<PAGE>
As filed with the Securities and Exchange Commission on January 20, 1999
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)
<TABLE>
<S> <C>
DELAWARE 77-0142070
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
</TABLE>
950 Page Mill Road, P.O. Box 10950, Palo Alto, CA 94303-0802 (650) 494-5000
(Address of Principal Executive Offices)
ALZA CORPORATION AMENDED AND
RESTATED EMPLOYEE STOCK
PURCHASE PLAN
AND
ALZA CORPORATION SUPPLEMENTAL
EMPLOYEE STOCK PURCHASE 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
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered per Share(1) Offering Price Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $0.01 par value 950,000 $45.75 $43,462,500 $12,083
=========================================================================================================================
</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>
EXPLANATORY NOTE: This Registration Statement on Form S-8 relates to the
issuance of up to 950,000 shares (the "Shares") of Common Stock of ALZA
Corporation (the "Company") under the ALZA Corporation Amended and Restated
Employee Stock Purchase Plan (the "Plan") and the ALZA Corporation Supplemental
Employee Stock Purchase Plan (the "Supplemental Plan" and collectively with the
Plan, the "Plans"). The Company has reserved an aggregate of 3,000,000 shares
of Common Stock under the Plans of which 2,050,000 were previously registered
under the Securities Act of 1933, as amended (the "Act").
<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 and 10-K/A for the fiscal year
ended December 31, 1997;
(b) ALZA's Quarterly Report on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
(c) ALZA's Current Report on Form 8-K dated October 4, 1998; and
(d) 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 2,141 shares of Common
Stock and options to purchase 135,000 shares of Common Stock, of which 75,000
are exercisable within 60 days of January 1, 1999. In addition, Mr. Staple
owns 14,000 shares of restricted stock which vest on August 12, 2002.
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
II-1
<PAGE>
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 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
II-2
<PAGE>
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 II-6)
99.1 ALZA Corporation Amended and Restated Employee Stock Purchase
Plan
99.2 ALZA Corporation Supplemental Employee Stock Purchase 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.
II-3
<PAGE>
(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.
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 January 20, 1999.
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 indicated on January 20, 1999.
<TABLE>
<CAPTION>
Signature Title
- ----------------------------- --------------------------------------------
<S> <C>
/s/ Dr. Ernest Mario Chairman of the Board, Chief Executive
- ----------------------------- Officer and Director (Principal Executive
Dr. Ernest Mario Officer)
/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
Bruce C. Cozadd Accounting Officer)
</TABLE>
II-6
<PAGE>
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Sequentially
Item Numbered
No. Description of Item Page
- ---- ------------------------------------------------------------------- --------------
<C> <S> <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 ALZA Corporation Amended and Restated Employee Stock Purchase Plan
99.2 ALZA Corporation Supplemental Employee Stock Purchase Plan
</TABLE>
II-7
<PAGE>
EXHIBIT 5
---------
January 20, 1999
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
January 20, 1999, for the purpose of registering under the Securities Act of
1933, as amended, an aggregate of 950,000 shares of its Common Stock, par value
$.01 (the "Shares"), issuable under the ALZA Corporation Amended and Restated
Employee Stock Purchase Plan and the ALZA Corporation Supplemental Employee
Stock Purchase Plan (collectively, 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.
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 Plans is paid for each Share,
and (iv) all applicable securities laws are complied with, it is my opinion that
when that when issued by ALZA after payment therefor in the manner provided in
the Plans, the Shares covered by the Registration Statement will be legally
issued, fully paid and non-assessable.
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 Employee Stock Purchase Plan and the
Supplemental Employee Stock Purchase Plan of ALZA Corporation of our report
dated February 13, 1998 with respect to the consolidated financial statements
and schedule 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, California
January 19, 1999
<PAGE>
EXHIBIT 99.1
------------
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.
<PAGE>
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 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
2
<PAGE>
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 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 a Company from a member will become effective on the soonest
practicable payroll date following receipt by the Company 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
---------------
3
<PAGE>
(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:
(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.
4
<PAGE>
After the purchase of Shares on a Purchase Date, any funds credited to
a member equaling 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 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
5
<PAGE>
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. 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.
6
<PAGE>
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.
7
<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
------------------------
Ernest Mario
Chief Executive Officer
8
<PAGE>
AMENDMENT NO. 2
TO THE ALZA CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
THIS AMENDMENT NO. 2 to the ALZA Corporation Amended and Restated
Employee Stock Purchase Plan (the "Plan") hereby amends the Plan as follows:
1. Paragraph 4 is hereby amended by adding the following at the
end thereof:
"Notwithstanding the foregoing, employees of the Company's
subsidiary ALZA International, Inc. are not eligible to
participate in the Plan."
2. All other provisions of the Plan shall remain in full force and
effect, without modification.
To record the adoption of this Amendment No. 2, the Company has caused
this instrument to be executed by a duly authorized officer as of the 18th day
of December, 1997.
ALZA Corporation
/s/ Ernest Mario
-----------------------------
Ernest Mario
Chief Executive Officer
9
<PAGE>
EXHIBIT 99.2
------------
ALZA CORPORATION
SUPPLEMENTAL
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The ALZA Corporation Supplemental Employee Stock Purchase
-------
Plan (the "Plan") is designed to foster continued cordial employee relations, to
----
encourage and assist employees of designated subsidiaries of ALZA Corporation
(the "Company") 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 3,000,000 shares of its Common Stock (the "Shares") less
------
the number of shares issued, from time to time, under the ALZA Corporation
Amended and Restated Employee Stock Purchase Plan (the "Company Plan"). 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
foregoing 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, 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.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by such
--------------------------
officers and employees of the Company or other persons (the "Plan Committee") as
--------------
the Board of Directors of the Company (the "Board of Directors") from time to
time may select. 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 provision 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.
<PAGE>
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
(a) Participating Subsidiaries. The Board of Directors may at any
--------------------------
time designate any subsidiary of the Company as participating in the Plan (a
"Participating Subsidiary"). The names of all Participating Subsidiaries shall
- -------------------------
be shown on Exhibit A to the Plan, which shall be amended from time to time to
reflect additions and deletions of Participating Subsidiaries; failure to show a
Participating Subsidiary on Exhibit A shall not, however, prevent otherwise
eligible employees of that Subsidiary from participating in the Plan.
(b) Eligible Employees. Except as provided below or as determined
------------------
by the Plan Committee, any employee who is customarily employed by a
Participating 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 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 Participating Subsidiary.
Exceptions: Notwithstanding the foregoing, an otherwise eligible employee may
- ----------
not participate in the Plan if (i) participation is prohibited by the laws of
the employee's nation of residence or employment (whether or not such
prohibition could be avoided by registration or other voluntary act of the
Company or the Participating Subsidiary) or (ii) the employee is a member of
the Company Plan.
(c) Employee Defined. For purposes of the Plan, except as otherwise
----------------
determined by the Plan Committee, "employee" shall mean any individual who is
treated as an employee by a Participating Subsidiary for payroll purposes.
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 "Supplemental
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. 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.
2
<PAGE>
(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 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 member 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.
(d) Enrollment after Termination of Participation in Company Plan.
-------------------------------------------------------------
Except as otherwise determined by the Plan Committee, if (i) an individual
becomes eligible to enroll in the Plan due to employment by a Participating
Subsidiary following termination of employment by the Company or a subsidiary
of the Company designated for participation in the Company Plan and (ii) the
individual enrolls in the Plan before the end of the "Offering Period" (as
defined in the Company Plan) in which the individual was enrolled under the
Company Plan before the change in employment, then the individual's initial
Enrollment Date for purposes of Section 8 of the Plan shall be deemed to be
the "Enrollment Date" for such "Offering Period" under the Company Plan.
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 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 be
credited to a member's account in the currency in which the member's monthly
gross pay is paid. 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
3
<PAGE>
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 to 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 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
Internal Revenue Code) that accrues at a rate in excess of U.S. $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 Participating
Subsidiary funds or Company funds free of any obligation of the Participating
Subsidiary or the Company to pay interest on such funds but shall be credited
to each member as soon as practicable after each withholding.
7. PURCHASE RIGHT.
--------------
(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 U.S. $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 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 U.S. $75,000 divided by
the fair market value of a Share on the Lower Price Enrollment Date.
(b) Terms and Conditions of Purchase Rights. Except as otherwise
---------------------------------------
determined by the Plan Committee, each purchase right granted under the Plan
shall have the following terms:
4
<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 through payroll deduction in accordance with Section 6. Upon
disposition of Shares acquired by exercise of a purchase right, the member
shall pay, or make provision adequate to the Company and the Participating
Subsidiary for payment of, all tax (and similar) withholdings that the Company
or the Participating Subsidiary determines, in its discretion, are required
due to the disposition, including any such withholding that the Company or the
Participating Subsidiary determines, in its discretion, is necessary to allow
the Company or the Participating Subsidiary to claim tax deductions or other
benefits in connection with the disposition. A member shall make such similar
provisions for payment that the Company or the Participating Subsidiary
determines, in its discretion, are required due to the exercise of a purchase
right, including such provisions as are necessary to allow the Company or the
Participating Subsidiary to claim tax deductions or other benefits in
connection with the exercise.
(iii) Purchase of Shares upon exercise of the purchase rights
will be accomplished 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.
(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, after conversion into U.S. Dollars, to the purchase of whole
Shares. The Company shall convert the funds credited to members' accounts to
U.S. Dollars on the business day immediately preceding each Purchase Date, using
for such purpose the conversion rate to buy U.S. Dollars on the prior day (i.e.,
two business days before the Purchase Date) as quoted in the Wall Street Journal
-------------------
on the date of conversion. 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.
5
<PAGE>
After the purchase of Shares on a Purchase Date, any funds credited
to a member equaling 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 8, 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 any of its
subsidiaries for any reason whatsoever, (b) when the member dies, (c) when the
member enrolls in the Company Plan, or (d) 90 days after the member ceases to
receive any compensation from the Company and any of its subsidiaries unless, in
the case of (d) 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 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 Participating Subsidiary or 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
6
<PAGE>
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 members; 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. 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 otherwise specifically
----------------------------
provided in the Plan, 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
any 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.
7
<PAGE>
16. EQUAL RIGHTS AND PRIVILEGES. It is intended that all eligible
---------------------------
employees shall have substantially equivalent rights and privileges with respect
to the Plan; notwithstanding any other provision of the Plan, however, the Plan
Committee may make such changes in the terms of eligibility and participation
from Participating Subsidiary to Participating Subsidiary that it determines, in
its discretion, to be necessary or desirable to reflect or comply with local
laws or conditions.
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 is effective as of
-------------------------------------
February 10, 1998, provided, however, that the first Enrollment Date will occur
on August 3, 1998.
19. APPROVAL. The Plan was approved by the Board of Directors on February
--------
10, 1998.
8
<PAGE>
Schedule A
----------
Companies Participating in
Supplemental Employee Stock Purchase Plan
ALZA International, Inc.
9
