<PAGE>
Exhibit 99.2
ALZA CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The ALZA Corporation Amended and Restated Employee Stock
Purchase Plan (the "Plan") is designed to foster continued cordial employee
relations, to encourage and assist employees of ALZA Corporation (the "Company")
and its subsidiaries to acquire stock in the Company and to help them provide
for their future financial security.
2. SHARES SUBJECT TO PLAN
(a) Number of Shares: The Company has reserved for purchase under the Plan
a total of 2,050,000 shares of its Common Stock (the "Shares"). Shares sold
under the Plan may be newly or previously issued shares, but all shares issued
under the Plan, regardless of source, shall be counted against the 2,050,000
share limitation. If at any time the available Shares are oversubscribed,
subscriptions shall be reduced proportionately to eliminate the
oversubscription. Any funds credited to a member that cannot be applied to the
purchase of Shares due to oversubscription shall be promptly refunded to the
member.
(b) Adjustments: In the event of any reorganization, recapitalization,
stock split, reserve stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the structure of
the capital stock of the Company, the Company may make such adjustment, if any,
as it may deem appropriate in the number, kind and subscription price of the
securities available for purchase under the Plan and in the maximum number of
securities that a member is entitled to purchase. The Company may make any
further adjustments it deems necessary to insure the qualification of the Plan
under Section 423 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code").
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by such
officers and employees of the Company or other persons as the Board of Directors
of the Company from time to time may select (the "Plan Committee"). All costs
and expenses incurred in administering the Plan shall be paid by the Company,
provided that any taxes applicable to a member's participation in the Plan may
be charged to the member by the Company.
The Plan Committee may make such rules and regulations as it deems
necessary to administer the Plan and to interpret the provisions of the Plan.
Any determination, decision or action of the Plan Committee in connection with
the construction, interpretation, administration or application of the Plan or
any right granted under the Plan shall be final, conclusive and binding upon all
persons. No member of the Plan Committee shall be liable for any determination,
decision or action made.
<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
<PAGE>
(the "Lower Price Enrollment Date") than it was on the Enrollment Date on which
a participating member last enrolled in the Plan, such member shall be deemed to
have re-enrolled in the Plan on such Lower Price Enrollment Date for the next
succeeding Offering Period. A participant may elect not to re-enroll on a Lower
Price Enrollment Date by filing a written statement declaring such election with
the Company prior to such Lower Price Enrollment Date.
6. MEMBER'S CONTRIBUTIONS. Each member shall make contributions by payroll
deduction of any whole percentage up to 15% of the member's monthly gross pay,
as designated by the member. "Monthly gross pay" shall include total salary and
wages before any tax reduction plan decreases and shall exclude overtime pay,
moving 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.
A written election to increase the rate of contribution received by the
Company from a member during the first eighteen months of the then current
Offering Period will become effective on the soonest practicable payroll date
following the Company's receipt of such election and will not constitute a new
enrollment. An election to increase the rate of contribution received by the
Company from a member during the last six months of the current Offering Period
will become effective on the Enrollment Date immediately following the Company's
receipt of such election and will 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.
<PAGE>
7. PURCHASE RIGHTS
(a) Grant Of Purchase Rights. Enrollment by a member in the Plan on an
Enrollment Date will constitute the grant by the Company to the Member of rights
to purchase Shares under the Plan. Upon enrollment, unless otherwise determined
by the Plan Committee, a member will become eligible for the grant of purchase
rights for the number of Shares equal to $75,000 divided by the fair market
value of a Share determined at the grant date of such purchase right. Any member
whose purchase rights expire and who has not withdrawn from the Plan will
automatically be re-enrolled in the Plan and granted new purchase rights (equal
in number to the number of expiring purchase rights) on the Enrollment Date
immediately following the Purchase Date on which the Member's then current
purchase rights expire. Any member who is deemed to have re-enrolled on a Lower
Price Enrollment Date will be granted new purchase rights for the number of
Shares equal to $75,000 divided by the fair market value of a Share on the Lower
Price Enrollment Date.
(b) Terms and Conditions of Purchase Rights. Each purchase right granted
under the Plan shall have the following terms:
(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
<PAGE>
the fair market value of one share of ALZA Common Stock on the applicable
Enrollment Date or on the Purchase Date, whichever is lower, as determined in
good faith by the Plan Committee, multiplied by the number of Shares purchased.
After the purchase of Shares on a Purchase Date, any funds credited to a
member 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.
<PAGE>
12. MODIFICATION, TERMINATION. The Company expects to continue the Plan
until such time as all of the Shares reserved for purchase under the Plan have
been purchased. However, the Company reserves the right to amend, alter or
terminate this Plan at any time. No amendment shall be effective unless, within
one year after it is adopted by the Company's Board of Directors, it is approved
by the holders of a majority of the voting power of the Company's outstanding
shares, if such amendment would:
(i) increase the number of Shares reserved for purchase under the Plan;
(ii) materially increase the benefits to participants; or
(iii) materially modify the requirements for participation.
The Board of Directors may elect to terminate any or all outstanding
enrollments at any time. In the event the Plan is terminated, the Board may also
elect either to terminate enrollments upon completion of the purchase of Shares
on the next Purchase Date, or to permit enrollments to expire in accordance with
their terms (and participation to continue through such expiration dates). If
the enrollments are terminated prior to expiration, any funds contributed to the
Plan that have not been used to purchase Shares shall be returned to the members
as soon as administratively feasible.
If at any time the Shares available under the Plan are over-enrolled,
enrollments shall be reduced proportionately to eliminate the over-enrollment.
Any funds that cannot be applied to the purchase of Shares due to over-
enrollment shall be refunded to members as soon as administratively feasible.
13. ASSIGNABILITY OF RIGHTS; CREATION OF LIENS. No rights of any member
under the Plan shall be assignable by the member, by operation of law or
otherwise, and no person may create a lien on any funds, securities or any other
property, except to the extent that there has been a designation of a
beneficiary or beneficiaries in accordance with the Plan, and except to the
extent permitted by the laws of descent and distribution if such beneficiary is
not designated. Prior to the purchase of any Shares under the Plan, each member
shall be required to sign a statement to the foregoing effect. 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.
<PAGE>
15. REPORTS. The Company shall make available to members copies of all
communications with holders of Common Stock, including annual and interim
reports. In connection with the issuance of Shares under the Plan, the Company
shall provide each member with a summary of such member's total contributions
during the preceding Offering Period, and the number of Shares purchased,
purchase price and the balance of funds, if any, in the member's account.
16. EQUAL RIGHTS AND PRIVILEGES. All members shall have equal rights and
privileges with respect to the Plan to the extent necessary to cause the Plan to
qualify as an "employee stock purchase plan" within the meaning of Section 423
or any successor provision of the Code and the regulations promulgated
thereunder. This Section 16 shall take precedence over all other provisions of
the Plan.
17. APPLICABLE LAW. The interpretation, performance and enforcement of the
Plan shall be governed by the laws of the State of California.
18. EFFECTIVE DATE; TRANSITION PROVISIONS. The Plan amendments embodied in
this Amended and Restated Employee Stock Purchase Plan are effective July 2,
1995, provided, however, that notwithstanding Sections 5(a) and 8, (a) no
enrollment date will occur on August 1, 1995; (b) the two Offering Periods
existing on the effective date of these amendments (i.e., the Offering Periods
commencing July 1, 1994 and July 1, 1995) will each continue for 25 months (to
July 31, 1996 and July 31, 1997, respectively) and (c) since no Purchase Date
occurred in January of 1995 with respect only to the Offering Period commencing
July 1, 1994 and ending on July 31, 1996, only three Purchase Dates (June 30,
1995, January 31, 1996 and July 31, 1996) will occur during such Offering
Period.
19. APPROVAL. The Plan was originally approved by the Company's Board of
Directors on July 18, 1984 and by holders of the majority of the voting power of
all outstanding shares of the Company on April 25, 1985. This Amended and
Restated Plan was approved by the Company's Board of Directors on February 16,
1995 and by the Company's stockholders on May 11, 1995.
<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
<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
<PAGE>
AMENDMENT NO. 3
TO THE ALZA CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
THIS AMENDMENT NO. 3 to the ALZA Corporation Amended and Restated Employee
Stock Purchase Plan (the "Plan") hereby amends the Plan as follows:
1. Paragraph 2(a) is hereby deleted in its entirety and replaced with the
following:
(a) Number of Shares. To date, the Company has reserved for purchase
-----------------
under the Plan a total of 3,000,000 shares of the Company's Common Stock (the
"Shares"). Subject to adjustment as provided in Section 2(b), the maximum
number of Shares that shall be made available for sale under the Plan shall be
3,000,000 Shares, plus an annual increase on the first business day of each of
the Company's fiscal years beginning in 2001 and ending in 2009, equal to the
lowest of (i) 500,000 Shares, (ii) one-half of one percent (0.5%) of the total
number of Shares outstanding on the last day of the immediately preceding fiscal
year, or (iii) such lesser number of Shares as is determined by the Board.
Shares sold under the Plan may be new or previously issued shares, but all
shares issued under the Plan, regardless of source, shall be counted against the
maximum share limitation. If the Board determines that, on a given Purchase
Date (as defined below), the number of Shares to be purchased may exceed (1) the
number of Shares that were available for sale under the Plan on the Enrollment
Date (as defined below) of the applicable Offering Period (as defined below), or
(2) the number of Shares available for sale under the Plan on such Purchase
Date, the Board may in its sole discretion provide (x) that the Company shall
make a pro rata allocation of the Shares available for purchase on such
Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all members who elected to purchase Shares on such Purchase Date, and
continue the Plan as then in effect, or (y) that the Company shall make a pro
rata allocation of the Shares available for purchase on such Enrollment Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all members
who elected to purchase Shares on such Purchase Date, and terminate the Plan
pursuant to Section 12 below. The Company may make a pro rata allocation of the
Shares available for purchase on the Enrollment Date of any applicable Offering
Period pursuant to the preceding sentence, notwithstanding any authorization of
additional Shares for issuance under the Plan by the Company's stockholders
subsequent to such Enrollment Date. Any funds credited to a member that can not
be applied to the purchase of Shares due to the foregoing shall be promptly
refunded to the member.
2. All other provisions of the Plan shall remain in full force and effect,
without modification.
<PAGE>
To record the adoption of this Amendment No. 3, the Company has caused this
instrument to be executed by a duly authorized officer as of the 8/th/ day of
February, 2000.
ALZA Corporation
/s/ Ernest Mario
---------------------
Ernest Mario
Chief Executive Officer
