EXHIBIT 10.2
FORM OF AMENDMENT TO EXECUTIVE AGREEMENT
AMENDMENT (the "Amendment") to Executive Agreement (the
"Executive Agreement"), between _______________ (the "Executive") and
ALZA Corporation, a Delaware corporation (the "Company").
WHEREAS, Compensation and Benefits Committee (the
"Committee") of the Board of Directors (the "Board") of the
Company previously authorized the Company to enter into
agreements with certain executive officers of the Company
(the "Executive Agreements") providing for the payment of
severance and other benefits upon termination of such
executives following a change in control of the Company;
WHEREAS, the Committee has determined that it is in the
best interests of the Company and its stockholders to modify such
benefits in the manner set forth below.
NOW, THEREFORE, in consideration of the mutual
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company have agreed and do
hereby agree to amend the Executive Agreement as follows,
effective as of the 11th day of June, 1999:
1. Section 6 of the Executive Agreement is hereby
renamed "Severance Payments."
2. Section 6.1(A) of the Executive Agreement is hereby
amended in its entirety to read as follows:
"In lieu of any further salary and bonus payments to
the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit
otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment,
in cash, equal to the product of (x) the sum of
(i) the Executive's annual base salary in effect
immediately prior to the occurrence of the event
or circumstance upon which the Notice of Termination
is based or in effect immediately prior to the Change
in Control, if higher, and (ii) the amount paid to or
accrued by the Executive pursuant to the Company's
regular bonus, incentive cash compensation or income
deferral arrangements (and not including any special
one-time awards not made as part of a regular program)
in the one-year period immediately preceding that in
which the Date of Termination occurs or, if higher,
the amount paid or accrued in the one-year period
immediately preceding that in which the Change in
Control occurs and (y) 2.5."
3. Section 6.1(C) of the Executive Agreement is hereby
amended in its entirety to read as follows:
"All outstanding Options, to the extent not then vested
on the Date of Termination shall be exercisable in
accordance with the terms and conditions of the Amended
and Restated Stock Plan and 1985 Stock Option Plan, as
applicable, and Executive's option agreement(s)."
4. Section 6.2 of the Executive Agreement is hereby
amended in its entirety to read as follows:
"(A) In the event that the Executive becomes entitled
to the Severance Payments, if any of the payments or
benefits received or to be received by the Executive
in connection with a Change in Control or the Executive's
termination of employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement or
agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated
with the Company or such Person) (all such payments and
benefits, excluding the Gross-Up Payment, being hereinafter
referred to as the "Total Payments") will be subject
to the Excise Tax, the Company shall pay to the Executive
an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any Federal,
state and local income and employment taxes and Excise
Tax upon the Gross-Up Payment, shall be equal to
the Total Payments.
(B) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) all of the Total Payments
shall be treated as "parachute payments" (within the meaning
of section 280G(b)(2) of the Code) unless, in the opinion
of tax counsel ("Tax Counsel")reasonably acceptable to the
Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company's
independent auditor (the "Auditor"), such payments or
benefits (in whole or in part) do not constitute
parachute payments, including by reason of section
280G(b)(4)(A)of the Code, (ii) all "excess parachute
payments" within the meaning of section 280G(b)(l) of
the Code shall be treated as subject to the Excise Tax
unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part)represent
reasonable compensation for services actually rendered
(within the meaning of section 280G(b)(4)(B) of the Code)
in excess of the Base Amount allocable to such reasonable
compensation, or are otherwise not subject to the Excise
Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the
Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income tax at the highest marginal
rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation
in the state and locality of the Executive's residence
on the Date of Termination (or if there is no Date of
Termination, then the date on which the Gross-Up Payment
is calculated for purposes of this Section 6.2), net of
the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is finally determined
to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the
time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Executive, to the extent
that such repayment results in a reduction in the Excise Tax
and a dollar-for-dollar reduction in the Executive's taxable
income and wages for purposes of federal, state and local
income and employment taxes, plus interest on the amount of
such repayment at 120% of the rate provided in Section 1274(b)(2)(B)
of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest,
penalties or additions payable by the Executive with respect
to such excess) within five (5) business days following the
time that the amount of such excess is finally determined.
The Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments."
5. Except as otherwise provided herein, the remaining
terms of the Executive Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused the Amendment to
be executed by its duly authorized officer, and the Executive has
hereunto signed the Amendment, as of the date first above written.
ALZA Corporation
By: _____________________________
Its: ______________________________
SCHEDULE OF SIGNATORIES TO
FORM OF AMENDMENT TO EXECUTIVE AGREEMENT
Xxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxx Staple
Xxxx Xxxxxx
Xxxxx Xxxxx
