This agreement is
being entered into between Myrtle Potter (“Potter”) and
Genentech, Inc., One DNA Way, South San Francisco, CA 94080
(“Genentech”) and becomes effective seven days after
the signing of this agreement by Potter (the “Effective
Date”).
Potter has served
Genentech for over five years, most recently as President,
Commercial Operations. Potter has been very instrumental in
building the commercial organization and the company. Potter and
Genentech have decided it is in their mutual interest to enter into
this Transition Agreement.
1.
Change in Status. Upon the Effective Date, Potter’s
employment with and position as President of Commercial Operations
with Genentech will automatically terminate, and commencing upon
the Effective Date, Potter will become a consultant to Genentech in
accordance with the terms and conditions contained herein. Upon the
Effective Date, Potter shall resign from the Genentech Foundation
and she shall no longer serve as Genentech’s representative
with respect to any other organization that she is currently serves
as a representative from Genentech. Potter’s status as a
consultant to Genentech will continue until September 30, 2006
unless her consultant status terminates prior to that date in
accordance with the terms herein. During the term of her consultant
status, Potter agrees to provide up to 20 hours per month in
consulting services on matters or projects identified to her in
writing by an officer of Genentech. Such matters or projects shall
be consistent with the level of input provided by a senior
executive of Genentech and consistent with Potter’s skills
and professional background.
Potter’s
consultant status shall automatically terminate and all ongoing
consulting status payments and stock option vesting shall cease at
any point at which (1) she initiates any employment or
relationship with any other organization or group of affiliated or
related organizations for which she receives cash and/or equity
compensation of $500,000 or more on an annualized basis or
(2) she provides employment or consulting services to a
Competitive Business (a “Competitive Business” shall
mean any biotechnology, pharmaceutical, or generics company that is
engaged in, or proposes to engage in, research, development or
commercialization of products in the fields of thrombolytics or
cystic fibrosis, or which has programs or products in the fields of
cancer, immunology or tissue growth and repair, where the program
or product involves or acts in the same pathway as any program or
product that, as of the Effective Date, is in research or
development or is being commercialized by Genentech. Potter shall
have the opportunity to request in writing that Art Levinson (or
his successor as CEO) advise her as to whether any proposed
employment or consulting arrangements would cause Genentech to
trigger the provisions of this paragraph. Potter shall promptly
advise Art
Levinson (or
his successor as CEO) upon the occurrence of any of the conditions
which give rise to the termination of her consultant status as set
forth above.
Nothing in this
Section 1 shall restrict Potter from making an investment in
any Competitive Business if such investment does not represent more
than 5% of market value of the outstanding capital stock or debt
(as applicable) of such Competitive Business, provided that Potter
does not have any right or ability or does not exercise any control
or influence over the policies, business or operations of such
Competitive Business other than by means of voting as a
shareholder. Further, this Section 1 shall not preclude Potter
from (i) being an employee of, or consultant to, any business
unit of a Competitive Business if (A) such business unit does
not qualify as a Competitive Business in its own right and
(B) Potter does not have any direct or indirect involvement
in, oversight or management of, or responsibility for, any
operations of such Competitive Business that cause it to qualify as
a Competitive Business, or (ii) regardless of compensation,
being a non-employee member of the board of directors or a
non-employee member of an advisory council or engaging in self
employment with respect to a business that Potter is the sole
proprietor of and is not a Competitive Business.
Potter may
terminate her consultancy at any time, by written notice to Art
Levinson (or his successor as CEO) with a copy to Genentech’s
Corporate Secretary on account of a Substantial Breach of this
agreement provided that prior written notice of such Substantial
Breach is provided to Art Levinson (or his successor as CEO) with a
copy to Genentech’s Corporate Secretary and that such
Substantial Breach is not cured within 30 days of receipt of
such notice. In such event Potter shall be entitled to
(i) receive from Genentech an amount equal to $1,216,000,
reduced by the aggregate amount of monthly payments of $101,333
already made, less appropriate deductions for federal and state
withholding, (ii) have all then outstanding unvested options
which would vest by September 15, 2006 become vested subject
to their being exercised within three months of such vesting at
which time any such unexercised options will expire or the right to
receive the equivalent value of such options in cash and
(iii) have all other obligations hereunder remain in effect
for the remaining term of this agreement as though the consultancy
had not ended. “Substantial Breach” shall mean
(x) a willful and deliberate failure by Genentech to provide
to Potter the payments or benefits set forth in Section 5 that
are due and owing and not in dispute or (y) a willful and
deliberate breach by Genentech of the non-disparagement provisions
in Section 6 of this agreement.
Notwithstanding
anything to the contrary in this agreement, if Potter initiates any
employment or relationship with any other organization or group of
affiliated or related organizations after March 31, 2006 for
which she receives cash and/or equity compensation of $500,000 or
more on an annualized basis, then (i) Genentech will pay to
Potter within ten days of notice from Potter of such employment or
relationship an amount equal to $1,216,000, reduced by the
aggregate number of monthly payments of $101,333 already made, less
appropriate deductions for federal and state withholding,
and
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(ii) all
then outstanding unvested stock options will be immediately
cancelled and forfeited.
2.
Release Of Claims By Potter . In exchange for the promises
contained in this agreement and to the extent permitted by law,
Potter hereby waives, releases and forever discharges, and agrees
that she will not in any manner institute, prosecute or pursue, any
and all complaints, claims, charges, or causes of action, whether
in law or in equity, which she asserts or could assert, at common
law or under any statute, rule, regulation, order or law, whether
federal, state, or local, or on any grounds whatsoever, including
but not limited to, any claims under Title VII of the 1964 Civil
Rights Act, the Age Discrimination in Employment Act, the
California Fair Employment and Housing Act, Government Code
§12900 et seq. , the California Labor Code, the
Americans with Disabilities Act, the California Family Leave Act,
and the Employment Retirement Income Security Act of 1974 against
Genentech and any of its or their current or former, owners,
shareholders, agents, employee benefit plans, representatives,
servants, employees, attorneys, successors, predecessors, and
assigns (collectively referred to as “Released
Parties”) with respect to any event, matter, claim, damage or
injury arising out of Potter’s employment relationship with
Genentech, and the termination of such employment relationship, and
with respect to any other claim, matter, or event arising prior to
execution of this agreement by Potter.
Notwithstanding
the foregoing provisions of this Section 2, it is understood
and agreed that Potter is not hereby releasing or waiving any right
or claim (i) for indemnification under and subject to the
provisions of any agreement with or policy of Genentech or its
affiliates relating to indemnification of directors and officers or
under any provision of Genentech’s articles or by-laws
relating to indemnification of directors and officers;
(ii) under any applicable policy of directors’ and
officers’ liability insurance; (iii) to obtain payments
and benefits and exercise any rights under this agreement;
(iv) to obtain any post-employment payments and benefits and
exercise any rights provided for under any stock plan or employee
benefit plan (as defined in ERISA), including but not limited to
any 401(k) plan or SERP, available to Potter as a result of her
employment with, or termination of employment from, Genentech;
(v) that arises against Genentech as a consequence of actions
or events occurring after the date this release becomes effective;
or (vi) to obtain contribution as permitted by law in the
event of entry of judgment against Potter and Genentech as a result
of any act or failure to act for which Potter and Genentech are
jointly liable.
3.
Release of Claims by Genentech . In exchange for the
promises contained in this agreement and to the extent permitted by
law, Genentech, on behalf of itself and the Released Parties,
hereby waives, releases, and forever discharges, and agrees that in
any manner will not institute, prosecute or pursue, any and all
complaints, claims, charges or causes of action, whether in law or
in equity, which it asserts or could assert, at common law or under
any statute, rule, regulation, order or law, whether federal, state
or local, or on any grounds whatsoever, against Potter with respect
to any event, matter,
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claim damage or
injury arising out of Potter’s employment relationship with
Genentech, and the termination of such employment relationship, and
with respect to any other claim, matter or event arising prior to
execution of this agreement by Potter.
4.
Civil Code § 1542 Waiver . As a further consideration
and inducement for this agreement, the parties hereby waive any and
all rights under Section 1542 of the California Civil Code or
any similar state, loc
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