GENENTECH, INC.
1984 INCENTIVE STOCK OPTION PLAN, AS AMENDED AND RESTATED
(Effective October 16, 1996)
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which selected key
employees of GENENTECH, INC. (the "Company") and its affiliates, as defined in
subparagraph 1(b), may be given an opportunity to purchase stock of the
Company.
(b) The word "affiliate" as used in the Plan means any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now holding key positions, to secure and retain the services of
persons capable of filling such positions, and to provide incentives for such
persons to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan be incentive
stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board relegates administration to a
committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine
all questions of policy and expediency that may arise in the administration of
the Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible under the
Plan shall be granted options; when and how the option shall be granted; the
provisions of each option granted (which need not be identical), including the
time or times during the term of each option within which all or portions of
such option may be exercised; and the number of shares for which an option
shall be granted to each person.
(2) To construe and interpret the Plan and options granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any option agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than three (3) members of the Board. If administration
is delegated to a committee, the committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the committee at any time and revest in the Board the administration
of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
this Plan shall not exceed in the aggregate Fifteen Million Ninety Four
Thousand Three Hundred and Ninety Seven (15,094,397) shares of the Company's
common stock; provided, however, that such aggregate number of shares shall be
reduced to reflect the number of shares of the Company's common stock which
has been sold under, or may be sold pursuant to outstanding options granted
under, the Company's 1984 Non-Qualified Stock Option Plan (the "Non-Qualified
Plan") to the same extent as if such sales had been made or options had been
granted pursuant to this Plan. As used in this Plan, the "Company's common
stock" includes all series of common stock authorized by the Company's charter
documents, including the Common Stock and Earnings Convertible Restricted
Stock now authorized and any other series that may in the future be
authorized. If any option granted under this Plan or the Non-Qualified Plan
shall for any reason expire or otherwise terminate without having been
exercised in full, the stock not purchased under such option shall again
become available for this Plan and the Non-Qualified Plan.
(b) For options granted after December 31, 1986, an option may be granted to
an eligible person under the Plan only if the aggregate fair market value
(determined at the time the option is granted) of the stock with respect to
which incentive stock options are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company and its
affiliates does not exceed one hundred thousand dollars ($100,000). Should it
be determined that any option granted under the Plan exceeds such maximum,
such option shall be considered a nonstatutory stock option to the extent, but
only to the extent, of such excess.
(c) Subject to the limitations contained elsewhere herein and to the
provisions of paragraph 9 relating to adjustments upon changes in stock, the
aggregate number of shares of stock that may be subject to options granted to
all persons who are directors of the Company at the time such Options are
granted shall not exceed four hundred thousand (400,000) shares of the
Company's common stock, and no single director of the Company may be granted
options to purchase more than two hundred thousand (200,000) shares of the
Company's common stock.
4. ELIGIBILITY
(a) Options may be granted only to key employees (including officers) of the
Company or its affiliates. A director of the Company shall not be eligible to
be granted an option under the Plan unless such director is also a key
employee (including an officer) of the Company or an affiliate of the Company.
(b) A director shall in no event be eligible to be granted an option under
the Plan unless and until such director is expressly declared eligible to
participate in the Plan by action of the Board or the committee.
(c) No person shall be eligible for the grant of an option under the Plan
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock assessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
of its affiliates unless the options price is at least one hundred ten percent
(110%) of the fair market value of such stock at the date of grant and the
term of the option does not exceed five (5) years from the date of grant.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and
conditions as the Board or the committee shall deem appropriate. The
provisions of separate options need not be identical, but each option shall
include (through incorporation of provisions hereof by reference in the option
or otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years from the
date it was granted.
(b) The exercise price of each option shall be not less than one hundred
percent (100%) of the fair market value of the stock subject to the option on
the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, as specified in the option, either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Board or the committee, (A) by
delivery to the Company of other shares of the Company's common stock, (B)
according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common
stock of the Company) with the person to whom the option is granted or to whom
the option is transferred pursuant to subparagraph 5(d), or (C) in any other
form of legal consideration that may be acceptable to the Board or the
committee in their discretion, either at the time of grant or exercise of the
option.
In the case of any deferred payment arrangement specified at the time of
grant, an interest rate shall be stated which is not less than the rate then
specified which will prevent any imputation of higher interest under Section
483 of the Code.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but need
not, be allotted in periodic installments (which may, but need not, be equal).
From time to time during each of such installment periods, the option may be
exercised with respect to some or all of the shares allotted to that period,
and/or with respect to some or all of the shares allotted to any prior period
as to which the option was not fully exercised. During the remainder of the
term of the option (if its term extends beyond the end of the installment
periods), the option may be exercised from time to time with respect to any
shares then remaining subject to the option. The provisions of this
subparagraph 5(e) are subject to any option provisions governing the minimum
number of shares as to which an option may be exercised.
(f) [RESERVED]
(g) The Company may require any optionee, or any person to whom an option is
transferred under subparagraph 5(d), as a condition of exercising any such
option to make such representations, warranties and agreements as the Company
may deem appropriate to assure that issuance of the Company's common stock
upon exercise of such option is in compliance with then applicable federal and
state securities laws.
(h) An option shall terminate three (3) months after termination of the
optionee's employment with the Company or an affiliate, unless (i) the
termination of employment of the optionee is due to such person's permanent
and total disability, within the meaning of Section 422(c)(6) of the Code, in
which case the option may, but need not, provide that it may be exercised at
any time within one (1) year following such termination of employment; or (ii)
the optionee dies while in the employ of the Company or an affiliate, or
within not more than three (3) months after termination of such employment, in
which case the option may, but need not, provide that it may be exercised at
any time within eighteen (18) months following the death of the optionee by
the person or persons to whom the optionee's rights under such option pass by
will or by the laws of descent and distribution; or (iii) the option by its
terms specifies either (a) that it shall terminate sooner than three (3)
months after termination of the optionee's employment, or (b) that it may be
exercised more than three (3) months after termination of the optionee's
employment with the Company or an affiliate. This subparagraph 5(h) shall not
be construed to extend the term of any option or to permit anyone to exercise
the option after expiration of its term, nor shall it be construed to increase
the number of shares as to which any option is exercisable from the amount
exercisable on the date of termination of the optionee's employment.
(i) The option may, but need not, include a provision whereby the optionee
may elect any time during the term of his or her employment with the Company
or any affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting data of the option or of any
installment or installments specified in the option. Any shares so purchased
from any unvested installment or option may be subject to a repurchase right
in favor of the Company or to any other restriction the Board or the committee
determines to be appropriate.
(j) Options may be granted to directors of the Company only during the first
month of each calendar quarter. Any option held by a director of the Company
may only be exercised during any period of ten business days beginning on the
third business day after a quarterly or annual summary statement of the
Company's revenues and earnings appears on a wire service or in a newspaper of
general circulation, or is otherwise made generally available to the public.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company
to register under the Securities Act of 1933, as amended, either the Plan, any
option granted under the Plan or any stock issued or issuable pursuant to any
such option. If the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems
necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such options unless and until such authority is
obtained.
7. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) The Board or the committee shall have the power to accelerate the time
during which an option may be exercised or the time during which the option or
any part thereof will vest pursuant to subparagraph 5(e), notwithstanding the
provisions in the option stating the time during which it may be exercised or
the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option
unless and until such person has satisfied all requirements for exercise of
the option pursuant to its terms.
9. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or otherwise), the Board shall make
appropriate adjustments in the maximum number of shares subject to the Plan
and the number of shares and price per share of stock subject to outstanding
options.
(b) In the event of a Change of Control (as defined in subparagraph 9(c)),
then as to options which are not then exercisable, the time during which such
options may be exercised shall be accelerated to the 60-day period from and
after a Change of Control, unless, in the opinion of the Board, it is clearly
in the best interests of the optionholders and the shareholders taken together
that the Company or a surviving corporation (if the Change of Control results
in the Company not surviving) assume any outstanding options or substitute
similar options for those outstanding under the Plan, in which case the Board
may take appropriate action to effect an assumption or substitution.
(c) "Change of Control" shall mean any of the following events:
(1) the acquisition by any person (including a group, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than the Company or any of its subsidiaries, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of 50% or more of the combined voting power
of the Company's then outstanding voting securities; or
(2) approval by stockholders of the Company of a merger, consolidation,
liquidation or dissolution of the Company or of the sale of all or
substantially all of the Company's assets.
(d) Notwithstanding any provision to the contrary set forth herein, the
consummation of the merger contemplated by the Agreement and Plan of Merger
dated as of May 23, 1995, among the Company, Roche Holdings, Inc. and HLR
(U.S.) II, Inc. shall not be deemed to be a Change of Control under the Plan.
(e) From and after October 25, 1995, all references herein to "shares",
"stock", or "the Company's common stock" shall be deemed to be references to
shares of Callable Putable Common Stock, par value $0.02 per share, of the
Company ("Special Common Stock"), except for the references to the shares of
Common Stock of the Company contained in subparagraph 9(g).
(f) Notwithstanding any provision to the contrary set forth herein, in the
event that the Special Common Stock is redeemed in accordance with Article
THIRD, Section (c)(ii) of the Company's Certificate of Incorporation, any
options granted under the Plan that are exercisable for Special Common Stock
and that are outstanding on the date of redemption (whether or not such
options are exercisable on such date) shall become exercisable for
consideration of the same type and amount as the holders thereof would have
received had they exercised such options prior to such date of redemption.
(g) Notwithstanding any provision to the contrary set forth herein, in the
event that the shares of Special Common Stock are converted into shares of
Common Stock, par value $0.02 per share, of the Company ("Common Stock")
pursuant to Article THIRD, Section (c)(vi) of the Company's Certificate of
Incorporation, each option granted under the Plan which is outstanding on the
Conversion Date as such term is defined in Article THIRD, Section (c)(vi) of
the Company's Certificate of Incorporation) shall automatically be canceled,
and the holder thereof shall receive, in exchange therefor, a substitute
option to purchase, at a per share exercise price equal to the per share
exercise price of such canceled option, the number of shares of Common Stock
equal to the number of shares of Special Common Stock subject to such canceled
option. Such substitute option shall be subject to the same terms and
conditions as the option for which it is exchanged, including with respect to
vesting (such that such substitute option vests at the same time as the option
for which it is exchanged would have vested) and the conditions relating to
the exercise of the option. From and after the Conversion Date, all references
herein to "shares", "stock", or the "Company's Common Stock" which in
accordance with subparagraph 9(e) are deemed to be references to shares of
Special Common Stock, shall be deemed to be references to shares of Common
Stock.
10. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by a
majority of the outstanding shares of the Company entitled to vote within
twelve (12) months before or after the adoption of the amendment, where the
amendment will:
(i) Increase the number of shares reserved for options under the Plan;
(ii) Materially modify the requirements as to eligibility for participation
in the Plan; or
(iii) Materially increase the benefits accruing to participants under the
Plan.
It to expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to employee incentive
stock options and/or to bring the Plan and/or options granted under it into
compliance therewith.
(b) Rights and obligations under any option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate within ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN
The Plan shall become effective as determined by the Board, but no options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the holders of a majority of the outstanding shares of the Company
entitled to vote, and, if required, an appropriate permit has been issued by
the Commissioner of Corporations of the State of California.