TRANSITION AGREEMENT
Exhibit 10.1
This agreement is being entered into between Xxxxxx Xxxxxx (“Xxxxxx”) and Genentech,
Inc., Xxx XXX Xxx, Xxxxx Xxx Xxxxxxxxx, XX 00000 (“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 Xxx Xxxxxxxx (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 Xxx
Xxxxxxxx (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 Xxx Xxxxxxxx (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 Xxx
Xxxxxxxx (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, local, or federal law, statute, rule, order or regulation each may have with respect
to the other.
Section 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN her FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM MUST HAVE MATERIALLY AFFECTED her SETTLEMENT WITH THE DEBTOR.
The parties expressly agree that this agreement shall extend and apply to all unknown,
unsuspected and unanticipated injuries and damages as well as those that are now disclosed.
5. Payments and Benefits. In consideration of the promises made herein, Genentech will pay
Potter the lump sum of $1,216,000 within five days of the Effective Date less any appropriate
deductions for federal and state withholding taxes. During the term of her consultancy, Genentech
will pay Potter within ten days of the beginning of each month the amount of $101,333 subject to
any appropriate deductions for federal and state withholding taxes. In addition, for any consulting
services provided at Genentech’s request where the amount of consulting time in a month exceeds,
with Genentech’s prior agreement, 20 hours for that month, Genentech will pay Potter the sum of
$500 per hour of consulting time spent prorated for portions of hours spent. All expenses which
are incurred in the course of consulting for Genentech will be submitted at cost for reimbursement
by Genentech. These expenses will be reimbursed in a manner consistent with Genentech’s policy for
expense reimbursements. Potter will provide Xxx Xxxxxxxx (or his successor as CEO) with a copy to
Genentech’s Corporate Secretary with written notice of where payments to be made to her are to be
directed and of any subsequent changes thereto.
Potter’s currently outstanding stock options granted to her under Genentech’s 1999 Stock Plan
during the course of her employment will continue to vest and be exercisable during her term as a
consultant in the same manner as they were during her employment. The stock options will cease to
vest when her consultancy ends either at its term as set forth in Section 1 above or upon its
earlier termination as set forth in Section 1 above and at such time she shall have three months to
exercise the then vested options in accordance with their terms at which time any unexercised
options will expire.
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Genentech will make COBRA medical and dental insurance coverage available to Potter for her
and her current dependents and will reimburse her on a monthly basis for the costs of the premiums
she incurs to maintain such insurance coverage. Such coverage will extend through July 31, 2007
unless prior to that date she is provided medical or dental insurance coverage in connection with
another employment or consulting arrangement with another company or organization in which case
medical coverage will cease at the time such other medical coverage is provided and dental coverage
will cease at such time as other dental coverage is provided.
In addition, Genentech will pay or provide Potter (i) all vested and/or accrued payments and
benefits pursuant to Genentech’s employee benefit plans (as defined under ERISA), including but not
limited to any 401(k) plan or SERP, as provided under the terms of such plans (except as may
otherwise be provided in this agreement), (ii) indemnification as provided under any agreement with
or policy of Genentech or its affiliates relating to indemnification of directors or officers, and
(iii) coverage under any policy of directors’ and officers’ liability for a period of six (6) years
commencing on the Effective Date to the same extent as current or former officers, employees or
directors, as applicable, are covered by insurance pursuant to the applicable insurance policy or
policies as they may exist from time to time.
6. Additional Support. During the term of her consulting relationship, Genentech will provide
reasonable information technology support to Potter in the same manner such support is provided to
Genentech’s Executive Committee under its Platinum support program although Potter will not have
access to Genentech’s internal website or email or other proprietary systems. Genentech will
provide security services for Potter’s residence under the direction of Genentech’s Director of
Security under its security principles operational as of the Effective Date (e.g., if an
identifiable security risk escalates, more intense security services may be provided as
appropriate).
It is the intent of the parties that none of the payments or benefits provided hereunder shall
be subject to any tax or other penalties under Section 409A of the Internal Revenue Code of 1986,
as amended (“409A Penalties”). Accordingly, to the extent that Potter and her counsel conclude at
any time prior to September 15, 2006 that 409A Penalties are reasonably likely to apply to any such
payment or benefit, then the parties will cooperate diligently and in good faith to take action to
prevent 409A Penalties from applying or to provide a payment or benefit to Potter of equivalent
value that would not be subject to 409A Penalties; provided, however, that any such action,
amendment or change to the terms of this agreement, as a result of this Section 4, shall not
materially increase the cost to (including any financial statement expense required to be
recognized by) or liability of Genentech hereunder, or (ii) override the provisions set forth in
Section 1 of this agreement which effect a termination of the consulting period as a result of
certain actions taken by Potter during such period (and a related termination of any obligation to
provide further benefits hereunder).
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Potter shall be responsible for all tax obligations she may incur, including interest and
penalties, that apply to any payment made or benefit conferred hereunder, and any sums owed to her
hereunder shall be reduced to satisfy all withholding or similar obligations that apply thereto.
Nothing in this agreement shall require Genentech to be responsible for or gross Potter up for any
tax obligation she may incur by virtue of this agreement.
7. Public Announcements. The parties agree that the announcements (internal and external) of
the change in leadership of the Commercial Organization, attached hereto as Exhibit A and Exhibit
A-1, shall be distributed on or after the Effective Date. Potter agrees that she will not make any
derogatory remarks about Genentech or any of the Released Parties at any time. Potter agrees that
if she determines to direct any future inquiries from prospective employers to Genentech, she will
direct them to members of Genentech’s Executive Committee or current officers of Genentech who were
Potter’s direct reports during the period Potter was President of Commercial Operations. Genentech
agrees that the personnel to whom such inquiries are directed as well as members of its Board of
Directors will not make any derogatory comments about Potter at any time. Potter and Genentech
further agree that in any public communications about the subject matter of this agreement neither
will say anything that is inconsistent with Exhibit A.
8. Confidentiality Of Agreement. The parties acknowledge that this agreement will be filed
with the Securities and Exchange Commission in accordance with the rules and regulations of that
agency and as such will become a public document.
9. Time to Consider and Revoke. Potter understands that she has twenty one (21) days from the
date she receives this agreement to consider its terms and, that after she signs this agreement,
she has seven (7) days to revoke it. Potter understands that this agreement shall not become
effective until this seven (7) day period has expired.
10. No Admission Of Liability. By entering into this agreement, neither party admits any
liability whatsoever to the other or to any other person arising out of any claims heretofore or
hereafter asserted by Potter and Genentech, and each party and all Released Parties, expressly deny
any and all such liability.
11. Joint Participation In Preparation Of Agreement. The parties hereto participated jointly
in the negotiation and preparation of this agreement, and each party has had the opportunity to
obtain the advice of legal counsel and to review, comment upon, and redraft this agreement.
Accordingly, it is agreed that no rule of construction shall apply against any party or in favor of
any party. This agreement shall be construed as if the parties jointly prepared this agreement,
and any uncertainty or ambiguity shall not be interpreted against any one party and in favor of the
other.
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12. Attorneys’ Fees And Costs. As further mutual consideration of the promises set forth
herein, Genentech agrees to reimburse Potter, upon presentation of an invoice therefor, for all
attorneys’ fees and related costs incurred by Potter in connection with the negotiation and
preparation of this agreement, or any subsequent or related agreements, up to a maximum of $50,000.
Except as provided in the foregoing sentence, the parties agree that they will not seek from the
other reimbursement for attorneys’ fees and/or costs incurred in this action or relating to any
matters addressed in this agreement.
13. Section Headings. Section headings in this agreement are included for convenience of
reference only and shall not be considered a part of this agreement for any other purpose.
14. Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original for all purposes, but all of which taken together shall constitute one and the
same instrument.
15. Scope Of Agreement. Potter hereby affirms and acknowledges that she has read the
foregoing agreement, that she has had sufficient time and opportunity to review or discuss it with
the counsel of her choice, and that she fully understands and appreciates the meaning of each of
its terms, and that it is a voluntary, full and final compromise, release and settlement of all
claims, known or unknown, with respect to the claims identified and referred to herein. The
parties to this agreement represent that this agreement may be used as evidence in any subsequent
proceeding in which any of the parties alleges a breach of this agreement or seeks to enforce its
terms, provisions or obligations.
16. Entire Agreement. This agreement constitutes the complete understanding between Potter
and Genentech and supersedes any and all prior agreements, promises, representations, or
inducements, no matter its or their form, concerning its subject matter.
//
//
//
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//
No promises or agreements made subsequent to the execution of this agreement by these parties shall
be binding unless reduced to writing and signed by authorized representatives of these parties.
| Dated: August 3, 2005 | /s/ Xxxxxx Xxxxxx | |||
| Xxxxxx Xxxxxx | ||||
| Dated: August 3, 2005 | Genentech, Inc. |
|||
| By: | /s/ Xxxxxx Xxxxxxxx | |||
| Xxxxxx Xxxxxxxx, CEO and Chairman | ||||
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Exhibit A
ALL EMPLOYEE ANNOUNCEMENT
I would like to provide an update on the Commercial organization. As many of you know, Myrtle has
been out of the office for the last several months, attending to her health.
Myrtle and I have discussed that given Genentech’s rapid growth, the Commercial organization needs
full-time leadership. To that end, Myrtle is transitioning from her current role and will continue
with the company as a consultant. Effective immediately, Xxx Xxxxx is being appointed SVP,
Commercial Operations. Ian, who has been the head of the Commercial organization for the past few
months, will report to me and join the Executive Committee. I have every confidence that he will
continue to provide excellent leadership, both as head of Commercial and as an EC member.
Myrtle has been very instrumental in building the Commercial organization and the company. Under
her leadership the Commercial organization successfully launched 6 new products including Avastin,
Raptiva, Xolair, Nutropin AQ Pen, , Cathflo Activase, and TNKase. In addition, Genentech’s product
revenue stream has grown more than three-fold, resulting in record sales and earnings growth.
Myrtle has provided invaluable insight and guidance to me personally, as well as to the entire
Executive Committee, during the last five years. I would like to take this opportunity to thank
Myrtle for her dedication, inspiration and her many contributions. Please join me in thanking
Myrtle. We look forward to her continued contributions as a consultant.
Art
Exhibit A-1
GENENTECH ANNOUNCES ORGANIZATIONAL CHANGES
SOUTH
SAN FRANCISCO, Calif. — August 16, 2005 - Genentech, Inc. (NYSE: DNA) today announced that
Xxxxxx Xxxxxx, President of Commercial Operations is transitioning from her current role and will
continue with the company as a consultant. Effective immediately, Xxx Xxxxx, Senior Vice
President and General Manager of BioOncology is being appointed SVP, Commercial Operations
reporting to CEO Xxx Xxxxxxxx. Xxxxx will be the head of the Commercial organization and will join
Genentech’s Executive Committee.
“Myrtle has been very instrumental in building the Commercial organization and the company, said
CEO Xxxxxx Xxxxxxxx. She has provided valuable insight and guidance to me personally as well as the
entire Executive Committee during the last five years. We look forward to her continued
involvement in a consulting role”.
Potter joined Genentech in 2000 as executive vice president and chief operating officer and has
overseen the successful launch of six new products including, Avastin, Raptiva, Xolair, Nutropin
AQ Pen, Cathflo Activase, and TNKase. In addition, Genentech’s product revenue stream has grown
more than three-fold under her leadership, resulting in record sales and earnings growth. In March
2004 she was promoted to President of Commercial Operations.
Xxxxx joined Genentech in January 2003. Prior to joining Genentech, he served as president
Novartis Canada. Before assuming his post in Canada, Xxxxx served as chief operating officer for
Novartis United Kingdom. Prior to joining Novartis in 1999, Xxxxx worked in positions of increasing
strategic importance in sales, marketing and business development at Ivax Pharma and
Sanofi-Synthelabo in the United Kingdom. Xxxxx started his career at Pharmacia, holding positions
in both sales and marketing.
“Ian has provided excellent management of the BioOncology franchise over the past two years
and interim leadership of the entire Commercial organization during the past six months”, said
Xxxxxxxx. “ I am confident that he will continue to contribute to the success of our commercial
organization and the company overall”.
About Genentech
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. A considerable number of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes multiple biotechnology products directly in the United States and licenses several additional products to other companies. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA. For additional information about the company, please visit xxxx://xxx.xxxx.xxx.
Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. A considerable number of the currently approved biotechnology products originated from or are based on Genentech science. Genentech manufactures and commercializes multiple biotechnology products directly in the United States and licenses several additional products to other companies. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA. For additional information about the company, please visit xxxx://xxx.xxxx.xxx.
