EXHIBIT 7.11
CONFORMED COPY
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AMENDED AND RESTATED GOVERNANCE AGREEMENT
Agreement dated as of October 25, 1995 between Roche Holdings,
Inc., a Delaware corporation ("Roche"), and Genentech, Inc., a Delaware
corporation (the "Company").
WHEREAS, Roche, a subsidiary of Roche ("Merger Sub") and the
Company have entered into an Agreement and Plan of Merger dated as of May 23,
1995 (as amended to date, the "Merger Agreement") pursuant to which, among
other things, (i) Merger Sub is being merged (the "Merger") with and into the
Company on the date hereof, (ii) all capital stock of the Company not owned by
Roche or any Affiliate (as hereinafter defined) of Roche shall be converted
into shares of Callable Putable Common Stock, par value $.02 per share (the
"Special Common Stock"), of the Surviving Corporation (as defined in the
Merger Agreement), and (iii) all of the common stock of Merger Sub owned by
Roche shall be converted into Common Stock (as defined below), all upon the
terms and subject to the conditions set forth in the Merger Agreement; and
WHEREAS, Roche and the Company have previously entered into a
Governance Agreement, dated as of September 7, 1990 (the "Governance
Agreement"); and
WHEREAS, Roche and the Company have agreed that the Governance
Agreement shall be amended and restated in its entirety contemporaneously with
the effectiveness of the Merger; and
WHEREAS, Roche and the Company have agreed to set forth in this
Agreement the terms and conditions upon which the Company shall redeem the
Special Common Stock; and
WHEREAS, Roche and the Company have agreed to establish in this
Agreement certain terms and conditions concerning the corporate governance of
the Company; and
WHEREAS, Roche and the Company also have agreed to establish in
this Agreement certain terms and conditions concerning the acquisition and
disposition of securities of the Company by Roche and its Affiliates;
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and agreements contained herein, Roche and the Company hereby
agree, and hereby amend and restate the Governance Agreement in its entirety,
as follows:
ARTICLE I
REDEMPTION AND REPURCHASE OF
SPECIAL COMMON STOCK
SECTION 1.01. Redemption and Repurchase of Special Common
Stock. (a) Subject to Sections 1.01(c) and 4.02, the Company shall, promptly
upon receipt of a written request from Roche for the redemption of the Special
Common Stock, designate a depositary (the "Depositary") for such redemption in
accordance with paragraph (A) of Article THIRD, Section (c)(iv) of the
Company's certificate of incorporation (the "Certificate of Incorporation")
and notify Roche of such designation. Upon confirmation from the Depositary
that it has received sufficient funds from Roche to pay the aggregate
Redemption Price (as defined in the Certificate of Incorporation) in respect
of all outstanding shares of Special Common Stock, the Company shall give, or
cause to be given, the Call Notification (as defined in the Certificate of
Incorporation) in accordance with such paragraph (B) of Article THIRD, Section
(c)(ii). The Company shall set as the date of redemption (the "Redemption
Date") the date set forth in Roche's written request for redemption; provided
that such date shall be consistent with the notice requirements of such
paragraph (B). The Redemption Date shall in no event be later than the earlier
of June 30, 1999 or such earlier date on which Roche's right to request
redemption pursuant to this Section 1.01 shall terminate. The calculation of
the Redemption Price per share of Special Common Stock, which shall be made in
accordance with paragraphs (A) and (C) of Article THIRD, Section (c)(ii) of
the Certificate of Incorporation, shall be verified with Roche prior to the
mailing of such notice. In the event that additional amounts become payable,
pursuant to the second sentence of Article THIRD, Section (c)(ii)(C) of the
Certificate of Incorporation in connection with a redemption of the Special
Common Stock pursuant to this Section 1.01(a), Roche shall promptly make
available to the Depositary the aggregate additional amount required to be
paid pursuant to such second sentence of Article THIRD, Section (c)(ii)(C).
(b) At least ten, but not more than thirty, days prior to the
commencement of the Put Period (as defined in the Certificate of
Incorporation), or, in the event of an acceleration of the Put in accordance
with the terms of Section (c)(v) of Article THIRD of the Certificate of
Incorporation, as soon as practicable following the date of the occurrence of
the Insolvency Event (as defined in the Certificate of Incorporation) giving
rise to such acceleration (but in no event later than the tenth day following
such date), the Company shall (i) designate the Depositary for making payments
to, and receiving shares from, holders of Special Common Stock in connection
with exercises of the Put (as defined in the Certificate of Incorporation) in
accordance with paragraph (A) of Article THIRD, Section (c)(iv) of the
Certificate of Incorporation and notify Roche of such designation and (ii)
give, or cause to be given, the Put Notification (as defined in the
Certificate of Incorporation) in accordance with paragraph (B) of Article
THIRD, Section (c)(iii) of the Certificate of Incorporation or Section (c)(v)
thereof, as the case may be. The Company shall set as the Put Period the
period required to be set pursuant such Section (c)(iii) or Section (c)(v), as
the case may be.
(c) The Company's obligations under Sections 1.01(a) and
1.01(b) hereof shall be suspended during any period when, in the good faith
judgment of the majority of the Company's directors, the redemption of the
Special Common Stock would be prohibited under the Delaware General
Corporation Law (the "DGCL").
(d) Subject to the provisions of Section 1.01(c), the Company
hereby irrevocably appoints Roche its attorney-in-fact for purposes of
redeeming the Special Common Stock in accordance with the terms of Sections
1.01(a) and 1.01(b) hereof and the Certificate of Incorporation.
SECTION 1.02. Deposit of Shares in Lieu of Cash. If so
instructed in connection with any redemption of the Special Common Stock
pursuant to Sections 1.01(a) hereof and Article THIRD, Section (c)(ii) of the
Certificate of Incorporation, the Company shall deposit or cause to be
deposited with the Depositary any certificates representing shares of Special
Common Stock delivered to it by or on behalf of Roche promptly after the
receipt thereof.
SECTION 1.03. Indemnification. Roche shall indemnify the
Company and its officers and directors against all losses, claims, damages,
liabilities and expenses (including attorneys' fees) arising out of the
redemption (pursuant to the Call or the Put (each as defined in the
Certificate of Incorporation)) of the Special Common Stock in accordance with
the provisions of this Agreement (including, without limitation, in the event
of the Company's consummation of the redemption of Special Common Stock in
contravention of Section 160 of the DGCL or any other law for the protection
of creditors), other than any such losses, claims, damages, liabilities and
expenses that result primarily from actions taken or omitted in bad faith by
the indemnified person or from the indemnified person's gross negligence or
willful misconduct.
SECTION 1.04. Options, Etc. Roche and the Company will make
appropriate provisions to assure that any options, warrants, rights or
securities issued by the Company and convertible into or exercisable or
exchangeable for shares of Special Common Stock outstanding on the Redemption
Date or the final day of the Put Period (whether or not convertible, vested,
exercisable or exchangeable on such date) become convertible into or
exercisable or exchangeable for consideration of the same type and amount as
the holders thereof would have received had they converted, exercised or
exchanged such options, warrants, rights or securities prior to the Redemption
Date or the final day of the Put Period. Nothing herein shall be deemed or
construed as a waiver of any other rights that a holder of any such securities
may have.
ARTICLE II
FURTHER ACQUISITIONS OF
COMPANY SECURITIES BY ROCHE
SECTION 2.01. Mergers, Etc. (a) Unless a majority of the
Independent Directors (as hereinafter defined) shall have determined that
there has been a sustained, substantial impairment of the business, prospects
or financial viability of the Company and its subsidiaries, taken as a whole,
since the effective time of the Merger (the "Effective Time"), Roche shall
not, prior to June 30, 1999, propose any Business Combination (as such term is
used in Article ELEVENTH of the Certificate of Incorporation) with Roche or
any affiliate (an "Affiliate") of Roche, as such term is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended (such Act,
including the rules and regulations promulgated thereunder, the "1934 Act").
Unless such a determination shall be made, Roche shall not propose any such
Business Combination during the period commencing on July 1, 1999 and
terminating on June 30, 2000, at a price per share for the unaffiliated
holders of the common stock into which shares of Special Common Stock shall
have been converted on June 30, 1999 less than the price per share at which
shares of Special Common Stock could have been redeemed on such date, adjusted
for any event occurring since such date as if the Special Common Stock had
continued to be outstanding.
(b) For purposes of the approval of the board of directors of
the Company (the "Board") required under Article ELEVENTH of the Certificate
of Incorporation for any transaction permitted by Section 2.01(a), the
Independent Directors shall consider whether the Business Combination is fair
to the minority stockholders of the Company without taking into account any
possible discount due to the fact that there exists a controlling stockholder
of the Company.
(c) The term "Independent Director" means a director of the
Company who would be entitled for purposes of Article ELEVENTH of the
Certificate of Incorporation to vote on a Business Combination with Roche.
SECTION 2.02. Additional Limitation. Subject to (a) Sections
1.01 and 2.01 and (b) the obligation of the Company to honor the rights of
holders of Special Common Stock to sell Special Common Stock to the Company in
accordance with the Call and the Put, Roche shall not, directly or indirectly,
purchase or otherwise acquire, or propose or offer to purchase or acquire, any
Equity Security (as defined below) of the Company, whether by tender offer,
market purchase, privately negotiated purchase, merger or otherwise, except
that Roche may acquire Equity Securities such that Parent's Voting Interest
(as defined below) in the Company would not immediately after such acquisition
exceed 79.9%. Except as expressly required pursuant to the terms of the
Special Common Stock and this Agreement, in no event will Roche, directly or
indirectly, make any tender offer for Equity Securities of the Company without
the consent of the majority of the Independent Directors. For purposes of this
Agreement, (i) "Equity Security" means any (A) voting stock of the Company
(other than shares of voting stock not having the right to vote generally in
any election of directors of the Company), (B) securities of the Company
convertible into or exchangeable for such stock, and (C) options, rights and
warrants issued by the Company to acquire such stock; and (ii) "Parent's
Voting Interest" means the percentage of votes for elections of directors of
the Company generally controlled directly or indirectly by Roche Holding Ltd,
a Swiss corporation ("Parent"), assuming the conversion, exchange or exercise
into or for voting stock of all Equity Securities other than voting stock and
not taking into account any voting agreements or arrangements granting to a
third party control over the voting of voting stock (including those contained
herein) beneficially owned by Parent.
SECTION 2.03. Capital Contribution and Assumption of Put
Obligations. (a) Roche agrees to, or to cause one or more of its
Affiliates to, contribute to the Company, immediately prior to the time
that any amounts become due and payable to the holders of Special Common
Stock pursuant to Article THIRD, Section (c)(iii) of the Company's
Certificate of Incorporation, (i) funds in an amount equal to the product
of the number of shares of Special Common Stock with respect to which the
Put has been properly exercised multiplied by the Put Price (as defined in
Article THIRD of the Company's Certificate of Incorporation) plus (ii) such
additional funds, if any, sufficient to permit the Company to redeem the
shares of Special Common Stock with respect to which the Put has been
properly exercised without violating Section 160 of the DGCL, any
bankruptcy or insolvency law or other law or regulation for the protection
of creditors. In exchange for such payment, the Company will issue to
Roche (or to its designated Affiliate) a number of duly authorized and
validly issued shares of Common Stock equal to the number of shares of
Special Common Stock acquired thereby by the Company. Notwithstanding the
foregoing, Roche's obligation to make any such payment to the Company under
this Section 2.03 shall be void and of no further force and effect if, in
lieu thereof, Roche shall (or shall cause one of its Affiliates to) elect
to purchase, and make all arrangements necessary (including compliance by
Roche, or any such Affiliate or Affiliates, with the 1934 Act, the 1933 Act
(as hereinafter defined) and any other applicable Federal or state
securities laws) to purchase, at the expiration of the Put Period, directly
from the holders of Special Common Stock at the Put Price the shares of
Special Common Stock which such holders elect to have purchased.
(b) Notwithstanding any other term or provision hereof or
of the Merger Agreement, the Marketing Agreement (as defined below), the
Guaranty dated as of the date hereof by Parent of Roche's obligations under
this Section 2.03, Article Third of the Company's Certificate of
Incorporation or any other agreement, Roche agrees that it shall either (i)
make (or cause one or more of its Affiliates to make) the aggregate
payments required to be made under the first sentence of Section 2.03(a)
hereof or (ii) if such payments are not made for any reason, make (or cause
one of its Affiliates to make) the election to purchase referred to in the
third sentence of Section 2.03(a) hereof and comply (or cause one of its
Affiliates to comply) fully with such sentence; provided, however, that if
an Insolvency Event (as defined in Article Third of the Company's
Certificate of Incorporation) occurs, Roche shall, within 10 days after the
occurrence of such Insolvency Event, either (x) contribute (or cause one or
more of its Affiliates to contribute) to the Company an amount equal to the
aggregate amount that would be required to be contributed to the Company
under the first sentence of Section 2.03(a) hereof assuming (for purposes
of clause (i) of such sentence) that the holders of all of the then
outstanding shares of Special Common Stock (on a fully diluted basis) were
to exercise the Put or (y) elect (or cause one of its Affiliates to elect)
to purchase, and make all arrangements necessary (including compliance by
Roche, or any such Affiliate, with the 1934 Act, the 1933 Act and any other
Federal or state securities laws) to purchase, at the expiration of the Put
Period, directly from the holders of Special Common Stock at the Put Price
the shares of Special Common Stock which such stockholders elect to have
purchased. In exchange for the payment by Roche of the amount specified in
clause (x) of the immediately preceding sentence (which amount shall be
invested by the Company in a money market fund which holds primarily U.S.
government obligations until such time as any amounts are paid to creditors
or stockholders), the Company will issue to Roche (or its designated
Affiliate) a number of duly authorized and validly issued shares of Common
Stock equal to the number of then outstanding shares of Special Common
Stock (on a fully diluted basis). Immediately following the expiration of
the Put Period, if the Put has not been exercised with respect to all of
the then outstanding shares of Special Common Stock (on a fully diluted
basis) and if Roche shall have complied with clause (x) of the first
sentence of this Section 2.03(b), (1) the Company shall refund to Roche (or
its designated Affiliate) an amount (together with any interest actually
earned thereon) equal to the product of the Put Price times the number of
outstanding shares of Special Common Stock (on a fully diluted basis) with
respect to which the Put has not been exercised and (2) Roche (or by its
designated Affiliate) shall, in exchange for such payment by the Company,
contribute to the Company a number of shares of Common Stock equal to the
number of outstanding shares of Special Common Stock (on a fully diluted
basis) with respect to which the Put has not been exercised. In the event
that Roche pays the amount specified in clause (x) of the first sentence of
this Section 2.03(b), none of Roche, Parent or any of their respective
Affiliates shall be entitled to any payments or other distributions on or
in respect of any Equity Security unless and until the Company has redeemed
all of the shares of Special Common Stock with respect to which the Put has
been properly exercised. If (x) an Insolvency Event occurs and (y) Roche
does not timely comply with its obligations under the proviso to the first
sentence of this Section 2.03(b), the amounts required to be paid by Roche
pursuant to such proviso shall be increased by $1,000,000, and the agent
(the "Agent") under the Agency Agreement dated as of September 6, 1995
between the Company, the Agent and Parent shall have an undivided interest
in the aggregate amount payable under such proviso, which undivided
interest shall (i) be limited to, and shall in no event exceed, $1,000,000
and (ii) be paid by Roche directly to the Agent.
(c) It is understood and agreed that, if Roche so elects, the
obligation of Roche to purchase shares of Special Common Stock pursuant to any
of the provisions in this Section 2.03 may, at the election of Roche, be
assigned by Roche to Parent or any Affiliate of Parent (other than the
Company). No assignment pursuant to this Section 2.03(c) shall relieve Roche
of any of its obligations under this Section 2.03 or otherwise.
(d) The Company shall take (and shall have no corporate power
or capacity to refuse to take) such actions as may be necessary to enforce the
obligations of Roche under this Section 2.03 and the obligations of Parent
under the Guaranty dated as of the date hereof by Parent of Roche's
obligations under this Section 2.03 (the "Guaranty") directly against Roche
and Parent, or in the event of assignment by Roche, against Roche, Parent and
any Affiliate of Parent to which any assignment is made.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. Initial Composition of Board of Directors at the
Effective Time. The number of directors comprising the Board immediately
after the Effective Time shall be 13. The directors of the Company following
the Effective Time shall be the directors of the Company immediately prior to
the Effective Time, until their successors have been duly elected or appointed
and qualified or until the earlier death, resignation or removal in accordance
with the Company's Certificate of Incorporation and By-Laws and this
Agreement. After the Effective Time, the Board shall continue to include up to
two nominees of Roche, whom Roche shall continue to designate prior to the
mailing of the applicable annual proxy statement of the Company. Such nominees
shall continue to serve in the class or classes of directors in which they
served prior to the Effective Time in a manner consistent with the terms of
the Certificate of Incorporation and bylaws of the Company. Directors
nominated by Roche pursuant to this Section 3.01 or Section 3.02 are referred
to herein as "Investor Directors" and all other directors are referred to
herein as "Noninvestor Directors". Notwithstanding any other provision of this
Agreement, the Certificate of Incorporation or by-laws of the Company or
applicable law, Roche shall not at any time prior to the day following the
last day of the Put Period be entitled to designate, or cause the nomination
or election of, more than two members of the Board.
SECTION 3.02. Proportional Representation. (a) The Company
agrees that after the last day of the Put Period the Board shall include two
nominees designated by Roche and two officers of the Company nominated by the
nominating or proxy committee of the Board. The remainder of the Board shall
be comprised of Independent Directors. Upon its request, Roche shall be
entitled to designate nominees for a number of such Independent Directors
equal to Parent's Voting Interest times the total number of such Independent
Directors, rounded up to the next whole number if Parent's Voting Interest is
greater than 50% and rounded down to the next whole number if Parent's Voting
Interest is less than or equal to 50%. Notwithstanding the foregoing, (i) the
number of Independent Directors designated by Roche shall not exceed 50% after
any Triggering Disposition (as defined in Section 4.02) and (ii) Roche shall
have no right to designate any nominees for directors hereunder at any time
after Parent's Voting Interest has fallen below 20%. Roche shall not have the
right to nominate or designate any additional directors to the Board pursuant
to this Section 3.02(a) unless and until (i) the Depositary shall have
received the Put Price in respect of shares of Special Common Stock with
respect to which the Put has been properly exercised and shall have been
irrevocably instructed to pay the Put Price to stockholders that have
exercised the Put; (ii) Roche shall have made (or caused one of its Affiliates
to make) the election to purchase referred to in the third sentence of Section
2.03(a) hereof and shall have complied (or caused one or more of its
Affiliates to comply) fully with such sentence; or (iii) the obligations of
Roche under the third sentence of Section 2.03(a) hereof shall have otherwise
been fully satisfied through Parent's performance under the Guaranty.
(b) The Company agrees to cause the Board to be increased or
decreased in size, and to cause the Board to fill the vacancies created by any
such increase, as appropriate in order to achieve the proportionality required
by Section 3.02(a). Any directors elected to fill a vacancy shall serve until
the next annual meeting of stockholders, at which the newly created positions
shall be assigned to classes of directors consistent with the terms of the
Certificate of Incorporation and the Company's bylaws. Whenever necessary to
maintain the proportionality required by Section 3.02(a), Roche will cause
directors designated by Roche to resign from the Board. At such time as
Parent's Voting Interest falls below 20%, Roche will cause all the Investor
Directors to resign from the Board.
(c) Roche and the nominating or proxy committee shall have the
right to designate or nominate any replacement for a director designated by
Roche or nominated by such committee, respectively, at the termination of such
director's term or upon death, resignation, retirement, disqualification,
removal from office or other cause. To the extent permitted by the Certificate
of Incorporation or bylaws of the Company, the Board shall elect each person
so designated or nominated.
(d) No individual designated by Roche shall serve as a
director unless such individual has such business or technical experience,
stature and character as is commensurate with service on the board of a
publicly held enterprise. No such individual who is an officer, director,
partner or principal stockholder of any competitor of the Company and its
subsidiaries (other than Roche and its Affiliates) shall serve as a
director of the Company.
SECTION 3.03. Committees. The Board shall designate a
nominating or proxy committee, an executive committee, an audit committee and
a compensation committee. Each committee of the Board (other than any special
committee or committee of Independent Directors constituted for the purposes
of making any determination that is to be made under the terms of this
Agreement or the Certificate of Incorporation) shall at all times include at
least one director designated by Roche and no action by any such committee
shall be valid unless taken at a meeting for which adequate notice has been
duly given to or waived by the members of such committee. Such notice shall
include a description of the general nature of the business to be transacted
at the meeting and no other business may be transacted at such meeting. Any
committee member unable to participate in person at any meeting shall be given
the opportunity to participate by telephone. The director designated by Roche
to serve on any committee may designate as his alternate another director
designated by Roche.
SECTION 3.04. Nomination of Other Directors. (a) The
nominating or proxy committee shall include, in addition to the director
designated by Roche, one Noninvestor Director who is an officer of the Company
and one Independent Director, and shall have the exclusive authority to
nominate individuals to fill all Board positions except for those designated
by Roche pursuant to the first sentence of Section 3.02(a). With respect to
any election of directors, any nomination of a person not then serving as a
director shall require the unanimous approval of the nominating or proxy
committee; provided that the directors designated by Roche pursuant to Section
3.01, the directors designated by Roche pursuant to the first sentence of
Section 3.02(a), and the directors initially nominated by Roche pursuant to
the third sentence of Section 3.02(a) shall not require such unanimous
approval.
(b) The Company agrees to use all reasonable efforts to solicit
proxies for the nominees for director nominated by such committee from all
holders of voting stock entitled to vote thereon.
SECTION 3.05. Roche Approval Required for Certain Actions. The
approval of the directors designated by Roche pursuant to Section 3.01 or the
first sentence of 3.02(a) shall be required to approve any of the following:
(a) the acquisition by the Company of any business or assets
that would constitute a substantial portion of the business or assets of the
Company, whether such acquisition be by merger or consolidation or the
purchase of stock or assets or otherwise;
(b) the sale, lease, license, transfer or other disposal of all
or a substantial portion of the business or assets of the Company other than
in the ordinary course of business, other than any such sale, lease, license,
transfer or other disposal which is subject to the provisions of Section 3.07;
(c) the issuance of any Equity Securities or other capital
stock of the Company, except for (i) issuances of shares of Special Common
Stock (or, after the conversion thereof into shares of the Company's Common
Stock, par value $.02 per share (the "Common Stock"), Common Stock) or
options, warrants or rights to acquire, or securities convertible into or
exchangeable for, such Special Common Stock (or Common Stock) pursuant to any
employee compensation plan that has been approved by a majority of the
Independent Directors, (ii) issuances thereof upon the exercise, conversion or
exchange of any outstanding Equity Securities or other capital stock; and
(iii) other issuances thereof during any 24 month period not exceeding 5% of
the voting stock of the Company outstanding at the beginning of such 24 month
period; or
(d) the repurchase or redemption of any Equity Securities or
other capital stock of the Company, other than redemptions required by the
terms thereof and purchases made at fair market value in connection with any
deferred compensation plan maintained by the Company.
For purposes of clauses (a) and (b), unless the majority of Independent
Directors shall have made a contrary determination in good faith, a
"substantial portion of the business or assets of the Company" shall mean a
portion of the business or assets of the Company accounting for 10% of the
consolidated total assets, contribution to net income or revenues of the
Company and its consolidated subsidiaries.
SECTION 3.06. Voting of Shares. (a) In any election of
directors, Roche will vote its shares of Common Stock and of Special Common
Stock for all nominees in proportion to the votes cast by the other holders of
Special Common Stock (excluding, at Roche's option, any votes cast by any
person (as such term is defined in Section 16(a) of the 0000 Xxx) or group (as
defined in Section 13(d) of the 0000 Xxx) that beneficially owns (as defined
in Rule 13d-3 promulgated under the 0000 Xxx) at least 12% of the Equity
Securities not beneficially owned by Parent); provided that it may cast all of
its votes in favor of any nominee designated by it pursuant to the provisions
of this Agreement.
(b) In any vote to amend the terms of the Special Common
Stock, Roche will vote its shares of Special Common Stock, if any, in
proportion to the votes cast by the holders of Special Common Stock (other
than Roche and its Affiliates).
SECTION 3.07. Affiliation Arrangements. Except as otherwise
provided in the Marketing Agreement between X. Xxxxxxxx -- Xx Xxxxx Ltd and
the Company dated as of the date hereof (the "Marketing Agreement"), the
Company will not, and will not permit any of its subsidiaries to, enter into
any material licensing or marketing agreement with respect to any products,
processes, inventions or developments made by the Company or any subsidiary of
the Company unless it shall have first negotiated in good faith with Roche for
a reasonable period of not less than three or more than six months with a view
towards reaching a mutually beneficial licensing or marketing agreement with
respect to such products, processes, inventions or developments.
ARTICLE IV
RESTRICTIONS ON TRANSFER
OF COMMON STOCK
SECTION 4.01. Restrictions on Transfer of Common Stock. (a)
Roche agrees that it will not sell or otherwise transfer any shares of Common
Stock or Special Common Stock except (i) pursuant to a registered underwritten
public offering in accordance with Article V, (ii) pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (such Act, including
the rules and regulations promulgated thereunder, the "1933 Act"), provided
that Roche at or prior to the time of such sale or transfer could have
requested a registration pursuant to Section 5.01 and that any such sale shall
be subject to the volume and manner of sale limitations set forth in such
rule, whether or not legally required, (iii) to any entity that is directly or
indirectly 100% owned by Parent or (iv) after the last day of the Put Period
and so long as Parent's Voting Interest is not below 50%, in a Liquidating
Sale, as defined below; provided that (x) no Liquidating Sale shall be made
prior to the time that such transaction is either rejected by the Independent
Directors or the stockholders, or consummated and (y) prior to the first
anniversary of the last day of the Put Period the per share value offered to
the public in any Liquidating Sale shall not be less than the final Redemption
Price of the Special Common Stock (adjusted appropriately for events occurring
after the conversion thereof as if it were still outstanding). The good faith
determination of the majority of the Independent Directors of the value of the
consideration offered in any proposal shall be conclusive and binding.
(b) "Liquidating Sale" shall mean (i) a sale of all shares of
Common Stock and Special Common Stock beneficially owned by Parent to any
person or group that is acquiring all outstanding voting stock of the Company
at a per share consideration having at least the same value, and to be paid in
the same form as (or in cash), and not later than, the per share consideration
to be paid to Roche and its Affiliates in a transaction that has been approved
by the Board and the stockholders in accordance with the requirements that
would be applicable to a Business Combination under Article ELEVENTH of the
Certificate of Incorporation proposed by Roche or (ii) if such transaction
proposed by such person or group has been rejected by the Independent
Directors or the stockholders entitled to vote thereon under Article ELEVENTH
of the Certificate of Incorporation, the sale of all the shares of Common
Stock and Special Common Stock beneficially owned by Parent to such person or
group for per share consideration having not more than the same value, and
payable in the same form, as was so proposed to be paid to stockholders.
(c) If requested by Roche, the Company shall use its best
efforts to consider any proposal involving a Liquidating Sale expeditiously
and, if recommended by the Board or any independent or special committee
thereof to the stockholders, to cause a stockholder meeting to be convened as
promptly as practicable for the purpose of voting on such proposal.
(d) Notwithstanding the foregoing, no Liquidating Sale shall be
permitted unless the transferee and each entity controlling such transferee
shall have agreed in writing to be bound, and to cause their Affiliates to be
bound, by the terms of this Agreement (including, without limitation, Section
3.06 hereof) as if it were Roche and has entered into a confidentiality
agreement with the Company substantially in the form of the Confidentiality
Agreement between Parent and the Company dated October 13, 1989 (as modified
by Section 6.01 of the Agreement and Plan of Merger dated as of February 2,
1990 among the Company, Roche and HLR (U.S.), Inc.); provided that no
transferee in a Liquidating Sale shall be entitled to the rights of Roche set
forth in Articles III (other than Section 3.06) and VII hereof.
SECTION 4.02. Commitment to Complete Disposition. In the event
that Roche sells shares of Common Stock in an underwritten public offering or
pursuant to Rule 144 prior to April 30, 2004 (a "Triggering Disposition"), it
shall use its best efforts to sell additional shares of Common Stock within
three years of the Triggering Disposition such that it will beneficially own
not more than 20% of the outstanding shares of Common Stock. After a
Triggering Disposition, Roche shall have no further rights (i) to request
redemption of the Special Common Stock or (ii) pursuant to Sections 3.03,
3.04, 3.05 and 3.07 or Article VII; provided, however, that no Triggering
Disposition shall relieve Roche of any of its obligations pursuant to the Put.
Other than in connection with its obligations with respect to the Put pursuant
to Section 2.03 hereof, after a Triggering Disposition, Roche shall not,
without the prior written consent of the Board, acting alone or as part of a
group, acquire or offer or agree to acquire, directly or indirectly, by
purchase or otherwise, any Equity Securities or all or any substantial portion
of the assets of, or otherwise seek to influence or control, in any manner
whatsoever, the management or policies of the Company until the fifteenth
anniversary of the date it ceases to beneficially own more than 20% of the
outstanding shares of Common Stock, provided that the foregoing shall not
apply to any of Roche's portfolio managers whose investment decisions are
not directed by Roche.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Registration. (a) The Company agrees that, at
any time after April 30, 2000 or such earlier date as it shall have become
illegal for Parent to continue to own the shares of Common Stock or Special
Common Stock directly or indirectly or to exercise fully all rights of
ownership with respect to the shares of Common Stock or Special Common Stock,
upon the request of Roche it will file a registration statement (a
"Registration Statement") under the 1933 Act as to the number of shares of
Common Stock and/or Special Common Stock specified in such request (the
"Registered Shares"); provided that, subject to Section 5.04, the Company
shall not be required to file more than three Registration Statements that
become effective and remain effective for the period referred to in Section
5.01(b).
(b) The Company agrees to use its best efforts to have any
registration of the Registered Shares declared effective as promptly as
practicable after the filing thereof and (ii) to keep such registration
statement effective for a period (up to three months) sufficient to complete
the distribution of the Registered Shares. The Company further agrees to
supplement or make amendments to the Registration Statement, if required by
(x) the registration form utilized by the Company for such registration or by
the instructions applicable to such registration form, (y) the 1933 Act or the
rules and regulations thereunder or (z) Roche (or any underwriter for Roche)
with respect to information concerning Roche or such underwriter or the plan
of distribution to be utilized with respect to the Registered Shares. The
Company agrees to furnish to Roche copies of any such supplement or amendment
prior to its being used or filed with the Securities and Exchange Commission
(the "SEC").
SECTION 5.02. Registration Procedures. Subject to the
provisions of Section 5.01 hereof, in connection with the registration of
shares of Common Stock hereunder, the Company will as expeditiously as
possible:
(a) furnish to Roche, prior to the filing of a Registration
Statement, copies of such Registration Statement as is proposed to be filed,
and thereafter such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such Registration Statement (including
each preliminary prospectus) and such other documents in such quantities as
Roche may reasonably request from time to time in order to facilitate the
disposition of the Registered Shares;
(b) use all reasonable efforts to register or qualify the
Registered Shares under such other securities or blue sky laws of such
jurisdiction as Roche reasonably requests and do any and all other acts and
things as may be reasonably necessary or advisable to enable Roche to
consummate the disposition in such jurisdictions of the shares of Common Stock
or Special Common Stock owned by Roche; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subsection (b),
(ii) subject itself to taxation in any such jurisdiction or (iii) consent
to general service of process in any such jurisdiction;
(c) use all reasonable efforts to cause the Registered Shares
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable Roche to consummate the disposition of such shares of
Common Stock or Special Common Stock;
(d) notify Roche, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of
any event as a result of which the prospectus included in such Registration
Statement or amendment contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of the Registered Shares, such prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registered
Shares;
(f) make available for inspection by Roche, any underwriter
participating in any disposition pursuant to such registration, and any
attorney, accountant or other agent retained by any Roche or any such
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the officers, directors and employees
of the Company to supply all information reasonably requested by any such
Inspector in connection with such registration; provided that (i) records and
information obtained hereunder shall be used by such persons only to exercise
their due diligence responsibility and (ii) records or information which the
Company determines, in good faith, to be confidential shall not be disclosed
by the Inspectors unless (x) the disclosure of such Records or information is
necessary to avoid or correct a misstatement or omission in the Registration
Statement or (y) the release of such Records or information is ordered
pursuant to a subpoena or other order from a court or governmental authority
of competent jurisdiction. Roche shall use reasonable efforts, prior to any
such disclosure, to inform the Company that such disclosure is necessary to
avoid or correct a misstatement or omission in the Registration Statement.
Roche further agrees that it will, upon learning that disclosure of such
Records or information is sought in a court or governmental authority, give
notice to the Company and allow the Company, at the expense of the Company, to
undertake appropriate action to prevent disclosure of the Records or
information deemed confidential;
(g) use all reasonable efforts to obtain a comfort letter from
the independent public accountants for the Company in customary form and
covering such matters of the type customarily covered by comfort letters as
Roche reasonably requests;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve months, beginning within three months after the
effective date of the registration, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; and
(i) use all reasonable efforts to cause all Registered Shares
to be listed on each securities exchange on which similar securities issued by
the Company are listed.
SECTION 5.03. Conditions to Offerings. The obligations of the
Company to take the actions contemplated by Sections 5.01 and 5.02 with
respect to an offering of shares of Common Stock shall be subject to the
following conditions:
(i) The Registered Shares shall (unless reduced pursuant to
Section 5.04(b)) constitute at least 10% of the outstanding common stock of
the Company and shall be distributed in an underwritten firm commitment public
offering. Roche shall have the right to select the investment banker or
bankers and lead manager or managers to administer the offering and its or
their counsel; provided that such lead manager or managers and such counsel
must be reasonably satisfactory to the Company.
(ii) There shall not have been an offering registered pursuant
to Section 5.01 within the immediately preceding twelve months and if such
earlier offering was completed or is continuing.
(iii) Roche shall conform to all applicable requirements of the
1933 Act and the 1934 Act with respect to the offering and sale of securities
and advise each underwriter, broker or dealer through which any of the
Registered Shares are offered that the Registered Shares are part of a
distribution that is subject to the prospectus delivery requirements of the
1933 Act.
(iv) Roche shall use all reasonable efforts to effect as wide a
distribution of such Registered Shares as reasonably practicable, and in no
event shall any sale of Registered Shares be made knowingly to any person
(including such person's Affiliates and any person or entities which are to
the knowledge of Roche part of any group (as defined in Section 13(d) of the
0000 Xxx) which includes such purchaser (or any of its Affiliates)) who, after
giving effect to such sale, would beneficially own (as defined in Rule 13d-3
promulgated under the 0000 Xxx) Equity Securities representing more than 5% of
the Company's outstanding Common Stock or 5% of the Company's Equity
Securities.
The Company may require Roche to furnish to the Company such
information regarding Roche or the distribution of the Registered Shares as
the Company may from time to time reasonably request in writing, in each case
only as required by the 1933 Act or the rules and regulations thereunder or
under state securities or Blue Sky laws.
Roche agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5.02(d) hereof,
such holder will forthwith discontinue disposition of Registered Shares
pursuant to the registration covering such shares of Common Stock until
Roche's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.02(d) hereof.
SECTION 5.04. Additional Conditions. (a) The Company's
obligations pursuant to Section 5.01 shall be suspended if (i) the fulfillment
of such obligations would require the Company to make a disclosure that would,
in the reasonable good faith judgment of the Company's board of directors, be
detrimental to the Company and premature, (ii) the Company has filed a
registration statement with respect to securities to be distributed in an
underwritten public offering and it is advised by its lead or managing
underwriter that an offering by Roche of the Registered Shares would
materially adversely affect the distribution of such equity securities or
(iii) the fulfillment of such obligations would require the Company to prepare
audited financial statements not required to be prepared for the Company to
comply with its obligations under the 1934 Act as of any date not coincident
with the last day of any fiscal year of the Company. Such obligations shall be
reinstated (x) in the case of clause (i) above, upon the making of such
disclosure by the Company (or, if earlier, when such disclosure would either
no longer be necessary for the fulfillment of such obligations or no longer be
detrimental), (y) in the case of clause (ii) above, upon the conclusion of any
period during which the Company would not, pursuant to the terms of its
underwriting arrangements, be permitted to sell the Registered Securities for
its own account and (z) in the case of clause (iii) above, as soon as it would
no longer be necessary to prepare such financial statements to comply with the
1933 Act. The period during which Roche is required to sell its shares of
Common Stock pursuant to Section 5.05 shall be tolled for the duration of any
suspension pursuant to this paragraph.
(b) The number of shares of Common Stock to be registered
pursuant to Section 5.01 shall be reduced to the extent that the Company is
advised in writing by an investment banker of national standing that the sale
of all shares of Common Stock requested to be registered by Roche would
materially and adversely affect the market price of the Company's equity
securities. No registration reduced pursuant to this Section 5.04(b) shall be
counted for purposes of the proviso to Section 5.01(a).
SECTION 5.05. Registration Expenses. All expenses incident to
the performance of or compliance with this Article by the Company, including,
without limitation, all fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registered Shares), rating
agency fees, printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by
the Company are then listed, fees and disbursements of counsel for the Company
and its independent certified public accountants (including the expenses of
any comfort letters required by or incident to such performance), securities
acts liability insurance (if the Company elects to obtain such insurance), the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration and the fees and expenses of other persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company. The Company will not have any
responsibility for any registration or filing fees payable under any federal
or state securities or Blue Sky laws or for any of the expenses of the holders
of Registrable Securities incurred in connection with any registration
hereunder including, without limitation, underwriting fees, discounts and
commissions and transfer taxes, if any, attributable to the sale of
Registrable Securities, counsel fees of such holders and travel costs.
SECTION 5.06. Indemnification; Contribution. (a)
Indemnification by the Company. The Company agrees to indemnify, to the
fullest extent permitted by law, Roche, its directors and officers and each
person who controls Roche (within the meaning of either the 1933 Act or the
0000 Xxx) against any and all losses, claims, damages, liabilities and
expenses (including attorneys' fees) caused by any untrue or alleged untrue
statement of material fact contained in any Registration Statement, prospectus
or preliminary prospectus (each as amended and or supplemented, if the Company
shall have furnished any amendments or supplements thereto), or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, provided that the Company shall not be required to indemnify any
holder or its officers, directors or controlling persons for any losses,
claims, damages, liabilities or expenses resulting from any such untrue
statement or omission if such untrue statement or omission is made in reliance
on and conformity with any information with respect to such holder
furnished to the Company by such holder expressly for use therein. In
connection with an underwritten offering, the Company will indemnify each
underwriter thereof, the officers and directors of such underwriter, and
each person who controls such underwriter (within the meaning of either the
1933 Act or 1934 Act) to the same extent as provided above with respect to
the indemnification of Roche; provided that such underwriter agrees to
indemnify the Company to the same extent as provided below with respect to
the indemnification of the Company by Roche.
(b) Indemnification by Roche. In connection with any
registration in which Roche is participating, Roche will furnish to the
Company in writing such information and affidavits with respect to Roche as
the Company reasonably requests for use in connection with any such
registration, prospectus, or preliminary prospectus and agrees to indemnify
the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company (within the
meaning of either the 1933 Act or of the 0000 Xxx) to the same extent as
the foregoing indemnity from the Company to such holder, but only with
respect to information relating to such holder furnished to the Company in
writing by Roche expressly for use in the Registration Statement, the
prospectus, any amendment or supplement thereto, or any preliminary
prospectus.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 5.07(a) or Section 5.07(b), such person (hereinafter called the
indemnified party) shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the indemnifying party) in writing
and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent
the indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have been advised by counsel
that representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
indemnified parties, such firm shall be designated in writing by the
indemnified parties. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the third sentence of this
Section 5.07(c), the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement in entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such
request or reasonably objected in writing, on the basis of the standards set
forth herein, to the propriety of such reimbursement prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) Contribution. If the indemnification provided for in this
Section 5.07 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to in this Section 5.07, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties
in connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party
or indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 5.07(c), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.07(d) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 5.07, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 5.06(a) and (b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 5.06(d).
SECTION 5.07. Rule 144. The Company covenants that it will
file the reports required to be filed by it under the 1933 Act and the 1934
Act and the rules and regulations adopted by the SEC thereunder, and it will
take such further action as Roche may reasonably request, all to the extent
required from time to time to enable Roche to sell shares of Common Stock
without registration under the 1933 Act within the limitation of the
exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of Roche, the Company will deliver to
Roche a written statement as to whether it has complied with such
requirements.
SECTION 5.08. No Inconsistent Agreements; etc. (a) The Company
will not hereafter enter into any agreement with respect to its securities
which is inconsistent with the rights granted to Roche in this Agreement.
(b) Any determination required to be made by the Company under
this Article V shall be made by the Independent Directors.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations of the Company. (a) The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby are within
the Company's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement constitutes a valid and binding agreement of
the Company.
(b) The execution, delivery and performance by the Company of
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, other than (i) compliance
with any applicable requirements of the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder, as amended (the "1934 Act");
(ii) compliance with any applicable requirements of the Securities Act of
1933, as amended (the "1933 Act"); and (iii) compliance with any applicable
foreign or state securities or Blue Sky laws.
(c) The execution, delivery and performance by the company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of the Company, and (ii) assuming
compliance with the matters referred to in Section 6.01(b), contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable
to the Company.
SECTION 6.02. Representations of Roche. (a) The execution,
delivery and performance by Roche of this Agreement and the consummation by
Roche of the transactions contemplated hereby are within Roche's corporate
powers and have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and binding agreement of Roche.
(b) The execution, delivery and performance by Roche of this
Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, other than (i) compliance
with any applicable requirements of the 1934 Act; (ii) compliance with any
applicable requirements of the 1933 Act; and (iii) compliance with any
applicable foreign or state securities or Blue Sky laws.
(c) The execution, delivery and performance by Roche of this
Agreement and the consummation by Roche of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or bylaws of Roche, and (ii) assuming compliance with the
matters referred to in Section 6.01(b), contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Roche.
ARTICLE VII
COVENANTS
SECTION 7.01. Severance Arrangements. The Company will not and
will not permit any of its subsidiaries to, (i) enter into any contract,
agreement, plan or arrangement covering any director, officer or employee of
the Company or any Subsidiary that provides for the making of any payments,
the acceleration of vesting of any benefit or right or any other entitlement
contingent upon (A) the Merger or the exercise by Roche of any of its rights
under this Agreement to representation on the Board of Directors (and its
committees) or any acquisition by Roche of securities of the Company (whether
by merger, tender offer, private or market purchases or otherwise) not
prohibited by this Agreement or (B) the termination of employment after the
occurrence of any such contingency if such payment, acceleration or
entitlement would not have been provided but for such contingency or (ii)
amend any existing contract, agreement, plan or arrangement to so provide.
SECTION 7.02. Marketing Agreements. Roche and the Company
agree to negotiate in good faith with respect to the establishment of a
marketing arrangement under which the Company would market, on agreed terms,
certain products of Roche and its Affiliates.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
If to the Company:
Genentech, Inc.
000 Xxxxx Xxx Xxxxx Xxxxxxxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. XxXxxxxxxx
Telecopy: 000-000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 212-403-2000
If to Roche:
Roche Holdings, Inc.
c/o Roche Holding Ltd
Xxxxxxxxxxxxxxxxx 000
XX-0000 Xxxxx
Xxxxxxxxxxx
Telecopy: 011-41-61-688-1396
Attn: Xx. Xxxxx Xxxxxx
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
or such other address or telecopier number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telecopier,
when such telecopy is transmitted to the telecopier number specified in this
Section and the appropriate answerback is received or (ii) if given by any
other means, when delivered at the address specified in this Section.
SECTION 8.02. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Roche and the
Company, or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that no such amendment or waiver shall be effective
without the approval of a majority of the Independent Directors.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 8.03. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other party hereto except that,
subject to the limitations set forth in Section 4.01(d), Roche may assign its
rights to any transferee of its shares of Common Stock permitted under clause
(iii) or (iv) of Section 4.01.
SECTION 8.04. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of the State of Delaware.
SECTION 8.05. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by the other party hereto.
SECTION 8.06. Specific Performance. The Company
acknowledges and agrees that Roche's and the Company's respective remedies
at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and, in recognition of that fact, agrees
that, in the event of a breach or threatened breach by the Company or Roche
of the provisions of this Agreement, in addition to any remedies at law,
Roche and the Company, respectively, without posting any bond shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any
other equitable remedy which may then be available.
SECTION 8.07. Termination. This Agreement (other than Sections
1.03 and 1.04 hereof) shall terminate at such time as Roche and its Affiliates
beneficially own 100% of the voting stock of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
GENENTECH, INC.
By /s/ Xxxx X. XxXxxxxxxx
---------------------------
Title: Senior Vice President
ROCHE HOLDINGS, INC.
By /s/ Xxxxx X. Xxxxx
---------------------------
Title: Vice President
