Exhibit 10.5
AMENDMENT NO. 1 TO AFFILIATION AGREEMENT
AMENDMENT NO. 1 dated as of October 22, 1999 to the Affiliation
Agreement dated as of July 22, 1999 between Genentech, Inc. and Roche
Holdings, Inc. (the "AFFILIATION AGREEMENT").
The Affiliation Agreement is hereby amended as follows:
1. DEFINITIONS. Section 1.01 of the Affiliation Agreement is amended as
follows:
(1) The definitions of "Applicable Stock", "Repurchased Shares" and
"Value" are deleted.
(2) The definition of "Ownership Percentage" is amended and restated
to read in its entirety as follows:
(i) "OWNERSHIP PERCENTAGE" means, at any time, the
fraction, expressed as a percentage and rounded to the next
highest thousandth of a percent, whose numerator is the number
of shares of Common Stock owned by Roche and its affiliates and
whose denominator is the number of shares of Common Stock
outstanding (excluding any shares repurchased by the Company
after the Offering that have not been re-issued by the Company).
2. COMMON STOCK REPURCHASE PROGRAM. Section 4.04(g) of the Affiliation
Agreement is amended and restated in its entirety as follows:
(g) (1) The Company will adopt, implement as soon as
practicable (but in any event prior to the time necessary to
comply with its obligations set forth in this Section 4.04(g))
and maintain a comprehensive, long-term common stock repurchase
program (the "COMMON STOCK REPURCHASE PROGRAM") for general
corporate purposes.
(2) The Company agrees that, pursuant to the Common Stock
Repurchase Program, prior to any issuance or sale of shares of
Common Stock by the Company or any of its subsidiaries, it shall
have repurchased a number of shares of Common Stock such that,
immediately after such issuance, Roche's Ownership Percentage is
at least equal to Roche's lowest Ownership Percentage at any
time after the Offering but prior to such issuance; except that
the Company and its subsidiaries may issue or sell shares of
Common Stock up to an amount that would cause Roche's Ownership
Percentage to be no more than two percentage points below
Roche's Minimum Percentage.
(3) As long as Roche's Ownership Percentage is greater
than 50%, the Company agrees that, pursuant to the Common Stock
Repurchase Program, prior to the issuance or sale of shares of
Common Stock by the Company or any of the subsidiaries, it shall
have repurchased a number of shares of Common Stock such that,
immediately after such issuance, Roche's Ownership Percentage is
greater than 50%.
(4) Pursuant to the Common Stock Repurchase Program, upon
Roche's written request, the Company will promptly (but in any
event (i) if Roche's Ownership Percentage is less than or equal
to 61% within 60 days and (ii) if Roche's Ownership Percentage
is more than 61% within 6 months) repurchase the amount of
shares of Common Stock specified by Roche in such written
request, provided such amount shall be no greater than the
amount required to cause Roche's Ownership Percentage to be not
less than Roche's Minimum Percentage.
(5) Notwithstanding the foregoing, nothing in this
Section 4.04(g) shall require the Company to take any action
that would, in the Company's reasonable determination, adversely
affect the Company's accounting for its stock option and
employee stock purchase plans, and the parties shall cooperate
to effect repurchases in a manner that will not have a
substantial adverse economic impact on the Company. It is
understood that any reduction in the Company's cash position as
a result of such repurchases is not a "substantial adverse
economic impact."
(6) Roche's Minimum Percentage means, at any time, the
fraction, expressed as a percentage and rounded to the next
highest thousandth of a percent, whose numerator is the lowest
number of shares of Common Stock owned by Roche and its
affiliates since the Offering and whose denominator is
127,298,588 (each of the numerator and the denominator to be
adjusted for any share subdivision, share combination, share
dividend, share exchange, reclassification, merger,
consolidation or similar transaction or event).
3. NOTICE REQUIREMENTS. Section 4.04(h) of the Affiliation Agreement is
amended and restated in its entirety as follows:
(h) The Company shall:
(i) provide to Roche at the end of each month, and
at such other times as Roche may request, information as
to (A) the total number of shares of Common Stock
repurchased by the Company in the last month and on a
year-to-date basis, (B) the total number of shares of
Common Stock previously issued to date, (C) the Company's
current forecasts as to future issuances, (D) the
calculation of Roche's Ownership Percentage and Roche's
Minimum Percentage and (E) such other information as
Roche may request in connection with Roche's ownership
and tax consolidation objectives; and
(ii) notify Roche within one business day after the
date in any month in which the total number of shares of
Common Stock issued by the Company in such month equals
or exceeds 500,000.
4. DEFINED TERMS. Capitalized terms used but not defined herein shall have
the meanings given to them in the Affiliation Agreement. References in the
Affiliation Agreement to the Affiliation Agreement or "this Agreement" and
other similar references shall be deemed to refer to the Affiliation
Agreement as amended hereby.
5. GOVERNING LAW; AMENDMENT; COUNTERPARTS. This Amendment shall be
construed in accordance with and governed by the law of the State of
Delaware. Except as expressly amended, modified and supplemented hereby, the
provisions of the Affiliation Agreement are and shall remain in full force
and effect. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date first
above written.
GENENTECH, INC.
By /s/ XXXXXXX X. XXXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President,
General Counsel and Secretary
ROCHE HOLDINGS, INC.
By /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
