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EXHIBIT 10.23

GENENTECH, INC.

1999 STOCK PLAN, AS AMENDED AND RESTATED AS OF 2/13/03

NONSTATUTORY STOCK OPTION AGREEMENT

(Director Version)

        Genentech, Inc., a Delaware corporation (the "Company") has granted to
you, the optionee named on the attached Nonstatutory Stock Option Data Sheet
(the "Data Sheet"), effective on the Date of Grant stated on the Data Sheet, an
option (the "Option") under the Company's 1999 Stock Plan, as amended and
restated as of February 13, 2003 (the "Plan"), to purchase shares of the common
stock of the Company (the "Common Stock"). The Option is a nonstatutory option
and is not intended to qualify as an "incentive stock option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

        The terms of the Option as set forth in this Stock Option Agreement (the
"Agreement") are as follows:

        1.      (a)      The total number of shares subject to the Option (the
"Shares") is stated on the Data Sheet. The Option shall vest on the Initial
Vesting Date as to the number of Shares indicated on the Data Sheet to vest on
such date, and thereafter shall vest at a rate of 8.33% of the Shares on the
same date of each month following the Initial Vesting Date (or the last day of
such month if the number of days in the month is fewer than the number
representing such date) until the Option is fully vested, provided you continue
to be a member of the Board of Directors of the Company on each such vesting
date.

                 (b)      Subject to the limitations contained herein, the
Option shall be exercisable with respect to each installment on or after the
date of vesting of such installment.

        2.      (a)      The exercise price per Share subject to the Option is
stated on the Data Sheet, and was determined by the administrator of the Plan on
the date the option was granted to you.

                 (b)      You may elect to pay the exercise price by any of the
following methods:

                           (i)    Payment in cash or check made payable to the
Company's order at the time of exercise.

                           (ii)    If at the time of exercise the Common Stock
is publicly traded and quoted regularly in The Wall Street Journal, or if such
newspaper no longer makes such quotation available, a comparable publication
selected by the Company, payment of the exercise price may be made by delivery
of shares of the Company's Common Stock that have been owned by you for at least
six months free and clear of any liens, claims, encumbrances, security interests
or repurchase options. Such Common Stock shall be valued (A) if listed on any
established stock exchange or a national market system, including without
limitation, the Nasdaq National Market or the Nasdaq SmallCap Market, at the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system on the day immediately prior to
the date of exercise or (B) otherwise, at the mean between the high bid and low
asked prices for the Common Stock on the date of exercise, as reported in The
Wall Street Journal or a publication selected by the Company.

                           (iii)    Any other method permitted under Section
9(c) of the Plan.

                           (iv)    Payment by a combination of the methods of
payment specified in subparagraphs 2(b)(i) - 2(b)(iii).

 

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        3.      Subject to the provisions of this Agreement, you may elect at
any time you are a member of the Board of Directors of the Company to exercise
the Option as to any part of the Shares prior to the vesting date for such
Shares; provided, however, that (a) you must obtain the Company's consent to
such exercise, (b) any Shares so purchased from installments that have not
vested as of the date of such election shall be subject to a purchase option in
favor of the Company at the exercise price paid per share, and (c) you agree to
enter into an agreement and related documents providing for such purchase option
in such form as the Company may request.

        4.      You may purchase any Shares upon exercise of the Option as
frequently as you want. However, the minimum number of Shares with respect to
which the Option may be exercised at any one time is 10, except that the last
exercise hereunder may be for some or all of the remainder of vested Shares,
even though such number is less than 10 Shares. No fractional Shares may be
issued upon exercise of the Option.

        5.      Notwithstanding anything to the contrary contained herein, the
Option may not be exercised unless the Shares are then registered under the
Securities Act of 1933, as amended (the "Act"), or, if the Shares are not then
so registered, the Company has determined that such exercise and issuance would
be exempt from the registration requirements of the Act. In addition, any
exercise of the Option must be in compliance with all U.S. state corporate and
securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country
or other applicable jurisdiction.

        6.      The term of the Option commences on the date of grant and
expires on the Expiration Date stated on the Data Sheet, unless terminated
sooner in connection with the termination of your membership on the Board of
Directors of the Company as set forth in this Paragraph 6 or in the Plan. The
Option shall terminate three months after the termination of your membership on
the Board of Directors of the Company for any reason, except as described below.
The Option may be exercised following termination of your membership on the
Board of Directors of the Company only as to that number of Shares as to which
it was vested and exercisable as of the date of termination of your membership
on the Board of Directors of the Company under the provisions of Paragraph 1 of
this Agreement. However, in the event of the termination of your membership on
the Board of Directors of the Company by reason of your death, the Option will
accelerate and become exercisable for all of the Shares then subject to the
Option as fully-vested Shares. In the event of your death, the Option term shall
automatically be extended to the Expiration Date set forth on the Data Sheet.
Furthermore, in the event of termination of your membership on the Board of
Directors of the Company by reason of your permanent disability, the Option is
exercisable only with respect to the number of Shares which have vested as of
such date of termination and the Option shall terminate twelve months after such
termination. In any event, however, the Option shall not be exercisable after
the Expiration Date set forth on the Data Sheet.

        7.      The Option may be exercised, to the extent specified above, by
delivering an appropriate notice of exercise (in substantially the form attached
as Exhibit A) together with the exercise price for the Shares being purchased to
Corporate Securities Administration, Legal Department of the Company (or to such
person as the Company may designate) during regular business hours, together
with such additional documents as the Company may then require pursuant to
Paragraph 3 of this Agreement and as may be necessary to transfer effectively
any stock delivered in payment of the exercise price.

        8.      The Option may be transferred by you to a trust for your benefit
or by will or the laws of descent or distribution. It is exercisable during your
life only by you unless (i) you are permanently disabled (as defined in Section
22(e) of the Internal Revenue Code), in which case it may be exercised by your
spouse or other individual to whom you have validly granted a durable power of
attorney, or (ii) you have transferred the Option to a trust for your benefit in
which case it may be exercised only by the trustee of such trust. In the event
you decide to transfer the Option to a trust for your benefit, you 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 exercise of the Option.

 

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        9.      Any notices provided for in this Agreement or the Plan shall be
given in writing and shall be deemed effectively given upon personal delivery,
by regular, registered or certified mail with postage and fees prepaid, or by
air courier service addressed, if to the Company, to its principal executive
office, Attention: Corporate Securities Administration, Legal Department, or if
to the optionee, at his or her address currently on file with Corporate
Securities Administration, Legal Department, or in either case, to such other
address as such party may designate by ten days' advance written notice to the
other party.

        10.      The Option is subject to all the provisions of the Plan, which
are hereby made a part of the Option, and is further subject to all
interpretations, amendments, rules and regulations that may from time to time be
promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this Agreement and those of the Plan, the provisions
of the Plan shall control.

        11.      You acknowledge and agree that the vesting of the Shares is
earned only by your continued membership on the Board of Directors of the
Company. You also acknowledge and agree that this Agreement, and the
transactions contemplated under this Agreement and the vesting schedule for the
Shares, do not constitute an express or implied promise of continued membership
on the Board of Directors of the Company for any period or at all.

 

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EXHIBIT A

FORM NOTICE OF EXERCISE

 

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            ACKNOWLEDGEMENT

            I, [NAME]:

                    (a)      acknowledge that I have been able to access and
view the Agreement, the Data Sheet, the Plan and the Prospectus and understand
that all rights and obligations with respect to this option are set forth in the
Agreement and the Plan;

                    (b)     agree to all the terms and conditions contained in
the Agreement, the Data Sheet and the Plan; and

                    (c)      acknowledge that as of the date hereof, the
Agreement, the Data Sheet, and the Plan set forth the entire understanding
between the Company and me regarding the acquisition of the shares and
supersedes all prior oral and written agreements with respect thereto.

            CLICK HERE TO SUBMIT ACKNOWLEDGEMENT

 

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