<PAGE>
As filed with the Securities and Exchange Commission on April 6, 1998
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
Incorporation or Organization) Identification No.)
950 Page Mill Road, P.O. Box 10950, Palo Alto, CA 94303-0802 (650) 494-5000
(Address of Principal Executive Offices)
AMENDED AND RESTATED STOCK PLAN
(Full Title of the Plan)
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)
(650) 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
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================
Proposed
Maximum
Amount Proposed Maximum Aggregate Amount of
Title of Securities to be Offering Price Offering Registration
to be Registered Registered per Share(1) Price Fee
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock issuable under 3,000,000 $ 44.71875 $134,156,250 $ 39,576
Amended and Restated Stock
Plan, $0.01 par value
==============================================================================================
</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, 1997; and
(b) 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 130,000
shares of Common Stock, of which 50,000 are exercisable within 60 days of
February 10, 1998. Mr. Staple also holds 1,923 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 (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
II-1
<PAGE>
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.
(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
II-2
<PAGE>
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 II-6)
99.1 Amended and Restated Stock Plan
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;
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
II-3
<PAGE>
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.
II-4
<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 10, 1998.
ALZA CORPORATION
By: /s/ Dr. Ernest Mario
---------------------
Dr. Ernest Mario,
Chairman and Chief Executive Officer
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Dr.
Ernest Mario and Mr. 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 as of February 10, 1998.
<TABLE>
<CAPTION>
Signature Title
- ----------------------------- --------------------------------------------------
<S> <C>
/s/ Dr. Ernest Mario Chairman of the Board, Chief Executive
- ----------------------------- Officer and Director (Principal Executive Officer)
Dr. Ernest Mario
/s/ William G. Davis Director
- -----------------------------
William G. Davis
/s/ Dr. William Brody Director
- -----------------------------
Dr. William Brody
/s/ Dr. Robert J. Glaser Director
- -----------------------------
Dr. Robert J. Glaser
/s/ Dean O. Morton Director
- -----------------------------
Dean O. Morton
/s/ Denise O'Leary Director
- -----------------------------
Denise O'Leary
/s/ Isaac Stein Director
- -----------------------------
Isaac Stein
/s/ Julian N. Stern Director
- -----------------------------
Julian N. Stern
/s/ Bruce C. Cozadd Senior Vice President and Chief Financial
- ----------------------------- Officer (Principal Financial and Accounting Officer)
Bruce C. Cozadd
</TABLE>
II-6
<PAGE>
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Sequentially
Item Numbered
No. Description of Item Page
- --- --------------------------------------------------------------- ------------
<S> <C> <C>
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 II-6)
99.1 Amended and Restated Stock Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
April 3, 1998
ALZA Corporation
950 Page Mill Road
P.O. Box 10950
Palo Alto, CA 94303-0802
Re: 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
April 6, 1998 for the purpose of registering under the Securities Act of
1933, as amended, an additional 3,000,000 shares of its Common Stock, par value
$.01 (the "Shares") issuable upon exercise of options or as restricted stock
under the ALZA Corporation Amended and Restated Stock Plan (the "Plan").
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.
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 the issuance of the
Shares, (iii) the full consideration stated in the Plan 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 Plan, 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 be reference in the REgistration Statement
(Form S-8) pertaining to the Amended and Restated Stock Plan of ALZA
Corporation of our report dated February 13, 1998 with respect to the
financial statements of ALZA Corporation incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto
April 2, 1998
<PAGE>
Exhibit 99.1
ALZA CORPORATION
AMENDED AND RESTATED STOCK PLAN
-------------------------------
(AS AMENDED THROUGH AUGUST 13, 1997)
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 9,000,000 shares of Common 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
1
<PAGE>
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 (the "Exchange Act") as in effect from time to time (in
either case, the "Administrator"). The Administrator (i) may authorize any one
or more of its members or any officer of the Company to execute and deliver
documents on behalf of the Administrator and (ii) so long as not otherwise
required for the Plan to comply with Rule 16b-3, may delegate to one or more
officers or directors of the Company authority to grant options to persons who
are not subject to Section 16 of the Exchange Act with respect to Stock. 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 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.
-----------
2
<PAGE>
(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 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
3
<PAGE>
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 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.
-------
4
<PAGE>
(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 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
5
<PAGE>
granted under this Plan be exercised more than ten (10) years from the Grant
Date. If the Company grants an incentive stock 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 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
6
<PAGE>
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 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
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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
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conditions of any such rights or other restrictions shall be set forth in the
Option Agreement evidencing the option.
(v) Nonassignability of Option Rights. Except as otherwise
---------------------------------
determined by the Administrator, 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
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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
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.
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(a) Grant. The Administrator may grant restricted stock under this Plan
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at any time and from time to time before the expiration of this Plan.
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(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 the
purchase price of the restricted stock set forth in the Restricted Stock
Agreement, which shall not be less than 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.
(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
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employment for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant.
8. Payment of Taxes.
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(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
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, a person may (i) tender to the Company previously-owned shares of
Stock, or (iii) have shares of Stock to be obtained upon exercise of the option
withheld by the Company on behalf of the optionee, to pay the amount of tax that
the Administrator, in its discretion, determines to be required to be withheld
by the Company.
9. Adjustment for Changes in Capitalization. The existence of outstanding
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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
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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%) 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) except as otherwise
provided in the Option Agreement, 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) except as otherwise provided in the Restricted Stock
Agreement, 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
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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 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.
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(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.
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, 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.
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* * * * * * * * *
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.
The Board amended the ALZA Corporation Amended and Restated Stock Plan on
February 12, 1997 to increase the number of shares from 6,000,000 to 9,000,000
and to provide for the transferability of option rights. The stockholders
approved the amendment to increase the number of shares on May 8, 1997.
The Board further amended the ALZA Corporation Amended and Restated Stock
Plan on August 13, 1997. These amendments did not require stockholder approval.
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