section 3.4 shall be made in such
manner as the Committee may specify.
SECTION 4
ACCOUNTING
4.1 Participants' Accounts. At the direction of the Committee,
there shall be established and maintained on the books of the Company, a
separate Account or Accounts for each Participant to which shall be credited
Employer Contributions made on behalf of the Participant, and the deemed
interest on such Employer Contributions. A separate Account shall be
established for the crediting of Employer Contributions (and deemed interest
thereon) on each of the Participant's unvested, in-the-money Options which are
cancelled on the Effective Date due to the Delisting or Redemption.
4.2 Participants Remain Unsecured Creditors. All amounts
credited to a Participant's Account under the Plan shall continue for all
purposes to be a part of the general assets of the Company. Each
Participant's interest in the Plan shall make him or her only a general,
unsecured creditor of the Company.
4.3 Accounting Methods. The accounting methods or formulas to be
used under the Plan for the purpose of maintaining the Participants' Accounts,
including the calculation and crediting of any deemed interest shall be
determined by the Committee in its sole discretion. The accounting methods or
formulas selected by the Committee may be revised from time to time.
4.4 Reports. Each Participant shall be furnished with periodic
statements of his or her Account, reflecting the status of his or her interest
in the Plan, at least annually.
SECTION 5
DISTRIBUTIONS
5.1 Normal Distribution Timing and Rules. Subject to Sections
5.2 and 5.3, distribution of the vested balance credited to a Participant's
Account(s) shall be made as soon as administratively practicable after the
date or dates elected by the Participant under Section 3.4. Subject to the
provisions of this Section 5, payment shall be made to the Participant, or in
the event of the Participant's death, to the Participant's Beneficiary (or
estate, as provided in Section 5.4). A Participant (or Beneficiary) shall be
paid all vested amounts credited to his or her Account(s) (if any) no later
than the last scheduled vesting date for the applicable Option.
5.2 Special Rule for Death or Disability. If a Participant dies,
the vested balance then credited to his or her Account (including any amounts
vested pursuant to Section 6.2.2) shall be immediately distributed to the
Participant's Beneficiary as soon as administratively practicable after the
date of death. If a Participant becomes Disabled, the vested balance credited
to the Participant's Account (including any amounts vested pursuant to Section
6.2.2) shall be distributed to the Participant at the time and in the form
elected by the Participant pursuant to Section 3.4; provided, however, that
the Committee, in its sole discretion, may elect to distribute the vested
balance of the Participant's Account in a lump sum as of any date after the
date of Disability.
5.3 Special Rule for Termination of Employment. If a Participant
terminates his or her employment with the Company and all of its Affiliates
for a reason other than death or Disability, the vested balance then credited
to his or her Account shall be distributed to him or her in a lump sum as soon
as administratively practicable after such termination.
5.4 Beneficiary Designations. Each Participant may, pursuant to
such procedures as the Committee may specify, designate one or more
Beneficiaries.
5.4.1 Spousal Consent. If a Participant does not designate
his or her spouse as sole primary Beneficiary, the beneficiary designation
shall be ineffective unless such spouse consents to the designation. Any
spousal consent required under this Section 5.4 shall be ineffective unless it
is set forth in writing and signed by the spouse. Notwithstanding the
preceding, if the Participant establishes to the satisfaction of the Company
that written spousal consent may not be obtained because the spouse cannot be
located, his or her designation shall be effective without a spousal consent.
Any spousal consent required under this Section 5.4 shall be valid only with
respect to the spouse who signs the consent.
5.4.2 Changes and Failed Designations. A Participant may
change or revoke Beneficiary designations by delivering a new designation (or
revocation) in the manner described in Section 5.4.1. Any designation or
revocation shall be effective only if it is received by the Company. However,
when so received, the designation or revocation shall be effective as of the
date the notice is executed (whether or not the Participant still is living),
but without prejudice to the Company on account of any payment made before the
change is recorded. The last effective designation received by the Company
shall supersede all prior designations. If a Participant dies without having
effectively designated a Beneficiary, or if no Beneficiary survives the
Participant, the vested portion (if any) of the Participant's Account shall be
payable (a) to his or her surviving spouse (if any), or (b) if the Participant
is not survived by a spouse, to the Participant's estate.
5.5 Financial Hardship. In the event that a Participant incurs a
"financial hardship", the Committee, in its sole discretion and
notwithstanding any contrary provision of the Plan, may determine that all or
part of the vested portion of the Participant's Account(s) shall be paid to
him or her immediately; provided, however, that the amount paid to the
Participant pursuant to this Section 5.5 shall be limited to the amount
reasonably necessary to alleviate the Participant's hardship. For purposes of
this Section 5.5, a "financial hardship" shall mean a severe financial
emergency which is caused by a sudden and unexpected accident, illness or
other event beyond the control of the Participant which, without an acceler-
ated distribution from the Plan, would result in severe financial burden to
the Participant or a member of his or her immediate family. A financial
hardship does not exist to the extent that the hardship may be relieved by
(a) reimbursement or compensation by insurance, (b) liquidation of the
Participant's other assets (to the extent such liquidation would not itself
cause severe financial hardship), or (c) any loan available to the Participant
(to the extent the payments on such loan would not themselves cause severe
financial hardship).
5.6 Payments to Incompetents. If any individual to whom a
benefit is payable under the Plan is a minor or legally incompetent, the
Committee shall determine whether payment shall be made directly to the
individual, any person acting as his or her custodian or legal guardian under
the California Uniform Transfers to Minors Act, his or her legal
representative or a near relative, or directly for his or her support,
maintenance or education.
5.7 Undistributable Accounts. Each Participant (and in the event
of the Participant's death, his or her Beneficiary) shall keep the Committee
advised of his or her current address. If the Committee is unable to locate
the Participant or Beneficiary to whom a Participant's Account is payable
under this Section 5, the Participant's Account shall be frozen and no further
deemed interest under Section 3.3 shall be credited to the Account. Accounts
that, in accordance with the preceding sentence, have been undistributable for
a period of 35 months shall be forfeited as of the end of the 35th month. If
a Participant whose Account was forfeited under this Section 5.7 (or his or
her Beneficiary) files a claim for distribution of the Account after the date
that it was forfeited, and if the Committee determines that such claim is
valid, then the forfeited balance shall be paid in a lump sum cash payment as
soon as administratively practicable thereafter (without any deemed interest
for the period during which the account was frozen or forfeited).
5.8 Payment in Cash or Its Equivalent. All payments from the
Plan shall be made in cash or its equivalent.
5.9 Tax Withholding. The Company shall withhold all applicable
taxes from any payment, including but not limited to, any federal, FICA,
state, and local income and employment taxes.
5.10 Committee Discretion. Within the specific time periods
described in this Section 5, the Committee shall have sole discretion to
determine the specific timing of the payment of any Account balance under the
Plan.
SECTION 6
PARTICIPANT'S INTEREST IN ACCOUNT
6.1 Vesting in Accounts. A Participant's vested interest (if
any) in his or her Account(s) shall be determined in accordance with Section
6.2. The vested portion of a Participant's Account(s) (if any) shall be
distributed to the Participant in the manner and at the time set forth in
Section 5, and any unvested portion shall be permanently forfeited as provided
in Section 6.2.
6.2 Vesting Rules. With respect to each Account of a
Participant, his or her interest in the Account shall be vested in accordance
with the same schedule, and on the same terms and conditions, as the Option
(or applicable portion thereof) with respect to which the Employer
Contributions in the Account were calculated. For example, suppose that
Employer Contributions of $4,000 are credited to a Participant's Account on
January 10, 1998, based on an Option covering 200 shares of Special Common
Stock. If the Option had been scheduled to vest as to 100 shares on June 30,
1998, and as to the remaining 100 shares on June 30, 1999, the Participant
would be scheduled to vest in $2,000 of Employer Contributions (and deemed
interest thereon) on June 30, 1998, and as to an additional $2,000 of Employer
Contributions (and deemed interest thereon) on June 30, 1999. On any
scheduled vesting date, vesting actually will occur only if the terms and
conditions set forth in the applicable Option agreement are satisfied (for
example, with respect to continuous employment with the Company and
Affiliates). Consistent with the Plan, the specific vesting schedule for any
Account shall be determined by the Committee in its discretion.
6.2.1 Termination. Upon termination of the Participant's
employment with all Employers and Affiliates for any reason at any time, the
vested portion of his or her Account(s) shall be distributable to him or her
in the manner and at the times set forth in Section 5, and the unvested
portion of such Account shall be permanently forfeited.
6.2.2 Full Vesting. Notwithstanding any contrary provision
of Section 6.2.1, a Participant's interest in his or her entire Account may
become 100% vested and nonforfeitable in accordance with the rules of this
Section 6.2.2. A Participant's interest in his or her entire Account shall
become 100% vested and nonforfeitable upon the date of his or her death or
Retirement. If a Participant becomes Disabled, the Committee, in its sole
discretion, may provide that all or part of the Participant's Account shall
become vested upon the date of his or her Disability.
6.3 Transfers of Employment. The transfer of a Participant
from employment with an Employer to employment with another Affiliate shall
not constitute a termination of employment under the Plan. Upon termination
of his or her employment with such other Affiliate (other than for transfer to
employment with another Affiliate), the Participant's employment shall be
deemed then to have terminated.
SECTION 7
ADMINISTRATION OF THE PLAN
7.1 Committee. The Plan shall be administered by the Committee.
The Committee shall have the authority to control and manage the operation and
administration of the Plan.
7.2 Actions by Committee. Each decision of a majority of the
members of the Committee then in office shall constitute the final and binding
act of the Committee. The Committee may act with or without a meeting being
called or held and shall keep minutes of all meetings held and a record of all
actions taken by written consent.
7.3 Powers of Committee. The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the
Plan and to control its operation in accordance with its terms, including, but
not by way of limitation, the following powers:
(a) To interpret and determine the meaning and validity of the
provisions of the Plan and to determine any question arising under, or
in connection with, the administration, operation or validity of the
Plan or any amendment thereto;
(b) To determine any and all considerations affecting the
eligibility of any employee to become a Participant or remain a
Participant in the Plan;
(c) To cause one or more separate Accounts to be maintained for
each Participant;
(d) To cause Employer Contributions and deemed interest to be
credited to Participants' Accounts;
(e) To establish and revise an accounting method or formula for
the Plan, as provided in Section 4.3;
(f) To determine the status and rights of Participants and
their spouses, Beneficiaries or estates;
(g) To employ such counsel, agents and advisers, and to obtain
such legal, clerical and other services, as it may deem necessary or
appropriate in carrying out the provisions of the Plan;
(h) To establish, from time to time, rules for the performance
of its powers and duties and for the administration of the Plan;
(i) To arrange for annual distribution to each Participant of a
statement of benefits accrued under the Plan;
(j) To publish a claims and appeal procedure pursuant to which
individuals or estates may claim Plan benefits and appeal denials of
such claims;
(k) To delegate to any one or more of its members or to any
other person, severally or jointly, the authority to perform for and on
behalf of the Committee one or more of the functions of the Committee
under the Plan; and
(l) To decide all issues and questions regarding Account
balances, and the time, form, manner, and amount of distributions to
Participants.
7.4 Decisions of Committee. All actions, interpretations, and
decisions of the Committee shall be conclusive and binding on all persons, and
shall be given the maximum deference permitted by law.
7.5 Administrative Expenses. All expenses incurred in the
administration of the Plan by the Committee, or otherwise, including legal
fees and expenses, shall be paid and borne by the Employers.
7.6 Eligibility to Participate. No member of the Committee who
also is a Participant shall be excluded from participating in the Plan, but as
a member of the Committee, he or she shall not be entitled to act or pass upon
any matters pertaining specifically to his or her own Account.
7.7 Indemnification. Each of the Employers shall, and hereby
does, indemnify and hold harmless the members of the Committee, from and
against any and all losses, claims, damages or liabilities (including
attorneys' fees and amounts paid, with the approval of the Board of Directors,
in settlement of any claim) arising out of or resulting from the
implementation of a duty, act or decision with respect to the Plan, so long as
such duty, act or decision does not involve gross negligence or willful
misconduct on the part of any such individual.
SECTION 8
FUNDING
8.1 Unfunded Plan. All amounts credited to a Participant's
Account under the Plan shall continue for all purposes to be a part of the
general assets of the Company. The interest of the Participant in his or her
Account, including his or her right to distribution thereof, shall be an
unsecured claim against the general assets of the Company. Nothing contained
in the Plan shall give any Participant or Beneficiary any interest in or claim
against any specific assets of the Company.
SECTION 9
MODIFICATION OR TERMINATION OF PLAN
9.1 Employers' Obligation is Limited. The Employers intend to
continue the Plan indefinitely, and to maintain each Participant's Account
until it is scheduled to be paid to him or her in accordance with the
provisions of the Plan. However, the Plan is voluntary on the part of the
Employers, and the Employers do not guarantee to continue the Plan. The
Company at any time may amend the Plan, with or without cause.
9.2 Right to Amend or Terminate. The Board of Directors reserves
the right to alter, amend or terminate the Plan, or any part thereof, at any
time and for any reason provided that (a) no amendment or termination of the
Plan shall, without the consent of the Participant, reduce the vested balance
then credited to the Participant's Account, and (b) the Plan shall not be
terminated until all vested amounts (and amounts which possibly still may
vest) have been distributed to the Participants (or Beneficiaries).
SECTION 10
GENERAL PROVISIONS
10.1 Inalienability. In no event may either a Participant, a
former Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors nor be liable to attachment, execution or other
legal process. Accordingly, for example, a Participant's interest in the Plan
is not transferable pursuant to a domestic relations order.
10.2 Participation by Affiliates. One or more Affiliates of the
Company may become participating Employers by adopting the Plan. By adopting
the Plan, an Affiliate is deemed to agree to all of its terms, including (but
not limited to) the provisions granting exclusive authority to the Board of
Directors to amend the Plan and the provisions granting exclusive authority to
the Committee to administer and interpret the Plan. Any Affiliate may
terminate its participation in the Plan at any time by resolution of its board
of directors. The liabilities incurred under the Plan to the Participants
shall be solely the liabilities of the Company, and no other Employer shall be
liable for benefits accrued under the Plan. An Affiliate's participation in
the Plan shall be deemed terminated if it ceases to be an Affiliate.
10.3 Rights and Duties. Neither the Employers nor the Committee
shall be subject to any liability or duty under the Plan except as expressly
provided in the Plan, or for any action taken, omitted or suffered in good
faith.
10.4 Apportionment of Costs and Duties. All acts required of the
Employers under the Plan may be performed by the Company for itself and its
Affiliates, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and the other Employers.
10.5 No Effect on Employment. Neither the establishment or
maintenance of the Plan, the making of any Employer Contributions nor any
action of any Employer or the Committee, shall be held or construed to confer
upon any individual any right to be continued as an employee, or upon
dismissal, any right or interest in any specific assets of the Employers other
than as provided in the Plan. Each Employer expressly reserves the right to
discharge any employee at any time, with or without cause.
10.6 Employer Contributions Not Counted Under Other Employee
Benefit Plans. Employer Contributions under the Plan will not be considered
for purposes of contributions or benefits under any other employee benefit
plan sponsored by the Employers.
10.7 Compliance with Rule 16b-3. Payments under the Plan are
intended to be exempt from liability under section 16 of the Securities
Exchange Act of 1934, as amended ("section 16"). To the extent deemed
necessary or advisable by the Committee, any payment to an individual who is
subject to section 16(a) with respect to the Special Common Stock may be
delayed in order to ensure that such payment will not result in any liability
under section 16(b) to such individual.
10.8 Applicable Law. The provisions of the Plan shall be
construed, administered and enforced in accordance with the laws of the State
of California (other than its conflict of laws provisions).
10.9 Severability. If any provision of the Plan is held invalid
or unenforceable, its invalidity or unenforceability shall not affect any
other provisions of the Plan, and in lieu of each provision which is held
invalid or unenforceable, there shall be added as part of the Plan a provision
that shall be as similar in terms to such invalid or unenforceable provision
as may be possible and be valid, legal, and enforceable.
10.10 Captions. The captions contained in and the table of
contents prefixed to the Plan are inserted only as a matter of convenience and
for reference and in no way define, limit, enlarge or describe the scope or
intent of the Plan nor in any way shall affect the construction of any
provision of the Plan.
EXECUTION
IN WITNESS WHEREOF, the Company, by its duly authorized officers,
has executed the Plan on the date indicated below.
GENENTECH, INC.
Dated: By:
Title:
GENENTECH, INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS
1.1 "Account" or "Account(s)" 1
1.2 "Affiliate" 1
1.3 "Beneficiary" 1
1.4 "Board of Directors" 1
1.5 "Committee" 1
1.6 "Company" 1
1.7 "Consultant" 1
1.8 "Delisting" 1
1.9 "Delisting Value" 2
1.10 "Disability" 2
1.11 "Effective Date" 2
1.12 "Employee" 2
1.13 "Employer" 2
1.14 "Employer Contributions" 2
1.15 "Nonemployee Director" 2
1.16 "Option" 2
1.17 "Parent" 2
1.18 "Participant" 3
1.19 "Plan" 3
1.20 "Redemption" 3
1.21 "Redemption Value" 3
1.22 "Retirement" 3
1.23 "Special Common Stock" 3
1.24 "Stock Option Plan" 3
1.25 "Subsidiary" 3
SECTION 2 PARTICIPATION
2.1 Participation 3
2.2 Termination of Participation 3
SECTION 3 EMPLOYER CONTRIBUTIONS
3.1 Employer Contributions 4
3.1.1 Delisting 4
3.1.2 Redemption 4
3.2 Crediting of Employer Contributions 4
3.3 Deemed Interest on Accounts 4
3.4 Form and Timing of Payment 5
SECTION 4 ACCOUNTING
4.1 Participants' Accounts 5
4.2 Participants Remain Unsecured Creditors 5
4.3 Accounting Methods 5
4.4 Reports 6
SECTION 5 DISTRIBUTIONS
5.1 Normal Distribution Timing and Rules 6
5.2 Special Rule for Death or Disability 6
5.3 Special Rule for Termination of Employment 6
5.4 Beneficiary Designations 6
5.4.1 Spousal Consent 6
5.4.2 Changes and Failed Designations 7
5.5 Financial Hardship 7
5.6 Payments to Incompetents 7
5.7 Undistributable Accounts 8
5.8 Payment in Cash or Its Equivalent 8
5.9 Tax Withholding 8
5.10 Committee Discretion 8
SECTION 6 PARTICIPANT'S INTEREST IN ACCOUNT
6.1 Vesting in Accounts 8
6.2 Vesting Rules 8
6.2.1 Termination 9
6.2.2 Full Vesting 9
6.3 Transfers of Employment 9
SECTION 7 ADMINISTRATION OF THE PLAN
7.1 Committee 9
7.2 Actions by Committee 10
7.3 Powers of Committee 10
7.4 Decisions of Committee 11
7.5 Administrative Expenses 11
7.6 Eligibility to Participate 11
7.7 Indemnification 11
SECTION 8 FUNDING
8.1 Unfunded Plan 11
SECTION 9 MODIFICATION OR TERMINATION OF PLAN
9.1 Employers' Obligation is Limited 12
9.2 Right to Amend or Terminate 12
SECTION 10 GENERAL PROVISIONS
10.1 Inalienability 12
10.2 Participation by Affiliates 12
10.3 Rights and Duties 13
10.4 Apportionment of Costs and Duties 13
10.5 No Effect on Employment 13
10.6 Employer Contributions Not Counted Under Other Employee Benefit
Plans 13
10.7 Compliance with Rule 16b-3 13
10.8 Applicable Law 13
10.9 Severability 13
10.10 Captions 13