<PAGE>
As filed with the Securities and Exchange Commission on February 14, 1997
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ALZA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0142070
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
950 PAGE MILL ROAD, P.O. BOX 10950, PALO ALTO, CA 94303-0802 (415) 494-5000
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
AMENDED AND RESTATED STOCK PLAN
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
BRUCE C. COZADD
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ALZA CORPORATION
950 PAGE MILL ROAD
P.O. BOX 10950
PALO ALTO, CALIFORNIA 94303-0802
(Name and address of agent for service)
(415) 494-5000
(Telephone number, including area code, of agent for service)
With copy to:
PETER D. STAPLE
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ALZA CORPORATION
950 PAGE MILL ROAD
P.O. BOX 10950
PALO ALTO, CALIFORNIA 94303-0802
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount maximum maximum Amount of
Title of securities to be offering price per aggregate registration
to be registered registered share (1) offering price fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock issuable
under Amended and
Restated Stock Plan, 3,000,000 $29.875 $89,625,000 $27,159
$0.01 par value
- ------------------------------------------------------------------------------------------------------
Common Stock issuable
under Amended and
Restated Employee 500,000 $25.39375 $12,696,875 $3,848
Stock Purchase Plan,
$0.01 par value
- ------------------------------------------------------------------------------------------------------
Totals 3,500,000 --- $102,321,875 $31,007
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by ALZA Corporation ("ALZA")
with the Securities and Exchange Commission (the "Commission"), are hereby
incorporated by reference in this Registration Statement:
(a) ALZA's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) ALZA's Quarterly Report on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1996; and
(c) The description of the Common Stock contained in ALZA's registration
statement on Form 8-A filed May 14, 1992 under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), including any amendment or
reports filed for the purpose of updating such description.
All documents subsequently filed by ALZA pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act and prior to the termination of the offering of
the securities offered hereby shall be deemed to be incorporated by reference
into this registration statement and to be a part hereof from the respective
dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Peter D. Staple, ALZA's General Counsel, owns options to purchase 100,000
shares of Common Stock, of which 60,000 are exercisable within 60 days of
February 14, 1997. Mr. Staple also holds 1,246 shares of ALZA Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102 of the Delaware General Corporation Law allows a corporation to
eliminate the personal liability of directors of a corporation to the
corporation or to any of its stockholders for monetary damage for a breach of
his or her fiduciary duty as a director, except in the case where the director
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of a
dividend or approved a stock repurchase in violation of Delaware corporate law
or obtained an improper personal benefit. ALZA's Certificate of Incorporation
contains a provision that eliminates directors' personal liability as set forth
above.
Section 145 of the Delaware General Corporation Law, as amended, provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation or is or was serving at its request in such
capacity in another corporation or business association against expenses
-2-
<PAGE>
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful.
In addition, Article 9 of ALZA's Certificate of Incorporation provides as
follows:
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS.
(a) ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. No director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit.
(b) INDEMNIFICATION AND INSURANCE.
(1) RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), because he or she, or a person of whom
he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise (including service with respect to employee benefit plans),
whether the basis of the proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the
fullest extent authorized by the Delaware General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than that law
permitted the corporation to provide before such amendment), against
all expense, liability and loss (including attorneys' fees, judgments,
penalties, fines, Employee Retirement Income Security Act of 1974
excise taxes or penalties, and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in
connection therewith; provided, however, that the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if the
proceeding (or part thereof) was authorized by the Board of Directors
of the corporation. Such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred by this
Section shall be a contract right which may not be retroactively
amended and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without
limitation, service with respect to an employee benefit plan) in
advance of the final disposition of the proceeding shall be made only
upon delivery to the corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if
ultimately it shall be determined that such director or officer is not
entitled to be indemnified under this Section or otherwise. The
corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the corporation with the
same scope and effect as the indemnification of directors and
officers.
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<PAGE>
(2) NONEXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance
of its final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of this Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
(3) INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or
agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability
or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
ALZA has purchased directors and officers liability insurance which would
indemnify the directors and officers of ALZA against damages arising out of
certain kinds of claims which might be made against them based on their
negligent acts or omissions while acting in their capacity as such.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
5 Opinion of General Counsel of ALZA
23.1 Consent of General Counsel of ALZA (filed as part of Exhibit 5)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24 Power of Attorney (page 6)
99.1 Amended and Restated Stock Plan
99.2 Amended and Restated Employee Stock Purchase Plan, as amended
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
-4-
<PAGE>
PROVIDED, HOWEVER, that paragraphs A(1)(i) and A(1)(ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Palo Alto, State of California, on February 14, 1997.
ALZA CORPORATION
By: /s/ ERNEST MARIO
--------------------------------------
Dr. Ernest Mario,
Co-Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ernest
Mario and Bruce C. Cozadd his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and
resubstitution, for him or her and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that
is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and all post-effective amendments thereto, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, each acting alone, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ ALEJANDRO ZAFFARONI Co-Chairman of the Board and Director February 14, 1997
- -----------------------
Dr. Alejandro Zaffaroni
/s/ ERNEST MARIO Co-Chairman of the Board, Chief Executive February 14, 1997
- ----------------------- Officer and Director (Principal Executive
Dr. Ernest Mario Officer)
/s/ WILLIAM G. DAVIS Director February 14, 1997
- -----------------------
William G. Davis
/s/ WILLIAM BRODY Director February 14, 1997
- -----------------------
Dr. William Brody
/s/ ROBERT J. GLASER Director February 14, 1997
- -----------------------
Dr. Robert J. Glaser
/s/ DEAN O. MORTON Director February 14, 1997
- -----------------------
Dean O. Morton
/s/ DENISE O'LEARY Director February 14, 1997
- -----------------------
Denise O'Leary
/s/ ISAAC STEIN Director February 14, 1997
- -----------------------
Isaac Stein
/s/ JULIAN STERN Director February 14, 1997
- -----------------------
Julian N. Stern
/S/ BRUCE C. COZADD Senior Vice President and Chief Financial February 14, 1997
- ----------------------- Officer (Principal Financial and Accounting
Bruce C. Cozadd Officer)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Item No. Description of Item Page
- -------- --------------------------------------------------------------- ----
5 Opinion of General Counsel of ALZA.............................
23.1 Consent of General Counsel of ALZA (filed as part of Exhibit 5)
23.2 Consent of Ernst & Young LLP, Independent Auditors.............
24 Power of Attorney (page 6).....................................
99.1 Amended and Restated Stock Plan................................
99.2 Amended and Restated Employee Stock Purchase Plan, as amended..
<PAGE>
EXHIBIT 5
February 13, 1997
ALZA Corporation
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303-0802
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
I am delivering this opinion in my capacity as Senior Vice President
and General Counsel of ALZA Corporation, a Delaware corporation ("ALZA"), in
connection with the Registration Statement on Form S-8 (the "Registration
Statement") which ALZA proposes to file with the Securities and Exchange
Commission on or about February 14, 1997, for the purpose of registering under
the Securities Act of 1933, as amended, an aggregate of 3,500,000 shares of its
Common Stock, par value $.01 (the "Shares"). Of the Shares, 3,000,000 Shares
are issuable upon exercise of options or as restricted stock under the ALZA
Corporation Amended and Restated Stock Plan (the "Stock Plan") and 500,000 are
issuable under the ALZA Corporation Amended and Restated Employee Stock Purchase
Plan (the "Purchase Plan" and collectively with the Stock Plan the "Plans").
In connection with this opinion, I have assumed the authenticity of
all records, documents and instruments submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all records, documents and instruments submitted
to me as copies. I have based my opinion upon my review of such records,
documents and instruments as I have deemed appropriate to render this opinion.
This opinion is limited to the General Corporation Law of the State of
Delaware. I disclaim any opinion as to any other statute, rule, regulation,
ordinance, order or other promulgation of any other jurisdiction or any regional
or local governmental body.
<PAGE>
ALZA Corporation
February 13, 1997 Page 2
Based upon the foregoing and my examination of such questions of law
as I have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and sold, (ii) appropriate
certificates evidencing the Shares will be executed and delivered upon issuance
of the Shares, (iii) the full consideration stated in the Plans is paid for each
Share, and (iv) all applicable securities laws are complied with, it is my
opinion that when issued by the Company, after payment therefor in the manner
provided in the Plans, the Shares covered by the Registration Statement will be
legally issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/S/ PETER D. STAPLE
Peter D. Staple
Senior Vice President and General Counsel
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Amended and Restated Stock Plan and Amended and
Restated Employee Stock Purchase Plan of ALZA Corporation ("ALZA") of our
report dated February 16, 1996, with respect to the consolidated financial
statements of ALZA incorporated by reference in its Annual Report (Form 10-K)
for the year ended December 31, 1995, filed with the Securities and Exchange
Commission.
Ernst & Young LLP
Palo Alto, California
February 13, 1997
<PAGE>
EXHIBIT 99.1
ALZA CORPORATION
AMENDED AND RESTATED STOCK PLAN
1. PURPOSE. The purpose of this ALZA Corporation Amended and Restated
Stock Plan (the "Plan") is to attract, retain and motivate key employees
(including employees who are also directors), directors and consultants of ALZA
Corporation (the "Company") and its subsidiaries by giving them the opportunity
to acquire stock ownership in the Company. Grants under this Plan may consist
of incentive stock options, intended to satisfy the requirements of Section 422
of the Internal Revenue Code of 1986, as it may be amended from time to time
(the "Code"), or nonstatutory stock options (in either case, where unspecified,
"options"). This Plan also provides for the award of restricted stock.
2. EFFECTIVE DATE AND TERM OF PLAN. The effective date of
this Plan is May 4, 1992, the date of the approval of the 1992 Stock Option Plan
by the Company's stockholders. This Plan shall terminate automatically ten (10)
years after its effective date unless terminated earlier by the Board of
Directors (the "Board") under Section 13 hereof. No grant of options or
restricted stock shall be made after termination of this Plan, but all grants
made prior to termination shall remain in effect in accordance with their terms.
3. SHARES SUBJECT TO THE PLAN.
(a) NUMBER AND SOURCE OF SHARES. Subject to the provisions of
Section 9, the total number of shares of stock reserved for grants under this
Plan is 6,000,000 shares of Common
<PAGE>
Stock, $. 01 par value, of the Company (the "Stock"). If any option
terminates or expires without being exercised in full, or if any shares of
Stock issued as restricted stock are forfeited prior to conferring on their
holder benefits of ownership other than voting rights or accumulated
dividends that are not realized, the shares issuable under such option or so
forfeited shall become available again for grant under this Plan. The shares
to be issued hereunder may consist of authorized and unissued shares or
treasury shares.
(b) INDIVIDUAL LIMITATION. The Company may not grant options
covering in the aggregate more than 200,000 shares of Stock (subject to
adjustments and substitutions as required under Section 9 below) to any one
participant in any one-year period, except that, at the time of an offer of
employment, the Company may grant options covering in the aggregate up to
750,000 shares of Stock (subject to adjustments and substitutions as required
under Section 9 below).
4. ADMINISTRATION OF THE PLAN. This Plan shall be administered by the
Board or by a committee that meets the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 as in effect from time to time (in either case,
the "Administrator"). The Administrator may delegate nondiscretionary
administrative duties to such employees of the Company or a subsidiary as it
deems proper. The Administrator may also make rules and regulations which it
deems useful to administer this Plan. Any decision or action of the
Administrator in connection with this Plan or any options or restricted stock
granted or shares of Stock purchased under this
-2-
<PAGE>
Plan shall be final and binding. No member of the Board shall be liable
for any decision, action or omission respecting this Plan, or any options or
restricted stock granted or shares of Stock issued under this Plan.
5. ELIGIBILITY.
(a) Incentive stock options may be granted under this Plan only to
employees of the Company or a subsidiary, including employees who may also be
officers or directors of the Company or any subsidiary of the Company.
Nonstatutory options and restricted stock may be granted to employees (including
employees who are also directors), directors, consultants and potential
employees (in contemplation of and subject to employment) of the Company or any
subsidiary of the Company; provided, however, that grants to directors who are
not also employees of the Company may be made only in accordance with Section
5(b) below. Participants in this Plan shall be recommended for grants hereunder
by the Chief Executive Officer or Chief Operating Officer of the Company and
approved by the Administrator. Determination by the Administrator as to
eligibility shall be conclusive.
(b) Notwithstanding any other provision of this Plan, directors who
are not also employees of the Company may receive grants under this Plan only in
accordance with this Section 5(b). Automatically and in connection with the
offer of directorship to a person who is not an employee of the Company, and
subject to that person becoming a director of the Company within the time period
set forth in the offer, the person shall be granted a nonstatutory option to
purchase 20,000 shares of Stock at the fair market value of the Stock on the
date of the offer. Such
-3-
<PAGE>
option shall vest in five equal annual increments of 4,000 shares for each
increment, beginning on the first anniversary of the date on which the person
first attends a meeting of the Board following his or her election as a
director (the "Service Date"), and shall be exercisable until the date that
is ten (10) years after the date of grant. Assuming that the director is a
non-employee director on the fifth anniversary of his or her Service Date,
such director automatically shall be granted on such fifth anniversary of his
or her Service Date a further nonstatutory option to purchase 10,000 shares
of Stock at the fair market value of the Stock on the date of the grant.
Such additional option shall vest in five equal annual increments of 2,000
shares each, beginning one year after the date of grant, and shall be
exercisable until the date that is ten (10) years after the date of grant.
Thereafter, on each subsequent fifth anniversary of his or her Service Date,
assuming the director is then a non- employee director, a further option to
purchase an additional 10,000 shares of Stock automatically shall be granted
to such director on the same basis as set forth in the preceding sentence.
The Service Date for a director who is also an employee of the Company but
who terminates employment with the Company while remaining a director shall,
for purposes of this Section 5(b), be deemed to be the date on which such
director first attends a meeting of the Board following the termination of
his or her employment with the Company. If such director has not been granted
options to purchase Stock within five years prior to his or her Service Date,
he or she automatically shall be granted a nonstatutory option to purchase
20,000 shares of Stock on the
-4-
<PAGE>
same basis as set forth above for a grant to a person becoming a director of
the Company; and, thereafter, on each subsequent fifth anniversary of his or
her Service Date, assuming the director is then a non-employee director, a
further option to purchase an additional 10,000 shares of Stock automatically
shall be granted to such director on the same basis as set forth above for
further options. However, if such director has been granted options to
purchase Stock within five years prior to his or her Service Date, he or she
shall automatically be granted a nonstatutory option to purchase 10,000
shares of Stock on the same basis as set forth above for further options on
the fifth anniversary of the date of the last grant of options by the Company
to such person prior to the termination of his or her employment with the
Company (the "Initial Grant Date"); and, thereafter, on each subsequent fifth
anniversary of his or her Initial Grant Date, assuming the director is then a
non-employee director, a further option to purchase an additional 10,000
shares of Stock automatically shall be granted to such director on the same
basis as set forth above for further options.
6. OPTIONS.
(a) GRANT. The Administrator may, in its discretion, grant options
under this Plan at any time and from time to time before the expiration of this
Plan. The Administrator shall specify the date of grant or, if it fails to, the
date of grant shall be the date of the action taken by the Administrator to
grant the option (in either case, the "Grant Date"). If an incentive stock
option is approved in anticipation of employment, the Grant Date shall in any
event not be prior to the date the
-5-
<PAGE>
intended optionee is first treated as an employee of the Company or any
subsidiary for payroll purposes.
(b) OPTION AGREEMENTS. As soon as practicable after the Grant Date,
the Company will provide the optionee a written stock option agreement (the
"Option Agreement"), which designates the option as an incentive stock option or
nonstatutory option and which identifies the Grant Date, the number of shares of
Stock covered by the option, the option price and the terms and conditions for
exercise of the option.
(c) TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan
shall be subject to the following additional terms and conditions and such other
terms and conditions not inconsistent with this Plan as the Administrator may
impose:
(i) EXERCISE OF OPTION. In order to exercise all or any portion
of an incentive stock option granted under this Plan (or any other option which,
by its terms, so requires), an optionee must remain in the employ of the Company
or a subsidiary of the Company until the date on which the option (or portion
thereof) becomes exercisable (the "Vesting Date"). An option shall be partially
exercisable on or after each Vesting Date with respect to the percentage of
total shares of Stock covered by the option set out in the Option Agreement.
If an option (or portion thereof) is not exercised on the earliest
Vesting Date on which it becomes exercisable, it may be exercised thereafter at
any time prior to its expiration date; provided, however, that in no event may
an incentive stock option granted under this Plan be exercised more than ten
(10) years from the Grant Date. If the Company grants an incentive stock
-6-
<PAGE>
option to an optionee who owns, on the Grant Date, directly or by
attribution, stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the company or any
subsidiary, the option shall not be exercisable more than five (5) years
after the Grant Date.
Notwithstanding any other provision of this Plan, to the extent
required by Section 422(d) of the Code, the aggregate value of all shares
first becoming exercisable by an optionee during any year, under all
incentive stock options granted to such optionee covering stock of the
Company (or any company which, at the time of grant, was a parent or
subsidiary of the Company), shall not exceed $100,000 or such other amount as
may be in effect from time to time. If by their terms such incentive stock
options, when taken together, would first become exercisable at a faster rate
then, except as otherwise specifically provided by the Administrator in its
discretion, the portion thereof which exceeds such amount shall be
nonstatutory options. For this purpose, value shall be the fair market value
of the option stock when the options were granted and options shall be taken
into account in the order in which they were granted. In no event may the
operation of this Section 6(c)(i) cause an option to vest before its terms
or, having vested, cease to be vested.
Nonstatutory options granted to employees under this Plan shall be
exercisable until ten (10) years after the Grant Date, unless the Administrator
shall determine otherwise.
(ii) OPTION PRICE. The option price of incentive stock options
shall be at least one-hundred percent (100%) of the
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fair market value of the shares covered by the option on the Grant Date, as
determined in good faith by the Administrator and, in the case of
nonstatutory options, shall be at least one- hundred percent (100%) of the
fair market value of the shares covered by the option on the Grant Date
unless the Administrator specifically determines otherwise, in which event
the option price of such nonstatutory options shall not be less than eighty-
five percent (85%) of the fair market value of the shares covered thereby on
the Grant Date, determined in the same manner. If the Company grants an
incentive stock option to an optionee owning on the Grant Date, directly or
by attribution, shares possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any
subsidiary, the option price shall be at least one-hundred ten percent (110%)
of the fair market value of the shares covered by the option on the Grant
Date determined in the same manner.
(iii) METHOD OF EXERCISE. To the extent the right to purchase
shares has accrued, an option (or portion thereof) may be exercised from time to
time in accordance with its terms by written notice from the optionee to the
Company stating the number of shares with respect to which the option is being
exercised and accompanied by payment in full of the exercise price of the
shares. Payment may be made in cash, by check, or by delivery of shares of
Stock (duly endorsed in favor of the Company or accompanied by a duly endorsed
stock power), by a combination of the above, or any other form of consideration
approved by the Administrator (including payment in accordance with a cashless
exercise program as permitted under Regulation T
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promulgated by the Federal Reserve Board, as amended from time to time). Any
shares delivered to the Company as payment upon exercise of an option shall
be valued at their fair market value as of the date of exercise of the option
determined in good faith by the Administrator. Options may not be exercised
by any optionee by the delivery of shares of stock more frequently than once
every six months.
(iv) RESTRICTIONS ON OPTION SHARES. At the time it grants
options under this Plan, the Company may retain for itself (or others) rights to
purchase the shares acquired under the option or impose other restrictions on
the shares. The terms and conditions of any such rights or other restrictions
shall be set forth in the Option Agreement evidencing the option.
(v) NONASSIGNABILITY OF OPTION RIGHTS. No option shall be
transferable other than by will or by the laws of descent and distribution or a
qualified domestic relations order and, otherwise during the lifetime of an
optionee, only the optionee may exercise an option.
(vi) EXERCISE AFTER TERMINATION OF SERVICE OR DEATH. If for any
reason other than permanent and total disability or death, an optionee ceases to
be employed by, or a consultant or director to (if such relationship forms the
sole basis for the grant), the Company or a subsidiary, options held at the date
of such termination (to the extent then exercisable) may be exercised at any
time within three months after the date of such termination (but in no event
after the expiration date of the option as set forth in the Option Agreement).
If an optionee becomes permanently and totally disabled (within the meaning of
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<PAGE>
Section 22(e)(3) of the Code) or dies while employed by, or a consultant or
director to, the Company or a subsidiary, (or, if the optionee dies within
the period that the option remains exercisable after termination of
employment, consultancy or directorship), options then held (to the extent
then exercisable) may be exercised by the optionee, the optionee's personal
representative, or by the person to whom the option is transferred by will or
the laws of descent and distribution, at any time within one year after the
disability or death or any lesser period specified in the Option Agreement
(but in no event after the expiration date of the option as set forth in the
Option Agreement).
7. RESTRICTED STOCK.
(a) GRANT. The Administrator may grant restricted stock under this
Plan at any time and from time to time before the expiration of this Plan.
(b) RESTRICTED STOCK AGREEMENT. As soon as practicable after the
grant of restricted stock, which in no event shall be later than thirty (30)
days after the grant date of the restricted stock, the Company will provide the
participant with a written restricted stock agreement setting forth the terms
and conditions of the grant (the "Restricted Stock Agreement").
(c) PRICE. Participants awarded restricted stock, within fifteen
(15) days of receipt of the Restricted Stock Agreement, shall pay to the Company
an amount equal to the par value of the Stock subject to the grant. If such
payment is not made and received by the Company by such date, the grant of
restricted stock shall lapse.
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(d) RESTRICTIONS. Subject to the provisions of the Plan and the
Restricted Stock Agreement, during a period set by the Administrator,
commencing with, and not exceeding ten (10) years from, the grant date of the
restricted stock (the "Restriction Period"), the participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
restricted stock. Within these limits, the Administrator may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such
other factors or criteria as the Administrator may determine.
(e) DIVIDENDS. Unless otherwise determined by the Administrator,
cash dividends with respect to shares of restricted stock shall be automatically
reinvested in additional restricted stock, and dividends payable in Stock shall
be paid in the form of restricted stock.
(f) TERMINATION. Except to the extent otherwise provided in the
Restricted Stock Agreement and pursuant to Section 7(d), upon termination of a
participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the participant.
8. PAYMENT OF TAXES.
(a) The exercise of an option (regardless of the form of payment for
exercise of the option) or the transfer or other disposition of restricted stock
shall be conditioned upon payment in cash, or provision satisfactory to the
Administrator for payment to the Company, of any federal and state withholding
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<PAGE>
taxes which, in the Administrator's judgement, are payable in connection
therewith.
(b) If and to the extent consented to by the Administrator in its
sole discretion at any time after an election pursuant to this Section 8(b)
is made, a participant may elect in writing to have Stock to be obtained upon
exercise of an option or lapse of restrictions applicable to restricted stock
withheld by the Company on behalf of the optionee to pay the amount of tax
required by law (as determined by the Company) to be withheld. Any such
election by a participant subject (in the view of the Company) to the "short
swing" profit rules of the Securities and Exchange Commission shall be
subject to the following limitations: (i) such election must be made at least
six months before the date that the amount of tax to be withheld in
connection with such exercise or lapse of restrictions is determined (the
"Tax Date") and shall be irrevocable; or (ii) such election (A) must be made
in (or made earlier to take effect in) any ten-day period beginning on the
third business day following the date of release for publication of the
Company's quarterly or annual summary statements of earnings and (B) the
option or restricted stock must be held at least six months prior to the Tax
Date. Any shares or other securities so withheld will be valued by the
Company as of the Tax Date. The right to so withhold shares shall relate
separately to each option or any increment thereof.
(c) If and to the extent consented to by the Administrator in the
manner described in Section 8(b), an optionee may elect at any time to deliver
previously owned shares
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of Stock to satisfy the tax obligations in connection with such options or
restricted stock.
9. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of
outstanding options shall not affect the Company's right to effect adjustments,
recapitalization, reorganizations, or other changes in its or any other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock, the dissolution or liquidation of the Company's, or any
other corporation's, assets or business, or any other corporate act whether
similar to the events described above or otherwise. Subject to Section 10, if
the number of outstanding shares of Stock is increased or decreased in number or
changed into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or other
event, the number and kind of securities with respect to which options or
restricted stock may be granted under this Plan, the individual limitations
under Section 3(b) above, the number and kind of securities as to which
outstanding options may be exercised, the option price at which outstanding
options may be exercised hereunder shall be proportionately adjusted.
10. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation, a reverse merger in which the Company is the
surviving corporation but in which more than fifty percent (50%)
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of the shares of its Stock outstanding before the merger are held, after the
merger, by holders different from those immediately prior to the merger, or a
sale of more than eighty percent (80%) of the assets of the Company, (a) the
time at which each outstanding option may be exercised (subject, in the case
of incentive stock options, to the limitations on exercisability set forth in
Section 6(c)(i) of this Plan) shall be accelerated at a time such that the
optionee (upon exercise of the option) would be eligible to receive the
consideration payable to holders of Stock in connection with such
liquidation, dissolution, merger, consolidation, reverse merger or sale, and
(b) the restrictions applicable to any restricted stock shall lapse.
11. RIGHTS AS STOCKHOLDER. Unless the Plan or the Administrator
expressly specify otherwise, a participant shall have no rights as a
stockholder with respect to any shares of Stock covered by a grant hereunder
until the date of issuance (as evidenced by the appropriate entry on the
books of the Company or a duly authorized transfer agent) of a certificate
representing the shares of Stock. Subject to Sections 9 and 10, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date the certificate is issued.
12. DISQUALIFYING DISPOSITIONS. If shares of Stock acquired upon exercise
of an incentive stock option are disposed of in a "disqualifying disposition"
(within the meaning of Section 422 of the Code), the holder of the shares shall
notify the Company in writing, within five days after the disposition, of the
date and the terms of such disposition. In the event of any such disposition,
the holder will comply with any other
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requirements imposed by the Company in order to enable the Company to secure
the related income tax deduction to which it is entitled.
13. TERMINATION OR AMENDMENT.
(a) The Board may amend, alter or discontinue this Plan, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding grant without the participant's
consent. In addition, the Board may not amend or alter the Plan without the
approval of stockholders of the Company entitled to vote at a duly held
stockholders' meeting or by an action by written consent and, if at a meeting, a
quorum of the voting power of the Company is represented in person or by proxy,
where such amendment or alteration would, except as expressly provided in the
Plan, increase the total number of shares reserved for issuance pursuant to
grants under the Plan or in such other circumstances as the Board deems
appropriate to comply with Rule 16b-3 or with Section 422 of the Code or
otherwise.
(b) Notwithstanding Section 13(a), except as may be necessary to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder, the Plan shall not be amended more than once every six
months if any such amendment would have the effect of amending in any way the
provisions set forth in Section 5(b) of the Plan relating to automatic stock
option grants to directors.
14. PARENT AND SUBSIDIARY. As used in this Plan, "parent" and
"subsidiary" mean any corporation in an unbroken chain of corporations which
includes the Company if, at the relevant time,
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each of the corporations other than the last corporation in the chain owns
stock possessing more than fifty percent (50%) of the total combined voting
power of all classes of stock of one of the other corporations in the chain.
15. GOVERNING LAW. This Plan and the rights of all persons under this
Plan shall be construed in accordance with and under applicable provisions of
the Code and the laws of the State of California.
* * * * * * * * *
The Board adopted the ALZA Corporation 1992 Stock Option Plan on January
30, 1992 and the stockholders approved it on May 4, 1992. The Board amended the
ALZA Corporation 1992 Stock Option Plan on February 16, 1995, renaming it the
ALZA Corporation Amended and Restated Stock Plan and the stockholders approved
the amendments on May 11, 1995.
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EXHIBIT 99.2
ALZA CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The ALZA Corporation Amended and Restated Employee Stock
Purchase Plan (the "PLAN") is designed to foster continued cordial employee
relations, to encourage and assist employees of ALZA Corporation (the "COMPANY")
and its subsidiaries to acquire stock in the Company and to help them provide
for their future financial security.
2. SHARES SUBJECT TO PLAN
(a) NUMBER OF SHARES: The Company has reserved for purchase under
the Plan a total of 2,050,000 shares of its Common Stock (the "SHARES"). Shares
sold under the Plan may be newly or previously issued shares, but all shares
issued under the Plan, regardless of source, shall be counted against the
2,050,000 share limitation. If at any time the available Shares are
oversubscribed, subscriptions shall be reduced proportionately to eliminate the
oversubscription. Any funds credited to a member that cannot be applied to the
purchase of Shares due to oversubscription shall be promptly refunded to the
member.
(b) ADJUSTMENTS: In the event of any reorganization,
recapitalization, stock split, reserve stock split, stock dividend, combination
of shares, merger, consolidation, offering of rights or other similar change in
the structure of the capital stock of the Company, the Company may make such
adjustment, if any, as it may deem appropriate in the number, kind and
subscription price of the securities available for purchase under the Plan and
in the maximum number of securities that a member is entitled to purchase. The
Company may make any further adjustments it deems necessary to insure the
qualification of the Plan under Section 423 or any successor provision of the
Internal Revenue Code of 1986, as amended (the "CODE").
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by such
officers and employees of the Company or other persons as the Board of Directors
of the Company from time to time may select (the "PLAN COMMITTEE"). All costs
and expenses incurred in administering the Plan shall be paid by the Company,
provided that any taxes applicable to a member's participation in the Plan may
be charged to the member by the Company.
The Plan Committee may make such rules and regulations as it deems
necessary to administer the Plan and to interpret the provisions of the Plan.
Any determination, decision or action of the Plan Committee in connection with
the construction, interpretation, administration or application of the Plan or
any right granted under the Plan shall be final, conclusive and binding upon all
persons. No member of the Plan Committee shall be liable for any determination,
decision or action made.
4. ELIGIBILITY. Any employee who is customarily employed by the Company
or a subsidiary for 20 hours per week or more and five months or more in any
calendar year (except any employee who would own, directly or indirectly, five
percent or more of
<PAGE>
the total combined voting power or value of all classes of
stock of the Company or any of its subsidiaries immediately after Shares are
purchased under the Plan) shall be eligible to become a member of and to
participate in the Plan beginning on the first Enrollment Date following his or
her employment with the Company or a subsidiary.
For purposes of the Plan, "employee" shall mean any individual who
performs services for the Company or a subsidiary pursuant to an employment
relationship described in Treasury Regulations Section 31.3401(c)-1; and
"subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if, as of a given Enrollment Date, each of the
corporations other than the last corporation in the chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
5. PARTICIPATION
(a) ENROLLMENT: Any eligible employee may enroll or re-enroll in the
Plan as of any February 1 or August 1 (or if either such date is not a trading
date, as of the trading date immediately following such date) (each an
"ENROLLMENT DATE") for a period of 24 months (an "OFFERING PERIOD") commencing
on the applicable Enrollment Date and ending on the fourth Purchase Date
following the applicable Enrollment Date. In order to enroll, an eligible
employee must deliver to the Company a completed and signed "Employee Stock
Purchase Plan Subscription Agreement" indicating the employee's acceptance of
the Plan and agreement to participate in the Plan. Forms must be received by
the Company no later than an Enrollment Date and shall be effective as of such
Enrollment Date. Participation in the Plan is entirely voluntary.
(b) RE-ENROLLMENT UPON EXPIRATION OF OFFERING PERIOD: At the end of
a member's then-current Offering Period, the member automatically shall be
enrolled in the next succeeding Offering Period (a "RE-ENROLLMENT") unless, in a
manner and at a time specified by the Company, but in no event later than the
day before the first day of such succeeding Offering Period, the member notifies
the Company in writing of the member's desire not to be so enrolled.
Re-enrollment shall be at the same percentage of contributions as the member's
prior participation unless the member by timely written notice changes the
percentage of contribution. No member shall be automatically re-enrolled whose
participation terminates by operation of Section 9 or who, during the preceding
Offering Period, has reduced his or her percentage of contribution to 0% or has
notified the Company in writing of the member's withdrawal from participation in
the Plan.
(c) AUTOMATIC RE-ENROLLMENT ON LOWER PRICE ENROLLMENT DATE: In the
event that the fair market value of the Company's Common Stock is lower on any
Enrollment Date (the "LOWER PRICE ENROLLMENT DATE") than it was on the
Enrollment Date on which a participating member last enrolled in the Plan, such
member shall be deemed to have re-enrolled in the Plan on such Lower Price
Enrollment Date for the next succeeding Offering Period. A participant may
elect not to re-enroll on a Lower Price Enrollment Date by filing a written
statement declaring such election with the Company prior to such Lower Price
Enrollment Date.
6. MEMBER'S CONTRIBUTIONS. Each member shall make contributions by
payroll deduction of any whole percentage up to 15% of the member's monthly
gross pay, as designated by the member. "MONTHLY GROSS PAY" shall include total
salary and wages before any tax reduction plan decreases and shall exclude
overtime pay, moving
2
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allowances, participation in clinical studies, bonus payments (including PACE
awards), income arising from stock options, imputed income due to fringe
benefits and similar items. Contributions shall not be made other than in
accordance with this Section 6.
At any time, a member may elect in writing to decrease the member's
rate of contribution. An election to decrease the rate of contribution or to
stop contributing totally will take effect on the soonest practicable payroll
date following receipt by the Company of the written election. Any election by
a member to decrease his or her payroll deductions to 0% shall be deemed to be
an election to withdraw from the Plan effective immediately following the
purchase of Shares on the next Purchase Date. Such member's participation in
the Offering Period shall continue until the next Purchase Date; thereafter, the
member may enroll on any subsequent Enrollment Date for a new Offering Period.
At any time, but no more frequently than once in any consecutive
six-month period, a member may elect in writing to increase the member's rate of
contribution up to 15%. A written election to increase the rate of contribution
received by the Company from a member will become effective on the soonest
practicable payroll date following the Company's receipt of such election and
will not constitute a new enrollment.
Notwithstanding any other provision of the Plan, no member may receive
a right to acquire Shares under the Plan (and all other employee stock purchase
plans of the Company and its subsidiaries that are qualified or intended to be
qualified under Section 423 or any successor provision of the Code) that accrues
at a rate in excess of $25,000 of fair market value of such Shares for any
calendar year (determined as of the Enrollment Date).
Employee contributions may be commingled with other Company funds free
of any obligation of the Company to pay interest on such funds but shall be
credited to each member as soon as practicable after each withholding.
7. PURCHASE RIGHTS
(a) GRANT OF PURCHASE RIGHTS. Enrollment by a member in the Plan on
an Enrollment Date will constitute the grant by the Company to the Member of
rights to purchase Shares under the Plan. Upon enrollment, unless otherwise
determined by the Plan Committee, a member will become eligible for the grant of
purchase rights for the number of Shares equal to $75,000 divided by the fair
market value of a Share determined at the grant date of such purchase right.
Any member whose purchase rights expire and who has not withdrawn from the Plan
will automatically be re-enrolled in the Plan and granted new purchase rights
(equal in number to the number of expiring purchase rights) on the Enrollment
Date immediately following the Purchase Date on which the Member's then current
purchase rights expire. Any member who is deemed to have re-enrolled on a Lower
Price Enrollment Date will be granted new purchase rights for the number of
Shares equal to $75,000 divided by the fair market value of a Share on the Lower
Price Enrollment Date.
(b) TERMS AND CONDITIONS OF PURCHASE RIGHTS. Each purchase right
granted under the Plan shall have the following terms:
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<PAGE>
(i) whether or not Shares have been purchased thereunder, the
purchase right will expire on the earliest to occur of (A) the completion of the
purchase of Shares on the last Purchase Date occurring within 24 months of the
Enrollment Date on which such purchase right was granted, or such shorter period
as may be established by the Board of Directors from time to time prior to an
Enrollment Date for all purchase rights to be granted on such Enrollment Date,
or (B) the date on which participation of such member in the Plan terminates for
any reason;
(ii) payment for Shares purchased under the purchase rights will
be made only through payroll deduction in accordance with Section 6;
(iii) purchase of Shares upon exercise of the purchase rights
will be accomplished only in installments in accordance with Section 8;
(iv) the purchase price per Share under the purchase rights will
be determined as provided in Section 8; and
(v) the purchase rights will in all respects be subject to the
terms and conditions of the Plan, as interpreted by the Plan Committee from time
to time.
8. ISSUANCE OF SHARES. On each January 31 and July 31 (or if either such
date is not a trading date, on the last trading date immediately prior to such
date) during an Offering Period (each a "PURCHASE DATE"), so long as the Plan
shall remain in effect, the Company shall apply the funds then credited to each
member's account to the purchase of whole Shares. The cost or charge to each
member's account shall be 85% of the fair market value of one share of ALZA
Common Stock on the applicable Enrollment Date or on the Purchase Date,
whichever is lower, as determined in good faith by the Plan Committee,
multiplied by the number of Shares purchased.
After the purchase of Shares on a Purchase Date, any funds credited to
a member equalling less than the sum required to purchase a whole Share shall be
held for purchases on the next succeeding Purchase Date. Upon the effective
date of a member's written election to withdraw from participation in the Plan
for the then-current Offering Period, any funds then credited to the member
shall, for purposes of this Section 7, cease to be credited to such member and
shall be refunded to the member. The Company shall, promptly after each
Purchase Date so long as the Plan is in effect, issue to the member entitled
thereto the Shares purchased by the member under the Plan. No member shall have
rights as a stockholder of the Company until such Shares are issued.
9. TERMINATION OF MEMBERSHIP. A member's participation in the Plan shall
terminate, and no Shares may thereafter be purchased by such member under the
Plan, (a) when the member ceases to be employed by the Company and its
subsidiaries for any reason whatsoever, (b) when the member dies, or (c) 90 days
after the member ceases to receive any compensation from the Company and its
subsidiaries unless, in the case of (c) above, (i) such cessation is due to a
leave of absence in accordance with policies of the Company or approved by the
person or persons appointed by the Company to administer the Plan and (ii) the
member's right to reemployment is guaranteed by statute or contract.
10. WITHDRAWAL OF FUNDS. A member may withdraw all or part of the funds
contributed by such member to the Plan at any time prior to the use of the funds
for the
4
<PAGE>
purchase of Shares. A member may make only one withdrawal of funds per
calendar quarter. The member may not, after any withdrawal, return any such
funds to the Company and require the Company to apply the funds to the
purchase of Shares.
11. BENEFICIARY. Each member may designate in writing one or more
beneficiaries and may, in such member's sole discretion, change such designation
from time to time. Any such designation shall be effective only after receipt
by the Company and shall be controlling over any disposition by will or
otherwise.
Upon the death of a member, amounts remaining credited to the member
shall be paid in cash to the beneficiary or beneficiaries designated by the
member or, in the absence of such designation, to the executor, administrator or
other legal representative of the member's estate. Such payment shall relieve
the Company of further liability under the Plan on account of the member. If
more than one beneficiary is designated, each beneficiary shall receive an equal
portion of the account unless the member gave contrary instructions in such
designation.
12. MODIFICATION, TERMINATION. The Company expects to continue the Plan
until such time as all of the Shares reserved for purchase under the Plan have
been purchased. However, the Company reserves the right to amend, alter or
terminate this Plan at any time. No amendment shall be effective unless, within
one year after it is adopted by the Company's Board of Directors, it is approved
by the holders of a majority of the voting power of the Company's outstanding
shares, if such amendment would:
(i) increase the number of Shares reserved for purchase under the
Plan;
(ii) materially increase the benefits to participants; or
(iii) materially modify the requirements for participation.
The Board of Directors may elect to terminate any or all outstanding
enrollments at any time. In the event the Plan is terminated, the Board may
also elect either to terminate enrollments upon completion of the purchase of
Shares on the next Purchase Date, or to permit enrollments to expire in
accordance with their terms (and participation to continue through such
expiration dates). If the enrollments are terminated prior to expiration, any
funds contributed to the Plan that have not been used to purchase Shares shall
be returned to the members as soon as administratively feasible.
If at any time the Shares available under the Plan are over-enrolled,
enrollments shall be reduced proportionately to eliminate the over-enrollment.
Any funds that cannot be applied to the purchase of Shares due to
over-enrollment shall be refunded to members as soon as administratively
feasible.
13. ASSIGNABILITY OF RIGHTS; CREATION OF LIENS. No rights of any member
under the Plan shall be assignable by the member, by operation of law or
otherwise, and no person may create a lien on any funds, securities or any other
property, except to the extent that there has been a designation of a
beneficiary or beneficiaries in accordance with the Plan, and except to the
extent permitted by the laws of descent and distribution if such beneficiary is
not designated. Prior to the purchase of any Shares under the Plan, each member
shall be required to sign a statement to the foregoing effect.
5
<PAGE>
A member's right to purchase Shares under the Plan shall be exercisable only
during the member's lifetime and only by the member.
14. PARTICIPATION IN OTHER PLANS. Except as provided in Section 6,
nothing in the Plan shall affect an employee's right to participate in and
receive benefits under the then-current provisions of any pension, insurance or
other employee benefit plan or program of the Company or a subsidiary.
15. REPORTS. The Company shall make available to members copies of all
communications with holders of Common Stock, including annual and interim
reports. In connection with the issuance of Shares under the Plan, the Company
shall provide each member with a summary of such member's total contributions
during the preceding Offering Period, and the number of Shares purchased,
purchase price and the balance of funds, if any, in the member's account.
16. EQUAL RIGHTS AND PRIVILEGES. All members shall have equal rights and
privileges with respect to the Plan to the extent necessary to cause the Plan to
qualify as an "employee stock purchase plan" within the meaning of Section 423
or any successor provision of the Code and the regulations promulgated
thereunder. This Section 16 shall take precedence over all other provisions of
the Plan.
17. APPLICABLE LAW. The interpretation, performance and enforcement of
the Plan shall be governed by the laws of the State of California.
18. EFFECTIVE DATE; TRANSITION PROVISIONS . The Plan amendments embodied
in this Amended and Restated Employee Stock Purchase Plan are effective July 2,
1995, provided, however, that notwithstanding Sections 5(a) and 8, (a) no
enrollment date will occur on August 1, 1995; (b) the two Offering Periods
existing on the effective date of these amendments (i.e., the Offering Periods
commencing July 1, 1994 and July 1, 1995) will each continue for 25 months (to
July 31, 1996 and July 31, 1997, respectively) and (c) since no Purchase Date
occurred in January of 1995 with respect only to the Offering Period commencing
July 1, 1994 and ending on July 31, 1996, only three Purchase Dates (June 30,
1995, January 31, 1996 and July 31, 1996) will occur during such Offering
Period.
19. APPROVAL. The Plan was originally approved by the Company's Board of
Directors on July 18, 1984 and by holders of the majority of the voting power of
all outstanding shares of the Company on April 25, 1985. This Amended and
Restated Plan was approved by the Company's Board of Directors on February 16,
1995 and by the Company's stockholders on May 11,1995.
6
<PAGE>
AMENDMENT NO. 1
TO THE ALZA CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
THIS AMENDMENT NO. 1 to the ALZA Corporation Amended and Restated Employee
Stock Purchase Plan (the "Plan") hereby amends the Plan as follows:
1. Paragraph 2(b) is hereby deleted in its entirety and replaced with the
following:
(b) ADJUSTMENTS: In the event of any reorganization,
recapitalization, stock split, reverse stock split, stock dividend,
combination of shares, merger, consolidation, offering of rights or other
similar change in the structure of the capital stock of the Company, the
Company may make such adjustment, if any, as it may deem appropriate in the
number, kind and subscription price of the securities available for
purchase under the Plan and in the maximum number of securities that a
member is entitled to purchase.
2. Section 5(a) of the Plan is amended to include at the end thereof the
following:
In the event that the Company fails to offer enrollment in the Plan to
every person who is entitled to participate therein, such action (or
inaction) shall not affect the enrollment, or eligibility to enroll or
re-enroll, of any other eligible employee.
3. All other provisions of the Plan shall remain in full force and
effect, without modification.
To record the adoption of this Amendment No. 1, the Company has caused
this instrument to be executed by a duly authorized officer as of the 23rd
day of December, 1996.
ALZA Corporation
/S/ ERNEST MARIO
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Ernest Mario
Chief Executive Officer
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