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EXHIBIT 4.2
Up to $1,090,000,000
ALZA Corporation
Zero Coupon Convertible Subordinated Debentures Due July 28, 2020
REGISTRATION RIGHTS AGREEMENT
July 24, 2000
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
ALZA Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to Credit Suisse First Boston Corporation ("CSFBC") and Chase
Securities Inc. and Morgan Stanley & Co. Incorporated (the "Initial
Purchasers"), upon the terms set forth in a purchase agreement of even date
herewith (the "Purchase Agreement"), $910,000,000 aggregate principal amount at
maturity (plus up to an additional $180,000,000 principal amount at the option
of the Initial Purchasers) of Zero Coupon Convertible Subordinated Debentures
Due July 28, 2020 (the "Debentures") of the Company. The Debentures will be
issued pursuant to an Indenture, dated as of July 28, 2000 (the "Indenture"),
between the Company and The Chase Manhattan Bank and Trust Company, National
Association (the "Trustee"). The Debentures will be convertible into shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock") at
the Conversion Rate set forth in the Indenture. As an inducement to the Initial
Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders of the Debentures and the Common Stock
issuable upon conversion of the Debentures (collectively, the "Securities") from
time to time until such time as such Securities have been sold pursuant to a
Shelf Registration Statement (as defined below) (each
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of the foregoing, including, if applicable, the Initial Purchasers, a "Holder"
and together the "Holders"), as follows:
1. Shelf Registration. The Company shall take the following actions:
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(a) The Company shall, at its cost, within 90 days after the
first date of original issuance of the Debentures prepare and file with the
Securities and Exchange Commission (the "Commission") and thereafter shall use
its reasonable best efforts to cause to be declared effective within 180 days
after the first date of original issuance of the Debentures, a registration
statement on Form S-3 (the "Shelf Registration Statement") covering the offer
and sale of the Transfer Restricted Securities (as defined in paragraph 5(d)
hereof) by the Holders thereof from time to time in accordance with the methods
of distribution set forth in the Shelf Registration Statement and Rule 415 under
the Securities Act of 1933, as amended (the "Securities Act") (hereinafter, the
"Shelf Registration"); provided, however, that no Holder (other than the Initial
Purchasers) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder. In order to have
Securities included in the Shelf Registration Statement, the Holder thereof
shall deliver to the Company a properly-completed and signed Selling
Securityholder Notice and Questionnaire (the "Holder Notice") in the form
attached as Annex A to the Confidential Offering Circular, dated as of July 24,
2000, relating to the Debentures.
(b) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective, in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years from the date of its
effectiveness or such shorter period that will terminate when all of the
Transfer Restricted Securities (i) have been sold pursuant to the Shelf
Registration Statement, (ii) have been distributed to the public pursuant to
Rule 144 under the Securities Act (or any successor rule thereto), or (iii) may
be sold pursuant to Rule 144(k) under the Securities Act (or any successor rule
therefore), assuming for this purpose that the Holders thereof are not
affiliates of the Company (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
in Holders of Securities covered thereby not being able to offer and sell such
Securities during that period, unless (i) such action is required by applicable
law or (ii) upon the occurrence of any
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event contemplated by paragraph 2(b)(v) below, such action is taken by the
Company in good faith and for valid business reasons and the Company thereafter
complies with the requirements of paragraph 2(h).
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (i) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2. Registration Procedures. In connection with the Shelf
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Registration contemplated by paragraph 1 hereof the following provisions shall
apply:
(a) The Company shall (i) furnish to each of the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each amendment or
supplement, if any, to the prospectus included therein and, in the event that
any of the Initial Purchasers (with respect to any portion of an unsold
allotment from the original offering) is participating in the Shelf Registration
Statement, shall use its reasonable best efforts to reflect in each such
document, when so filed with the Commission, such comments as any such Initial
Purchasers reasonably may propose; (ii) prior to the filing of the Shelf
Registration Statement, provide a notice to the Holders of its intention to file
such Shelf Registration Statement and request that Holders return to the Company
a completed Holder Notice if such Holder proposes to include Securities held by
it in the Shelf Registration Statement, and (iii) include (including, to the
extent applicable,) by means of amendment or post-effective amendment to the
Shelf Registration Statement) the names of the Holders who propose to sell
Securities pursuant to the Shelf Registration Statement, as selling security
holders.
(b) The Company shall give written notice to the Initial
Purchasers and the Holders (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
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(i) when the Shelf Registration Statement or any amendment
thereto has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event or circumstance that would
require the Company to make changes in the Shelf Registration Statement or
the prospectus in order that the Shelf Registration Statement or the
prospectus do not contain an untrue statement of a material fact nor omit
to state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading, which written
notice need not provide any detail as to the nature of such event.
(c) The Company shall make every reasonable effort to obtain
the withdrawal, at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all documents incorporated by reference, if any, and all
exhibits to such Shelf Registration Statement.
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(e) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
in connection with the offering and sale of the Securities covered by the
prospectus, or any amendment or supplement thereto, included in the Shelf
Registration Statement.
(f) Prior to any public offering of the Securities, pursuant to
the Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification of such
Securities for offer and sale under the securities or "blue sky" laws of such
states of the United States as any such Holder reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities covered by the Shelf
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(g) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to the Shelf Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request a reasonable period of time
prior to sales of the Securities pursuant to the Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs
(ii) through (v) of paragraph 2(b) above during the period for which the Company
is required to maintain an effective Shelf Registration Statement, the Company
shall, as required hereby, prepare and file a post-effective amendment to the
Shelf Registration Statement or an amendment or supplement to the related
prospectus and any other required document so that, as thereafter delivered to
Holders or purchasers of Securities, the prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any such amendment,
supplement or
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document will be prepared and filed as promptly as practicable under the
circumstances, as determined in good faith by the Company, it being understood
that the Company may have bona fide reasons to delay such preparation and filing
for a period which may not in any individual instance exceed 60 days.
(i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Debentures and the
Common Stock registered under the Shelf Registration Statement, and provide the
Trustee with printed certificates for such Debentures, in form eligible for
deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to the Holders (or otherwise
provide in accordance with Section 11(a) of the Securities Act) an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of a 12-month period (or 90 days, if such
period is a fiscal year) beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Shelf Registration
Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in a
timely manner and containing such changes, if any, as shall be necessary for
such qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(l) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as the
Company may from time to time reasonably require for inclusion in the Shelf
Registration Statement, and the Company may exclude from such Shelf Registration
the Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(m) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all other actions, if any, as any Holder shall reasonably request in order to
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facilitate the disposition of the Securities pursuant to the Shelf Registration,
provided, however, that (i) the Company shall not be required to facilitate an
underwritten offering pursuant to the Shelf Registration Statement by any
Holders unless the offering relates to at least $100,000,000 aggregate principal
amount at maturity of the Debentures or the equivalent number of shares of
Common Stock into which such Debentures are convertible and (ii) the Company
will not be required to facilitate more than five underwritten offerings
pursuant to the Shelf Registration Statement.
(n) The Company shall (i) make reasonably available for
inspection by the Holders of the Securities, any underwriter participating in
any distribution pursuant to the Shelf Registration Statement and any attorney,
accountant or other agent retained by the Holders of the Securities or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and (ii) cause the Company's officers,
directors, employees, accountants and auditors to supply all relevant
information reasonably requested by the Holders of the Securities or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering (i) shall be coordinated on behalf of the
Initial Purchasers by CSFBC and on behalf of the other parties, by one counsel
designated by and on behalf of the other parties as described in paragraph 3
hereof and (ii) shall be conditioned upon such party entering into customary
confidentiality agreements with the Company.
(o) The Company, if requested by any Holder of Securities
covered by the Shelf Registration, shall cause (i) its counsel (which may
include the Company's general counsel for one or more of the opinions) to
deliver an opinion and updates thereof relating to the Securities in customary
form addressed to such Holders, and the managing underwriters, if any, thereof,
and dated, in the case of the initial opinion, the effective date of the Shelf
Registration Statement (it being agreed that the matters to be covered by such
opinion shall include, without limitation, the due incorporation and good
standing of the Company; the qualification of the Company to transact business
as a foreign corporation; the due authorization, execution and delivery of the
relevant agreement of the type referred to in paragraph 2(m) hereof; the due
authorization, execution, authentication and issuance, and the validity and
enforceability, of the applicable Securities; the absence of material legal or
governmental proceedings involving the Company; the absence of governmental
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approvals required to be obtained in connection with the Shelf Registration
Statement, the offering and sale of the applicable Securities, or any agreement
of the type referred to in paragraph 2(m) hereof; the compliance as to form of
such Shelf Registration Statement and any documents incorporated by reference
therein and of the Indenture with the requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Trust
Indenture Act, respectively; and, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or supplemented,
and from any documents incorporated by reference therein of an untrue statement
of a material fact or the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading (in
the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act), (ii) its officers to execute and deliver all customary certificates and
updates thereof requested by any underwriters of the applicable Securities or
counsel for the Holders and (iii) its independent public accountants and the
independent public accountants with respect to any other entity for which
financial information is provided or incorporated by reference in the Shelf
Registration Statement to provide to the selling Holders of the applicable
Securities and any underwriter therefor a comfort letter in customary form and
covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(p) The Company shall use its reasonable best efforts to take
all other steps necessary to effect the registration of the Securities covered
by the Shelf Registration Statement contemplated hereby.
3. Registration Expenses. The Company shall bear all fees and
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expenses incurred in connection with the performance of its obligations under
paragraphs 1 through 2 hereof (including the reasonable fees and expenses, if
any, of Skadden, Arps, Slate, Meagher, & Flom LLP, counsel for the Initial
Purchasers, incurred in connection with the Shelf Registration), whether or not
the Shelf Registration Statement is filed or becomes effective, and shall bear
or reimburse the Holders of the Securities covered by the Shelf Registration for
the reasonable fees and disbursements of one firm of counsel designated by the
Holders of a majority in principal amount at maturity of the Securities covered
by the Shelf Registration Statement (provided that Holders of Common Stock
issued upon the conversion of
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the Debentures shall be deemed to be Holders of the aggregate principal amount
at maturity of Debentures from which such Common Stock was converted) to act as
counsel for the Holders in connection therewith.
4. Indemnification.
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(a) The Company agrees to indemnify and hold harmless each
Holder and its directors or officers (if applicable) and each person, if any,
who controls such Holder within the meaning of the Securities Act or the
Exchange Act (each such Holder, directors and officers and such controlling
persons are referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party becomes subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Shelf Registration
Statement or prospectus, including any document incorporated by reference
therein, or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration, or arise out of, or are based
upon, the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in the Shelf Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to the
Shelf Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein and (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to the Shelf Registration Statement, the
indemnity agreement contained in this subparagraph (a) shall not inure to the
benefit of any Holder from whom the person asserting any such losses, claims,
damages or liabilities purchased the Securities concerned, to the extent that a
prospectus which did not include the relevant untrue statement or omission or
alleged untrue statement or omission relating to such Securities was required to
be delivered
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by such Holder under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the final
prospectus if the Company had previously furnished copies thereof to such
Holder; provided, further, however, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to such
Indemnified Party.
The Company shall also indemnify any relevant underwriters, their
officers and directors and each person who controls such underwriters within the
meaning of the Securities Act or the Exchange Act to the same extent as provided
above with respect to the indemnification of the Holders if requested by such
Holders.
(b) Each Holder, severally and not jointly, will indemnify and
hold harmless the Company, its officers and directors and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively, the ACompany Indemnified Parties@) from and against
any losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof, to which such Company Indemnified Party may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf Registration, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
loss, claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability which such Holder may otherwise
have to the Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this
paragraph 4 of notice of the commencement of any action or proceeding
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(including a governmental investigation), such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
paragraph 4, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations under subparagraph (a) or (b) above to
any indemnified party except if, and only to the extent that, the indemnifying
party is prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not be liable to such
indemnified party under this paragraph 4 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action and does not include a statement as
to an admission of fault, culpability or failure to act by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this paragraph 4 is
unavailable or insufficient to hold harmless an indemnified party under
subparagraphs (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subparagraphs (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party on the other from the registration of the
Securities, pursuant to the Shelf Registration, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The
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relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other indemnified
party, as the case may be, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subparagraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subparagraph (d).
Notwithstanding any other provision of this paragraph 4(d), the Holders shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by such Holders from the sale of the Securities pursuant
to the Shelf Registration Statement exceeds the amount of damages which such
Holders have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls an indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party.
(e) The agreements contained in this paragraph 4 shall
survive the sale of the Securities pursuant to the Shelf Registration Statement
and shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
5. Additional Interest Under Certain Circumstances.
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(a) Except as set forth in paragraph 5(b), Additional
interest (the "Additional Interest") with respect to the Securities shall be
assessed as follows if any of the following events occur (each such event in
clauses (i) through (iii) below being herein called a "Registration Default"):
(i) if after the 90th day after the first date of original
issuance of the Debentures, the Shelf Registration Statement has not been
filed with the Commission;
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(ii) if after the 180th day after the first date of original
issuance of the Debentures, the Shelf Registration Statement has not been
declared effective by the Commission; or
(iii) if after the Shelf Registration Statement is declared
effective (A) the Shelf Registration Statement thereafter ceases to be
effective; or (B) the Shelf Registration Statement or the related
prospectus ceases to be usable in connection with resales of Transfer
Restricted Securities (as defined below) during the periods specified
herein because either (1) any event occurs as a result of which the related
prospectus forming part of such Shelf Registration Statement would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or (2) it shall be necessary to
amend such Shelf Registration Statement or supplement the related
prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Interest shall accrue on the Debentures and/or any shares
of Common Stock into which any Debentures have been previously converted that
are, in each case, Transfer Restricted Securities, from and including the date
on which any Registration Default shall occur, but excluding the date on which
all Registration Defaults have been cured, at a rate of 0.25% per annum for the
first 90-day period from and including the date of the Registration Default and
thereafter at a rate of 0.50% per annum. The applicable Additional Interest
will be calculated on the aggregate issue price plus accrued original issue
discount of the outstanding Debentures which are Transfer Restricted Securities
and, if applicable, the aggregate Applicable Conversion Price (as defined below)
of any issued and outstanding shares of Common Stock which are Transfer
Restricted Securities into which any Debentures have been previously converted
(such amount with respect to the Debentures and the Common Stock, the
"Applicable Principal"). "Applicable Conversion Price" means the original issue
price of a Debenture plus accrued original issue discount to the date of
calculation divided by the Conversion Rate (as defined in the Indenture) as then
in effect.
(b) A Registration Default referred to in paragraph
5(a)(iii)(B) shall be deemed not to have occurred and not to be continuing in
relation to the Shelf Registration Statement or the related prospectus if (i)
such Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to the Shelf Registration Statement to incorporate
annual audited financial informa-
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tion with respect to the Company where such post-effective amendment is not yet
effective and needs to be declared effective to permit Holders to use the
related prospectus or (y) other material events with respect to the Company that
would need to be described in the Shelf Registration Statement or the related
prospectus and (ii) in the case of clause (y), the Company is proceeding in good
faith to amend or supplement the Shelf Registration Statement and related
prospectus to describe such events as required by paragraph 2(h) hereof;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 60 days in any individual instance, Additional
Interest shall be payable in accordance with the above paragraph from the date
such Registration Default occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to
subparagraphs (a)(i), (a)(ii) or (a)(iii) of this paragraph 5 will be payable in
cash on each July 28 and January 28. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
Applicable Principal, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360. The indebtedness represented by the
Additional Interest shall be subordinated in right of payment to all existing
and future Senior Indebtedness (as defined in the Indenture) as and to the same
extent as the Debentures.
(d) "Transfer Restricted Securities" means each Security until
(i) the date on which such Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (ii) the date on which such Security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act.
6. Rules 144 and 144A. The Company shall use its reasonable best
------------------
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A under the Securities Act. The
Company covenants that it will take such further action as any Holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitations of the
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exemptions provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)). Upon the request of any Holder, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Initial Purchasers upon request.
Notwithstanding the foregoing, nothing in this paragraph 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
7. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount at maturity of such
Transfer Restricted Securities to be included in such offering (provided that
Holders of Common Stock issued upon conversion of Debentures shall not be deemed
Holders of Common Stock, but shall be deemed to be Holders of the aggregate
principal amount at maturity of Debentures from which such Common Stock was
converted) which Managing Underwriters must be reasonably acceptable to the
Company.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
8. Miscellaneous.
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(a) Amendments and Waivers. The provisions of this Agreement may
----------------------
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except by the written consent of
the Company, on the one hand, and the written consent of the Holders of a
majority in principal amount at maturity of the Securities (provided that
Holders of Common Stock issued upon conversion of Debentures shall not be deemed
Holders of Common Stock, but shall be deemed to be Holders of the aggregate
principal amount at maturity of Debentures from which such Common Stock was
converted) affected by such amendment, modification, supplement, waiver or
consents, on the other hand.
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(b) Notices. All notices and other communications provided for
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or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company;
(2) if to any of the Initial Purchasers, to CSFBC at its
address as follows:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Skadden, Arps, Slate, Meagher, & Flom LLP
Four Times Square
New York, NY 10036
Fax No.: (212) 735-2000
Attention: Mark C. Smith, Esq.
(3) if to the Company, at its address as follows:
ALZA Corporation
1900 Charleston Road
Mountain View, CA 94303
Fax No.: (650) 564-7848
Attention: General Counsel
with a copy to:
Heller Ehrman White & McAuliffe LLP
525 University Avenue
Palo Alto, CA 94301
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Fax No.: (650) 324-0638
Attention: Sarah A. O'Dowd
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the
--------------------------
date hereof, entered into, nor shall it, on or after the date hereof, without
the prior consent of CSFBC, enter into, any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon
----------------------
the Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
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(i) Securities Held by the Company. Whenever the consent or
------------------------------
approval of Holders of a specified percentage of principal amount at maturity of
Securities is required hereunder, Securities held by the Company or its
affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
ALZA CORPORATION
By:
/s/ Matthew K. Fust
--------------------------------
Name: Matthew K. Fust
Title: Senior Vice President and
Chief Financial Officer
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
/s/ David J. Koo
---------------------
Name: David J. koo
Title: Vice President
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