GENENTECH, INC. NONQUALIFIED STOCK OPTION GRANT AGREEMENT
EXHIBIT
10.17
Appendix
A
GENENTECH,
INC.
2004
EQUITY INCENTIVE PLAN
Genentech,
Inc. (the “Company”) hereby grants you (the “Participant”), a nonqualified stock
option (“Option”) under the Company’s 2004 Equity Incentive Plan
(the “Plan”) to purchase shares of common stock of the Company
(“Shares”). The date of this Nonqualified Stock Option Grant
Agreement (the “Agreement”) is the date of grant as indicated on the
Participant’s Stock Option Data Sheet (the “Grant Date”). Subject to
the provisions of this Agreement and of the Plan, the principal features of this
option are as follows:
TERMS
AND CONDITIONS OF NONQUALIFIED STOCK OPTION GRANT
1. Vesting: Subject
to any changes in vesting upon the occurrence of certain events, this Option is
scheduled to become exercisable (vest) as to the number of Shares, and on the
dates shown, on the Participant’s Stock Option Data Sheet. Vesting
will not occur unless the Participant remains continuously employed by the
Company and/or a Subsidiary through the applicable vesting date.
2. Termination of
Service: Regardless of the reason for Termination of Service, if the
vested Option is not exercised within the appropriate exercise period, the
Option will automatically terminate and the Shares covered by the Option will
revert to the Plan. If applicable, the provisions of Section 3 shall
determine the appropriate number of Shares and vesting schedule upon Termination
of Service.
(a) General. If the Participant’s
Termination of Service is for any reason other than Retirement, Disability or
death, the unvested portion of Participant’s Option will terminate immediately
and the Shares covered by such portion will revert to the Plan. The
Participant may exercise any vested but unexercised portion of the Option within
three (3) months after the date of the Termination of Service, or prior to the
expiration date indicated on his or her Stock Option Data Sheet (the “Expiration
Date”), whichever occurs first.
(b) Retirement. If
Participant’s Termination of Service is due to Retirement after reaching age
sixty (60) and completing at least ten (10) Years of Service with the Company
and/or a Subsidiary, the number of Shares that would otherwise have vested had
the Participant remained employed by the Company and/or a Subsidiary during the
twenty-four (24) months following his or her Retirement date will accelerate and
become exercisable until the Expiration Date. After applying this
provision, any remaining unvested portion of the Option will immediately
terminate and the Shares covered by such portion will revert to the Plan. In
this section, "Year of Service" shall mean a continuous year of employment with
Genentech as an eligible employee from a Participant’s initial date of
employment until Termination of Service.
(c) Disability. If
Participant’s Termination of Service is due to Disability, the Participant may
exercise any vested but unexercised portion of his or her Option within twelve
(12) months after the date of the Termination of Service, or prior to the
Expiration Date, whichever occurs first. After applying this
provision, any unvested portion of the Option will terminate and the Shares
covered by such portion will revert to the Plan.
(d) Death. Unless
otherwise provided for by the Committee in the Agreement, if Participant’s
Termination of Service is due to his or her death, one hundred percent (100%) of
the Shares subject to the Option shall vest on the date of the Participant’s
death, and the option shall be exercisable for up to three (3) years after the
date of death, or prior to the Expiration Date, whichever occurs first. The
Option may be exercised by the beneficiary designated by the Participant (as
provided in Section 9.6 of the Plan), the executor or administrator of the
Participant’s estate or, if none, by the person(s) entitled to exercise the
Option under the Participant’s will or the laws of descent or
distribution.
3. Other
Events:
(a) Leave of Absence. Each of
Participant’s scheduled vesting dates will be delayed one (1) month each time a
Participant takes a personal leave of absence (“LOA”) for ten (10) or more
successive business days in a given calendar month.
(b) Part-time
Status.
(i) As
of the end of an initial six-month period following a change to part-time
employment status of at least twenty (20) hours per week with the Company or a
Subsidiary prior to full vesting, the Participant’s vesting schedule will apply
to a reduced number of shares, adjusted in proportion to the percentage of hours
worked per week on that date in accordance with the following formula (rounded
to the nearest whole Share).
|
Number
of unvested Shares
remaining
|
X
|
Participant’s
part-time percentage of employment
|
=
|
New
number of
Shares
set to vest
|
After
this initial six-month period, further changes in part-time status of at least
twenty (20) hours per week or to full-time status will be adjusted in accordance
with the above formula as of the effective date of the change. If a
Participant’s part-time status will apply for six (6) months or less, his or her
vesting will not apply to a reduced number of shares.
(ii) As
of the effective date of a change to part-time employment status of less than
twenty (20) hours per week with the Company or a Subsidiary prior to full
vesting, the Participant’s total number of unvested shares will be decreased in
accordance with the following formula (rounded to the nearest whole
Share):
|
Number
of unvested Shares as
of
the change in employment status
|
X
|
Participant’s
part-time percentage of employment
|
=
|
New
number of Shares
that
will vest
|
If
a Participant’s part-time status will apply for six (6) months or less, his or
her Shares will not decrease.
If
applicable law prohibits the modification under the preceding formulas, the
Participant agrees that the Committee or its duly authorized delegate may extend
the vesting period with respect to the Option or reduce the Shares awarded by
this Agreement on a pro rata basis, as reasonably determined by the Committee or
its duly authorized delegate and to the extent permitted under applicable law;
provided that any such modification shall not affect a greater number of Shares
than the number of Shares that would have been modified pursuant to the
preceding formula.
A
change to part-time status will not affect Shares that have already
vested. The vesting period will end in accordance with the original
vesting schedule, and Shares that have not vested pursuant to the formula in
Section (3)(b)(i) of this Agreement will be forfeited upon the final scheduled
vesting date. However, Shares that have been lost in accordance with the formula
in Section (3)(b)(ii) of this Agreement will be immediately forfeited by the
Participant. Once forfeited, Xxxxxx will revert to the Plan.
(c) Consultancy Arrangements. A
change in status from Employee to Consultant, as such terms are defined in the
Plan, will not affect the vesting schedule or cause the option to expire, so
long as Participant continues to perform services and job duties for the Company
or a Subsidiary.
4. Persons Eligible to Exercise
Option. Except as determined by the Committee in its discretion, this
Option shall be exercisable during the Participant’s lifetime only by the
Participant unless (i) Participant is permanently disabled (as defined in
Section 22(e) of the Code), in which case it may be exercised by Participant’s
spouse or other individual to whom he or she has validly granted a durable power
of attorney, or (ii) Participant has transferred the Option to a trust for his
or her benefit, in which case it may be exercised only by the trustee of such
trust.
5. Option is Not
Transferable. Except to the extent provided in the Plan, the
unvested Shares subject to this grant and the rights and privileges conferred
hereby shall not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated in any way (whether by operation of law or otherwise except
pursuant to a qualified domestic relations order, as determined by the Company)
other than by will or by the laws of descent and distribution.
6. Conditions to
Exercise. This Option may be exercised by the person then
entitled to do so as to any whole Shares which may then be purchased by (a)
giving notice in such form or manner as the Company may designate, (b) providing
full payment of the exercise price as indicated on the Participant’s Stock
Option Data Sheet (the “Exercise Price”) and the amount of any income tax the
Company determines is required to be withheld by reason of the exercise of this
Option or as is otherwise required under Section 10 below, and (c) giving
satisfactory assurances in the form or manner requested by the Company that the
Shares to be purchased upon the exercise of this Option are being purchased for
investment and not with a view to the distribution thereof.
7. Payment Methods.
Except as otherwise required as a matter of law, the Exercise Price may be paid
in one (or a combination of two or more) of the following forms:
(a) Cash
or its equivalent. The Company reserves the right to limit the
availability of certain other methods of exercise as it deems
necessary;
(b) By
tendering previously acquired Shares that have an aggregate Fair Market Value,
as such term is defined in the Plan, at the time of exercise equal to the total
Exercise Price;
(c) Consideration
under a cashless method of exercise;
(d) By
any other means that the Committee, in its sole discretion, determines to both
provide legal consideration for the Shares and to be consistent with the terms
of the Plan.
8. Timing
Considerations. Notwithstanding any contrary provision of this
Agreement, if the Expiration Date of this Option falls on a Saturday, Sunday or
holiday, the Participant may exercise any vested but unexercised portion of this
Option at any time prior to the close of business on the first business day
following that Saturday, Sunday or holiday. In addition, if the
Option is to be exercised through a stock broker-assisted transaction, it must
be exercised while the applicable stock market is open for trading and before
the Option otherwise expires. If the Participant receives a hardship
withdrawal from his or her account (if any) under the Company’s Tax Reduction
Investment Plan (the “401(k) Plan”) for U.S. employees, this Option may not be
exercised during the six (6) month period following the hardship withdrawal
(unless the Company determines that exercise would not jeopardize the
tax-qualification of the 401(k) Plan).
9. Trusts. The
Option may be transferred by the Participant to a trust for his or her benefit
or by will or the laws of descent or distribution, all in accordance with such
procedures as the Company in its discretion may designate from time to time. In
the event the Participant decides to transfer the Option to a trust for his or
her benefit, the Participant must obtain the consent of the Company to such
transfer and the trustee shall be required to make certain representations in
writing to the Company regarding the exercise of the Option and the trading of
the Shares obtained upon the exercise of the Option.
10. Tax
Withholding. The Company shall assess its requirements
regarding tax, social insurance and any other payroll tax withholding and
reporting in connection with this Option, including the grant, vesting or
exercise of this Option or sale of Shares acquired pursuant to the exercise of
this Option (“tax-related items”). These requirements may change from
time to time as laws or interpretations change. Regardless of the
Company’s actions in this regard, the Participant hereby acknowledges and agrees
that the ultimate liability for any and all tax-related items is and remains his
or her responsibility and liability and that the Company (a) makes no
representations or undertaking regarding treatment of any tax-related items in
connection with any aspect of this Option grant, including the grant, vesting or
exercise of this Option and the subsequent sale of Shares acquired pursuant to
the exercise of this Option; and (b) does not commit to structure the terms of
the grant or any aspect of this Option to reduce or eliminate the Participant’s
liability regarding tax-related items. In the event the Company
determines that it and/or a Subsidiary must withhold any tax-related items as a
result of the Participant’s participation in the Plan, the Participant agrees as
a condition of the grant of this Option to make arrangements satisfactory to the
Company to enable it to satisfy all withholding requirements. The
Participant authorizes the Company and/or a Subsidiary to withhold all
applicable withholding taxes from the Participant’s
wages. Furthermore, the Participant agrees to pay any amount of taxes
to the Company and/or a Subsidiary as one or both may be required to withhold as
a result of the Participant’s participation in the Plan and that cannot be
satisfied by deduction from the Participant’s wages or other cash compensation
paid to the Participant. The Participant acknowledges that he or she may not
exercise this Option unless the tax withholding obligations of the Company
and/or any Subsidiary are satisfied.
11. Section 409A. Under
Section 409A of the Code, an Option that vests after December 31, 2004,
that was granted with a per share exercise price that is determined by the
Internal Revenue Service (the “IRS”) to be less than the fair market value of a
share of common stock on the date of grant (a “Discount Option”) may be
considered “deferred compensation.” A Discount Option may result
in (i) income recognition by the Participant prior to the exercise of
the Option, (ii) an additional twenty percent (20%) tax, and (iii)
potential penalty and interest charges. The Participant acknowledges
that
the
Company cannot and has not guaranteed that the IRS will agree that the per share
exercise price of this Option equals or exceeds the Fair Market Value of a
Share on the date of grant in a later examination. The Participant
agrees that if the IRS determines that this Option was granted with a per
share exercise price that was less than the Fair Market Value of a Share on the
date of grant, the Participant will be solely responsible for his or her costs
related to such a determination.
12. Suspension of
Exercisability. This Option, in the sole discretion of
the Company, may not be exercised, in whole or in part, and the Company shall
not be required to issue any certificate or certificates for Shares hereunder
prior to fulfillment of all the following conditions: (a) the admission of such
Shares to listing on all stock exchanges on which such class of stock is then
listed; (b) the completion of any registration or other qualification of such
Shares, the filing of quarterly reports and the completion of any restatement of
financial statements required under any state or federal law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; (c) the obtaining of any approval or
other clearance from any state or federal governmental agency, which the
Committee shall, in its absolute discretion, determine to be necessary or
advisable; and (d) the lapse of such reasonable period of time following the
date of exercise of the Option as the Committee may establish from time to
time for reasons of administrative convenience. Any suspension of
exercise or delay in the issuance of Shares as a result of one or more of the
following conditions shall not extend the Expiration Date of this Option,
and the Company shall have no further obligation or liability with respect to
this Option as of and following the Expiration Date.
13. Address for
Notices. Address any notice given to the Company under this
Agreement to: Corporate Securities Administration, MS 49, Legal
Department, Genentech, Inc., 0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, XX 00000, or at
such other address as the Company may subsequently designate in
writing.
14. No Rights of
Stockholder. Neither the Participant nor any beneficiary shall
be or have any of the rights or privileges of a stockholder of the Company with
respect to any of the Shares issuable pursuant to the exercise of this Option,
unless and until certificates representing such Shares have been issued,
recorded on the records of the Company or its transfer agents or registrars, and
delivered to the Participant (or beneficiary). Nothing in the Plan or
this Option shall create an obligation on the part of the Company to repurchase
any Shares purchased hereunder.
15. No Effect on
Employment. Subject to any employment contract with the
Participant, Participant’s terms of employment shall be determined from time to
time by the Company and/or the Subsidiary employing the Participant, which
entity hereby expressly reserves the right to terminate or change the terms of
the employment of the Participant at any time for any reason whatsoever, with or
without good cause. Neither the transaction(s) contemplated hereunder
nor the vesting schedule indicated on the Participant’s Stock Option Data Sheet
constitutes an express or implied promise of continued employment for any period
of time. A leave of absence or an interruption in service (including
an interruption during military service) authorized or acknowledged by the
Company or the Subsidiary employing the Participant, including the transfer of a
Participant between the Company and any of its Subsidiaries (or between
Subsidiaries) shall not be deemed a Termination of Service for the purposes of
this Agreement.
16. Plan
Governs. This Agreement is subject to all terms and provisions
of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used and not defined in
this Agreement shall have the meaning set forth in the Plan. This
Option is not an incentive stock option as defined in Section 422 of the
Internal Revenue Code. The Company may, in its discretion, issue newly issued
Shares or treasury shares pursuant to this Option.
17. Binding
Agreement. Subject to the limitation on the transferability of
this Option contained herein, this Agreement shall be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.
18. Committee
Authority. The Committee shall have the power to interpret the
Plan and this Agreement, and to adopt rules consistent with the Plan for the
administration, interpretation and application of the Plan and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Participant, the Company and all other interested
persons. The Committee shall not be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
this Agreement.
19. Captions. Captions
provided herein are for convenience only, and shall not serve as a basis for
interpretation or construction of this Agreement.
20. Agreement
Severable. In the event that any provision in this Agreement
shall be held illegal or invalid for any reason, such provision shall be
severable from, and such illegality or invalidity shall not be construed to have
any effect on, the remaining provisions of this Agreement.
21. Modifications to the
Agreement. This Agreement constitutes the entire understanding
of the parties on the subjects covered. The Participant expressly
warrants that he or she is not accepting this Agreement in reliance on any
promises, representations, or inducements other than those contained
herein. Modifications to this Agreement or the Plan can be made only
in an express written contract executed by a duly authorized officer of the
Company.
22. Amendment, Suspension or
Termination of the Plan. By accepting this award, the
Participant expressly warrants that he or she has received an Option under the
Plan, and has received, read and understood a description of the
Plan. The Participant understands that the Plan is discretionary in
nature and may be amended, suspended or terminated by the Company at any
time.
23. Labor
Law. By accepting this Option, the Participant acknowledges
that: (a) the grant of this Option is a one-time benefit which does
not create any contractual or other right to receive future grants of Options,
or benefits in lieu of Options; (b) all determinations with respect to any
future grants, including, but not limited to, the times when the Options shall
be granted, the number of Shares subject to each Option, the Exercise Price, and
the time or times when each Option shall be exercisable, will be at the sole
discretion of the Company; (c) the Participant’s participation in the Plan is
voluntary; (d) the value of this Option is an extraordinary item of compensation
which is outside the scope of the Participant’s employment contract, if any; (e)
this Option is not part of the Participant’s normal or expected compensation for
purposes of calculating any severance, resignation, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar
payments;
(f) the vesting of this Option ceases upon termination of employment for any
reason except as may otherwise be explicitly provided in the Plan or this
Agreement; (g) the future value of the underlying Shares is unknown and cannot
be predicted with certainty; (h) if the underlying Shares do not increase in
value, this Option will have no value; (i) this Option has been granted to the
Participant in accordance with the Participant’s status as an Employee or
Consultant of the Company or its Subsidiaries; (j) any claims resulting from
this Option shall be enforceable, if at all, against the Company; (k)
there shall be no additional obligations for any Subsidiary employing the
Participant as a result of this Option and (l) no claim or entitlement to
compensation or damages arises if the Option does not increase in value and the
Participant irrevocably releases the Company and its Subsidiaries from any such
claim that does arise.
24. Disclosure of Participant
Information. By accepting this Option, the Participant
consents to the collection, receipt, use, retention and transfer of personal
data as described in this Section 24. The Participant understands that the
Company and its Subsidiaries hold certain personal information about him or her,
including his or her name, home address and telephone number, date of birth,
social security or identity number, salary, nationality, job title, data for tax
withholding purposes, any Shares or directorships held in the Company, details
of all Options or any other entitlement to Shares awarded, canceled, exercised,
vested, unvested or outstanding in his or her favor, for the purpose of managing
and administering the Plan (“Data”). The Participant further understands that
the Company and/or its Subsidiaries will transfer Data amongst themselves as
necessary for the purpose of implementation, administration and management of
his or her participation in the Plan, and that the Company and/or any of its
Subsidiaries may each further transfer Data to any third parties assisting the
Company in the implementation, administration and management of the Plan. The
Participant understands that these recipients may be located in the European
Economic Area, or elsewhere, such as in the U.S. or Asia. The Participant
expressly authorizes the Company to collect, receive, use, retain and transfer
the Data in electronic or other form, for the purposes of implementing,
administering and managing his or her participation in the Plan and/or the
subsequent holding of Shares on his or her behalf, including any requisite
transfer to a broker or other third party with whom he or she may elect to
deposit any Shares acquired upon exercise of this Option. The
Participant understands that he or she may, at any time, without cost, view the
Data, require any necessary amendments to the Data or withdraw his or her
consent herein in writing by contacting the human resources department and/or
the stock option administrator for his or her employer. The
Participant understands, however, that refusing or withdrawing his or her
consent may affect his or her ability to accept an Option under the
Plan.
25. Notice of Governing
Law. This option shall be governed by, and construed in
accordance with, the laws of the State of California without regard to
principles of conflict of laws.
GENENTECH,
INC.
2004
EQUITY INCENTIVE PLAN
STOCK
OPTION DATA SHEET
|
Optionee:
|
[NAME]
|
||
|
Date
of Grant:
|
[GRANT
DATE]
|
Grant
Number:
|
[GNT
NUMBER]
|
|
Shares
subject to option:
|
[SHR
NUMBER]
|
||
|
Exercise
price per share:
|
[PRICE]
|
||
|
Scheduled
date of vesting of first installment ("Initial Vesting
Date"):
|
[VEST
DATE]
|
||
|
Number
of shares scheduled to vest on Initial Vesting Date:
|
[SHR
ON IVD]
|
||
|
Number
of shares scheduled to vest per month after the Initial Vesting
Date:
|
[SHR
PER MO]
|
||
|
Expiration
Date of the Option:
|
[EXP
DATE]
|
||
On
the date specified above, Genentech, Inc. (the “Company”) approved the grant to
you of the option described above to purchase shares of Company Common Stock
(the "Shares") under the Genentech, Inc. 2004 Equity Incentive Plan (the
"Plan").
In
addition to this Stock Option Data Sheet, you will need to carefully read your
nonqualified stock option grant agreement (the “Agreement”), the Plan, and the
Plan prospectus (the “Prospectus”) to understand the terms and conditions of
your grant. These and other documents relating to the Plan or the
underlying shares can be found by clicking on the following links:
1. Agreement
2. Prospectus
3. Plan
4. Annual
Report
5. Notice of
Exercise
6. Instructions to Notice of
Exercise
This
option is a valuable security and should be safeguarded accordingly. After you
have reviewed these documents and understand your rights and obligations, please
submit the Acknowledgment below by clicking on the "I accept" button. This
Acknowledgment does not commit or obligate you to purchase any shares from this
option.
It
is your responsibility to exercise this option before it
terminates.
Once
you are able to begin exercising your option, you may be required to complete a
Notice of Exercise and submit it to Corporate Securities Administration (MS
#49), along with a form of payment permitted under the option for the full
purchase price of the shares being purchased and any applicable
taxes.
If
you have any questions, please feel free to contact Corporate Securities
Administration.
ACKNOWLEDGMENT
By
accepting this option, I, [EMPLOYEE NAME]:
(a)
agree that I have read the Agreement, the Stock Option Data Sheet, and the
Prospectus, and that I have been able to access and view the Plan, and
understand the rights and obligations with respect to this option as set forth
in the Agreement and the Plan, including, for example, the rules on vesting and
early termination;
(b)
agree to all the terms and conditions contained in the Agreement, the Stock
Option Data Sheet and the Plan; and
(c)
agree that as of the date hereof, the Agreement, the Stock Option Data Sheet and
the Plan set forth the entire understanding between the Company and me regarding
the acquisition of the shares and supersede all prior oral and written
agreements with respect thereto.
Please
click the button below to indicate your acceptance of this option.
|
I
accept
|
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