Document:

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                                                                   EXHIBIT 10.16

                             DATED:  MARCH 3, 2000

                          W & G PROPERTIES LIMITED (1)

                       NEONATAL PERSPECTIVES LIMITED (2)

                            ANDREW JOHN VINCENT (3)

                              ____________________

                                     LEASE

                                  Re:  Unit 9
                                   Northmill
                                Summerleys Road
                               Princes Risborough
                                Buckinghamshire

                              ____________________

                                   Lightfoots
                                1-3 High Street
                                     Thame
                                  Oxfordshire
                                    OX9 2BX

                               Ref:  JO/1WA4917
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THIS LEASE made the 3rd day of March Two Thousand BETWEEN W&G PROPERTIES LIMITED
                                                          ----------------------
of Chiltern House Manor Park Avenue Princes Risborough in the County of
Buckingham (hereinafter called the "the Landlord") of the one part which
expression shall where the context so requires or admits include the estate
owner or estate owners for the time being of the reversion of the premises
hereby demised expectant on the term hereby granted) of the first part and
NEONATAL PERSPECTIVES LIMITED of Worsley Chamber 168 Bolton Road Walkden Worsley
-----------------------------
Manchester M28 3BN (hereinafter called "the Tenant" which expression shall where
the context so requires or admits include the persons deriving title under the
Tenant) of the second part and ANDREW JOHN VINCENT of 3 The Woodland London Road
                               -------------------
Harrow on the Hill Middlesex HA1 3JG ("the Guarantor") of the third part.

W I T N E S S E T H as follows:
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1.   IN consideration of the rents hereinafter reserved and of the convenants on
the part of the Tenant hereinafter contained the Landlord hereby demises unto
the Tenant ALL THOSE premises described in the First Schedule hereto
           ---------
(hereinafter called "the demised premises")

TOGETHER WITH
-------------

(a)  the Landlord's fixtures fittings and furnishings installed therein or
     affixed thereto and

(b)  such rights of water drainage passage of gas electricity and support and
     also rights to use and maintain (including rights of entry on to adjoining
     or neighbouring property) sewers drains pipes and cables for these services
     as exist as at the date of this Deed and are needed in order to use the
     demised premises for the use allowed

TO HOLD the same unto the Tenant SUBJECT to the rights of light and air or
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support and all other easements or rights (if any) affecting the demised
premises or any part thereof for a term commencing on the date of this Lease and
expiring at midnight on 17 October 2002 yielding and paying therefor unto the
Landlord yearly during the said term and so in proportion for any less time than
a year the yearly rent as shall be specified in the Second Schedule hereto such
rent to be paid
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clear of all deductions whatsoever by equal quarterly payments in advance on the
usual quarter days in every year by Bankers' Standing Order the first of such
payments or a proportionate part thereof to be made on March 3 2000

2.   The Tenant hereby convenants with the Landlord in manner following that is
to say:

(1)  To pay the said rents hereinbefore reserved and made payable without any
     deduction whatsoever at the times and in the manner aforesaid

(2)  To pay and discharge all rates taxes duties charges assessments impositions
     obligations and outgoings whatsoever whether Parliamentary Parochial Local
     or otherwise and whether or not of an annual or recurring nature which are
     now or which may at any time during the said term be assessed charged or
     imposed upon or payable in respect of the demised premises or any part
     thereof whether the same shall be in the nature of those now-in being or
     not

(3)  To pay the Landlord on demand during the said term by way of further and
     additional rent a sum or sums of money equal to:

(a)  The cost of insuring and keeping insured the demised premises against the
     insured risks and in addition the cost of insurance against third party
     employer's and public liability and such further or other risks and
     insurance that the Landlord may deem reasonably desirable or expedient
     (including not less than three years' loss of rent and Architect's and
     Surveyor's fees and demolition clearance and other expenses consequent upon
     or incidental to rebuilding and reinstatement); and

(b)  The amount (if any) that may be demanded by the Insurance Office referred
     to in Clause 3 (4) hereof in respect of increased premiums by the nature of
     the occupation or business of the Tenant

(4)  At all times to keep the whole of the demised premises and each and every
     part thereof and the appurtenances thereto in as good a state of repair and
     condition as the same are in at the date hereof and property cleansed and
     in the same good repair and condition deliver up the same to the Landlord
     at the expiration or sooner determination of the said term together with
     the Landlord's

                                      -2-
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     fixtures and fittings and all things in the nature of Landlord's fixtures
     which at any time during the said term shall have been affixed to the
     demised premises

(5)  The every third year and in the last year of the said term (however
     determined) to paint all the interior and exterior finishes usually
     required to be painted of the demised premises and all additions and
     fixtures thereto with two coats at least of good oil paint or other
     approved paint in proper and workmanlike manner PROVIDED ALWAYS that such
     works of painting and decoration shall be done to the reasonable
     satisfaction of the Landlord or the Landlord's Agents in tints colours and
     designs previously approved in the writing by the: Landlord (such consent
     no to be unreasonably withheld or delayed)

(6)  To permit the Landlord and his agents or surveyors at all reasonable times
     and after reasonable notice with or without workmen or others to enter the
     demised premises or any part thereof and to take a plan of and view the
     state of repair and condition of the same and to take a schedule of the
     fixtures and fittings and things to be yielded up at the expiration of the
     said term and thereupon the Landlord may serve upon the Tenant notice in
     writing of all defects decays and wants of reparation in accordance with
     the terms of this Lease then and there found and require the Tenant within
     three months after every such notice (or sooner if requisite) to repair and
     make good the same according to such notice and to the satisfaction of the
     Landlord or his surveyor in accordance with the covenants on the part of
     the Tenant hereinbefore contained and if the Tenant shall fail to comply
     with the requirements of such notice as aforesaid to permit the Landlord or
     its contractors agents and workmen to enter upon the demised premises to
     execute such works as may be necessary and to comply with the same at the
     expense of the Tenant and the proper costs and expense of such repairs
     shall be repaid by the Tenant to the Landlord on demand as liquidated
     damages and be recoverable forthwith by action or by distress as if such
     monies formed part of the rent hereunder

(7)  At the expiration or sooner determination of the said term quietly to yield
     up to the Landlord the demised premises together with the Landlord's
     fixtures fitting and furnishings and all additions and improvements thereto
     and all fixtures which during the said term may be affixed or fastened to
     or upon the demised premises (tenant's or trade fixtures and fittings only
     excepted subject to the Tenant making good all damage caused by the removal
     thereof) in such state and condition as shall in all respects be consistent
     with a full and due performance by the Tenant of the convenants on its

                                      -3-
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     part herein contained and in case any of the Landlord's fixtures and
     fittings shall be missing worn out broken or damaged or destroyed forthwith
     to replace the same with others of a similar character and of equal value

(8)  To pay and make good to the Landlord all and every loss and damage
     whatsoever incurred or sustained by the Landlord as a consequence of every
     breach or non-observance of the Tenant's covenants herein contained and to
     indemnify the Landlord from and against all actions proceedings costs
     claims and demands thereby arising

(9)  (a)  Not to do or permit or omit or suffer to be done permitted or omitted
          any act matter or thing whatsoever the doing or omission of which
          would make void or voidable the insurance of the demised premises or
          the fixtures and fittings therein or of any adjoining or contiguous
          property belonging to the Landlord or whereby any payment thereunder
          may be refused in whole or in part or whereby the premiums payable in
          respect thereof may be increased and if and so often as required by
          the Landlord to permit the insurers to inspect the demised premises
          and the tenant's user thereof

     (b)  In the event of the demised premises or any part thereof being
          destroyed or damaged by any peril whatsoever to give notice thereof to
          the Landlord as soon as such destruction or damage shall come to the
          notice of the Tenant

     (c)  In the event of the demised premises or any adjoining premises of the
          Landlord or any part thereof being destroyed or damaged by any peril
          against which the Landlord shall have insured and the insurance money
          under any insurance against the same effected thereon by the Landlord
          being wholly or partly irrecoverable by reason solely or in part of
          any act or default of the Tenant or the Tenant's servants or agents
          then and in every such case the Tenant will forthwith pay to the
          Landlord the whole or (as the case may require) the irrecoverable
          proportion of the cost (including Professional and other fees) of
          completely rebuilding and reinstating the same

(10) Not at any time during the said term to make any alterations or addition to
     the electrical installation of the demised premises save in accordance with
     the terms and conditions laid down by the Institution of Electrical
     Engineers and the regulations of the Electricity Supply Authority or

                                      -4-
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          make any alteration or addition whatsoever structural or otherwise in
          or to the demised premises or any part thereof or change the existing
          design elevation or appearance or the external decorative scheme
          thereof or cut maim or remove any of the walls beams columns party
          walls principal timbers or other structural parts thereof without
          license in writing of the Landlord first obtained such license not to
          be unreasonably withheld or delayed and if granted to be without
          prejudice nevertheless to the provisions of Sub-clause (13) of this
          Clause or interfere with or otherwise cause access to any pipes wires
          cables or other conducting media drains sewers watercourses conduits
          trunking or subways which now are under in or through the demised
          premises to be or become more difficult than the same now is AND

     (a)  to remedy immediately upon notice in writing from the Landlord any
          breach of this covenant and in the event of failure so to do for the
          space of fourteen days after such notice then it shall be lawful for
          the Landlord or its servants contractors agents and workmen to enter
          upon the demised premises and remove such new buildings structures
          additions or interferences and execute such other requisite works and
          all reasonable expenses of so doing reasonably and properly incurred
          shall be repaid by the Tenant to the Landlord on demand as liquidated
          damages and be recoverable forthwith by action or by distress as if
          such monies formed part of the rents payable hereunder

     (b)  To obtain such license the Tenant shall submit to the Landlord the
          necessary plans and specifications for approval in each case in
          triplicate and the Landlord may as a condition of giving such consent
          as aforesaid require the reinstatement of the demised premises to
          their former state and condition upon the expiration or sooner
          determination of the said term

(11) At all times during the said term to observe and comply in all respects
with the provisions and requirements of any and every enactment (which
expression in this covenant includes as well as any and every Act of Parliament
already or hereafter to be passed as any and every order regulation and bye-law
already or hereafter to be made under or in pursuance of any such Act) so far as
they relate to or affect the demised premises or any additions or improvements
thereto and are not the Landlord's responsibility under the terms of this Lease
or the user thereof for the purposes of any

                                      -5-
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trade or business or the employment therein of any person or persons or any
fixtures machinery plant and chattels for the time being affixed thereto or
being thereupon or used for the purposes thereof and to execute all works and
provide and maintain all arrangements which by or under any such enactment or by
any government department local authority or other public authority or duly
authorised officer or Court of competent jurisdiction acting under or in
pursuance of any enactment are or may be directed or required to be executed
provided and maintained at any time during the said term upon or in respect of
the demised premises or any additions or improvements thereto or in respect of
any such user or employment therein of any such person or persons or fixtures
machinery plant or chattels as aforesaid whether by the Landlord or Tenant
thereof and to indemnify the Landlord at all times against all cost charges and
expenses of or incidental to the execution of any works or the provisions or
maintenance of any arrangements so directed or required as aforesaid and not at
any time during the said tem to do or omit or suffer to be done or omitted on or
about the demised premises any act or thing by reason of which the Landlord may
under any enactment incur or have imposed upon it or become liable to pay any
penalty damages compensation costs charges or expenses

(12) In relation to the Planning Acts (by which expression it is intended herein
to designate the Town and Country Planning Act 1990 or any statutory
modification or re-enactment thereof for the time being in force and any
regulations or orders made thereunder)

     (a)  at all times during the said term to comply in all respects with the
          provisions and requirements of the Planning Acts and all licenses
          consents permissions and conditions (if any) granted or imposed
          thereunder or under any enactment repealed thereby so far as the same
          respectively are not the responsibility of the Landlord under the
          terms of this Lease and relate to or affect the demised premises or
          any part thereof or any operations works acts or things already or
          hereinafter to be carried out executed done or omitted thereon or the
          use thereof for any purpose and at all times hereafter to indemnify
          and keep indemnified the Landlord against all actions proceeding costs
          expenses claim and demands in respects of any contravention of such
          provisions or requirements

                                      -6-
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     (b)  during the said term so often as occasion shall require at the expense
          in all respects of the Tenant to obtain from (as the case may be) the
          local planning authority or the Secretary of State for the Environment
          all such licenses consents and permissions (if any) as may be required
          for the carrying out by the Tenant of any operations on the demised
          premises or the institution or continuance by the Tenant thereon of
          any use thereof which may constitute development within the meaning of
          the Planning Acts but so that the Tenant shall not make any
          application for planning permission without the previous written
          consent of the Landlord (such consent not to be unreasonably withheld
          or delayed)

     (c)  on receipt by the Tenant of any notice order or proposal made given or
          issued to the Tenant by a planning authority under or by virtue of the
          Planning Acts insofar as the same relates to or affects the demised
          premises to give full particulars thereof within seven days from such
          receipt to the Landlord and subject as aforesaid without delay and at
          the Tenant's own expense to take all reasonable or necessary steps to
          comply with such notice or order and (if so required by and at the
          expense of the Landlord) to make or join in making such representation
          in respect of any such proposal as the Landlord may reasonably require

     (d)  to the extent only that the same shall be permitted by statute to pay
          and satisfy any charge that may hereafter be imposed under the
          Planning Acts or otherwise in respect of the carrying out of
          maintenance by the Tenant of any such operations or the institution or
          continuance by the Tenant of any such use as aforesaid

     (e)  unless the Landlord shall otherwise direct to carry out before the
          expiration or sooner determination of the said term any works
          stipulated to be carried out to the demised premises by a date
          subsequent to such expiration or soon determination as a condition of
          any Planning Permission which may have been granted during the said
          term

     (f)  if and when called upon so to do to produce to the Landlord or its
          Surveyor all such plans orders directions proposals notices documents
          and other evidence as the

                                      -7-
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          Landlord may reasonably require in order to satisfy itself that the
          provisions of this covenant have been complied with in all respects

(13) To permit the Landlord and Tenants or occupiers of adjoining property and
others authorised in writing by the Landlord and their respective officers
servants agents contractors licensees and workmen at all reasonable times on
prior appointments being made (except in the case of emergency) to enter upon
the demised premises with all necessary appliances

     (a)  to execute maintenance repairs alternations replacements renewals
          painting redecoration or other works to or upon such adjoining or
          neighbouring property

     (b)  for the purpose of constructing laying down connecting altering
          repairing cleansing emptying or maintaining any sewers watercourses
          drains gutters water-pipes electric wires or gas pipes in or under the
          demised premises in connection with or for the accommodation of such
          adjoining or neighbouring property and

the person or persons exercising such rights doing as little damage as possible
to the demised premises and making good any damages thereby occasioned without
unreasonable delay and causing as little annoyance nuisance damage noise
vibration or inconvenience to the Tenant as possible in connection with the
carrying on of the business of the Tenant on the demised premises or otherwise

(14) (a)  Not to use the demised premises or any part thereof or permit or
          suffer the same to be used for any illegal or immoral purpose nor to
          permit any sale by auction to be held thereon or sleep or suffer any
          person to sleep thereon nor for the carrying on of any noisy noxious
          dangerous or offensive manufacture trade art or business nor to permit
          or suffer to be done in or upon the demised premises or any part
          thereof (particularly by wireless or other sound producing
          instruments) nor to permit or suffer to be brought upon or done upon
          the demised premises or any part thereof anything which shall or may
          be or become a danger to the public or private nuisance or injury
          damage or disturbance annoyance or inconvenience to or which may cause
          damage to the Landlord or to any tenant of his or the owners or
          occupiers of any adjoining or neighbouring premises or that may be
          detrimental to the neighbourhood Provided That these provisions shall
          not preclude the use of the demised premises for any

                                      -8-
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          purpose within class B1 in the schedule to the Town & Country Planning
          (use classes) Order 1987

     (b)  Not to use or permit to be used the demised premises or any part
          thereof other than in accordance with the provisions of the Town and
          Country Planning Acts

(15) Not to stop up darken or obstruct any windows or lights belonging to the
demised premises the building or any other buildings belonging to the Landlord
or permit any new window light opening doorway path passage drain or other
encroachment or easement to be made acquired into against out of or upon the
demised premises which may be or grow to the damage or annoyance or
inconvenience of the Landlord and that in case any such window light opening
doorway path passage drain or other encroachment or easement shall be made or
acquired or attempted to be made or acquired the Tenant will give immediate
notice thereof to the Landlord and will at the request and cost of the Landlord
adopt such means as may be reasonably required or deemed proper for preventing
any such encroachment or the acquisition of any such easement and if the Tenant
shall omit or neglect to do all such things as aforesaid as soon as may be
reasonable it shall be lawful for the Landlord or its agents and others to enter
upon the demised premises and to do the same making good all unnecessary damage
caused

(16) Not to give to any third party any acknowledgement that the Tenant enjoys
the access of light to any of the windows or openings in the demised premises by
the consent of such third party nor to pay such third party any sum of money nor
to enter into any agreement with such third party for the purposes of inducing
or binding such third party to refrain from obstructing the access of light to
any such windows or openings and in the event of any of the owners of adjacent
land or buildings doing or threatening to do anything which obstructs the access
of light to any of overload any floor of the demised premises or place safes
machines or heavy articles of any kind whatsoever in any part of the demised
premises in such manner or places that the resultant load on any part of the
floor is at a rate exceeding the permitted limits per square foot of the
building or any part thereof nor to place or use or allow to be placed or used
any operative machinery upon the demised premises save and except such as shall
have been previously approved in writing by the Landlord (such approval not to
be unreasonably withheld or delayed)

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(17) To indemnify and keep indemnified the Landlord from and against its
liability (if any) for injury (whether fatal or not) to persons the infringement
disturbance or destruction of any right easement or privilege and for damage to
property (moveable or immovable) caused by or arising out of the condition of
the demised premises or any fixtures fittings or chattels therein or the act or
default of the Tenant its servants licensees or agents or contractors and from
all proceedings costs claims and demands of whatsoever nature in respect of any
such liability or alleged liability

(18) To permit the Landlord to enter upon the demised premises and affix and
retain without interference upon any party thereof at any time during the last
six months of the said term a notice for letting the same and at any time during
such periods to permit all persons with authority from the Landlord at all
reasonable times during the daytime on prior appointment to enter and view the
demised premises or any part thereof

(19) To pay all reasonable costs charges and expenses (including Solicitors'
costs and Surveyors' fees) incurred by the Landlord in or in contemplation of
any proceedings under Sections 146 and 147 of the Law of Property Act 1925
notwithstanding forfeiture shall be avoided otherwise than by relief granted by
the Court or in relation to the preparation and service of a Schedule of
Dilapidations during or upon the expiration or prior determination of the said
term

(20) (a)  Save as hereinafter provided not to underlet share or part with the
possession of the whole or any part of the premises except that so long as this
lease remains vested in Neonatal Perspectives Limited the Tenant may share
possession with another company so long as Andrew John Vincent remains the sole
or majority or controlling shareholder of that company provided that such other
company makes no payment for occupation occupy as licensees only on terms that
such license can be terminated without notice and gain no rights to continue in
occupation

     (b)  (i) Not to assign the whole of the demised premises without the
          Landlord's consent (such consent not to be unreasonably withheld or
          delayed) provided that where the assignment is to a limited liability
          Company then if the Landlord so requires a surety or two sureties for
          the proposed assignee reasonably acceptable to the Landlord shall
          enter into covenants with the Landlord jointly and severally to
          guarantee the performance and observance of the said covenants and
          conditions

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          during the residue of the term as well after as before any disclaimer
          of this Lease by any liquidator or Trustee in Bankruptcy of the
          proposed assignee and to indemnify the Landlord in respect thereof the
          Assignee shall in any event enter into direct covenants with the
          Landlord to observe and perform the provisions of this Lease

               (ii) The Landlord is entitled to give consent to an assignment of
the whole of the premises subject to the condition where it is reasonable to do
so that before the Tenant assigns this Lease the Tenant enters into an agreement
under which he:

                    a)  guarantees the performance by the proposed assignee of
all the covenants on the part of the Tenant contained in this Lease

                    b)  agrees that in the event that this lease is disclaimed
by a liquidator or trustee in bankruptcy of the immediate assignee of the
original Tenant and on being so required by the Landlord he will accept the
grant of a new tenancy of the demised premises

                        i)  on the same terms and conditions as this Lease at
the date of the disclaimer

                       ii)  for a term expiring in the term date of this Lease

                    c)  Upon a permitted assigment the Assignee shall produce to
the Landlord a certified copy of the Assignment and the Assignee shall give
written notice of such assignment within 28 days and shall pay the Landlord's
solicitors reasonable fees for the registration of such notice

(21) To pay the reasonable legal charges and Surveyor's fees of the Landlord
including the stamp duty on the Licenses and Counterpart resulting from all
applications by the Tenant for any consent of the Landlord required by this
Lease including reasonable legal charges and surveyors' fees actually incurred
in cases where consent is refused or the application is withdrawn

(22) (a)  To keep any fire fighting and extinguishing apparatus installed on
the demised premised in compliance with any legal requirements open to the
inspection and maintained to the reasonable satisfaction of the Landlord (so far
as not opposed to the Legal obligations of the Tenant)

                                      -11-
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and also not to obstruct the access to or means of working such apparatus and
appliances by their operations at or connected with the demised premises

     (b)  Not to install in or upon the demised premised any paraffin burning
          apparatus whether for heating purposes or otherwise or permit any
          smoke effluvia grit smells or odours from any apparatus on the demised
          premises

(23) If and so often as any monies due from the Tenant hereunder shall be unpaid
for fourteen days after the due date (whether formally or legally demanded or
not) the Tenant shall pay interest thereon from the due date until payment (as
well after as before any judgement) at the rate of 4 per centum per annum above
the Base Rate for the time being of National Westminister Bank Plc

(24) At the expiration or sooner determination of the term quietly to yield up
the premises decorated repaired cleaned and kept in accordance with the Tenant's
covenants herein TOGETHER WITH all additions and improvements and all fixtures
which may be fixed or fastened to or on the premises during the term damage by
fire or other risks for which the Landlord is indemnified under its Insurance
Policies and Tenants own or trade fixtures belongings to the Tenant only
excepted PROVIDED ALWAYS that the Tenant shall make good to the Landlord's
reasonable satisfaction all damage to the premises resulting from the removal of
such fixtures

3.   THE LANDLORD HEREBY COVENANTS with the Tenant:

(1) That the Tenant paying the rents hereinbefore reserved and made payable at
the times and in manner aforesaid and performing and observing the covenants
agreements conditions and stipulations on the part of the Tenant hereinbefore
contained shall and may peaceably and quietly hold and enjoy the demised
premises for the said term without any interruption from or by the Landlord or
any person lawfully claiming through under or in trust for it

(2) Unless such insurance shall be prevented by the act or default of the Tenant
its servants or agents to insure or procure the Insurance of the demised
premises and the Landlord's fixtures and fittings therein in the joint names of
the Landlord and the Tenant against loss or damage by fire lightning explosion
earthquake landslide subsidence riot civil commotion industrial unrest impact by
vehicles aircraft and other aerial devices and articles dropped therefrom act of
malicious persons and

                                      -12-
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vandals and such other risks as the Landlord may reasonably determine or the
Tenant may reasonably request (hereinafter called "the insured risks") in some
U.K. Insurance Office of repute upon the usual terms and conditions of such
Insurance Office and in case of damage to or destruction of the demised premises
to lay out all monies received in respect of such insurance (other than for loss
of rent Architects' and Surveyors' fees and demolition and clearance expenses)
in repairing rebuilding and reinstating the same as soon as reasonably
practicable so that the same may be as commodious and convenient in all respects
as they were before the destruction or damage in respect of which such moneys
shall have been received and to produce on demand to the Tenant a copy of the
policy that it is in force

4.   PROVIDED ALWAYS and IT IS HEREBY AGREED AND DECLARED that:
     ---------------     --------------------------------
(1) Notwithstanding and without prejudice to any other remedy and power herein
contained or otherwise available to the Landlord if the rents hereby reserved
and made payable or any part thereof respectively shall be unpaid for fourteen
days after becoming due (whether formally demanded or not) or if any covenant
agreement condition or stipulation on the Tenant's part herein contained shall
not be performed or observed or if the Tenant shall permit any execution or
distress to be levied on any goods for the time being in the demised premises or
shall enter into liquidation whether compulsory or voluntary (not being merely a
voluntary liquidation while solvent for the purpose of amalgamation or
reconstruction) or if a receiver shall be appointed or if any tenant or
guarantor for the time being shall be an individual and shall enter into
composition with creditors generally or be adjudicated bankrupt or commit any
act of bankruptcy then and in any such case it shall be lawful for the Landlord
at any time thereafter to re-enter upon the demised premises or any part thereof
in the name of the whole and thereupon this demise shall absolutely determine
but without prejudice to any right of action of the Landlord in respect of any
breach non-observance or non-performance of any of the Tenant's covenants
agreements conditions or stipulations herein contained

(2) If during the said term the demised premises or any part thereof shall be
destroyed or damaged by any of the insured risks so as to be unfit for
occupation or use by the Tenant hereunder then (if at the date thereof no
insurance of the demised premises shall have been vitiated or payment of the
policy moneys refused in whole or in part by some act or default of the Tenant
or the servants agents licensees or visitors of the Tenant) the rents hereby
reserved and made payable or a fair and

                                      -13-
<PAGE>

just proportion thereof according to the nature and extent of the damage
sustained shall as from the date of such destruction or damage until the demised
premises shall have been rebuilt or reinstated and made fit for occupation and
use be suspended and cease to be payable and any dispute as to the extent
proportion or period of such suspension shall be determined by a single
arbitrator to be appointed by the Landlord and the Tenant and in case of
difference by the President for the time being of the Royal Institution of
Chartered Surveyors in accordance with the provisions of the Arbitration Acts
1950 and 1979 or any statutory modification or re-enactment thereof for the time
being in force

(3) Section 196 of the Law of Property Act 1925 (as amended) shall apply to any
notices to be served under the terms of this Lease

(4) Subject to the provisions of sub-clause (2) of Section 38 of the Landlord
and Tenant Act 1954 neither the Tenant nor any assignee shall be entitled on
quitting the demised premises or any part thereof to any compensation under
Section 37 of the said Act

(5) Any obligation on the part of the Tenant to pay money refers to a sum
exclusive of Value Added Tax ("VAT") and any VAT charged on it is payable

5.   The Guarantor agrees with the Landlord

     5.1  to indemnify the Landlord against all losses incurred as a result of
any failure by the Tenant to comply with the terms of this Lease both during the
lease period and any extension of it. Even if the Landlord gives the Tenant
extra time to comply with any obligation in this Lease or does not insist upon
its strict terms this covenant remains fully effective

     5.2  (a)  to accept a new lease from the Landlord if before the Tenant
assigns this Lease:

               (i)  this Lease ends prematurely and

               (ii) The Landlord so requires by giving notice within six months
(for which time is of the essence) of the date on which this Lease ends
("termination date")

                                      -14-
<PAGE>

          (c)  The new lease is:

               (i)  for the period from the termination date to the end of the
lease period

               (ii) on the terms of this Lease as they apply on the termination
date omitting any provisions for a guarantor of the Tenant's obligations and any
reference to any obligation which was completely performed before the
termination date

     5.3  To pay the reasonable legal fees which the Landlord incurs in
          preparing and granting any new lease including expenses and the costs
          of any necessary license to sublet and stamp duty charged on the
          counterpart of it

6.   IN this Lease where to context so admits

(1)  words importing the singular number only include the plural number and visa
versa; and

(2) where there are two or more persons included in the expression "the Tenant"
covenants expressed to be made by the Tenant shall be deemed to be made by such
persons jointly and severally

7.   HAVING been authorised to do so by order of the Court (No.           ) made
on the day of            2000 it is hereby agreed that the provisions of Section
24 to 28 (inclusive) of the Landlord and Tenant Act 1954 shall not apply to this
Lease and (for the avoidance of doubt) it is hereby declared in particular
(without prejudice to the generality of the foregoing) that the said provisions
shall not apply in the event of any determination hereof

                                      -15-
<PAGE>

     IN WITNESS whereof these presents have been duly executed and delivered by
     ----------
the parties hereto the day and year first before written

                     THE FIRST SCHEDULE before referred to
                     -------------------------------------

     ALL THOSE office premises situate and known as Unit 9 at Northhill off
     ---------
Summerleys Road Princes Risborough Buckinghamshire which are for the purpose of
identification only edged red on the annexed plan

                     THE SECOND SCHEDULE before referred to
                     --------------------------------------

1.  The rent payable shall be one peppercorn until 3rd June 2000 and from and
including that day the sum of (Pounds)7000 per year

THE COMMON SEAL of
W&G PROPERTIES LIMITED
was hereunto affixed in the presence of:
                                               Director:  (Signature Illegible)
                                                        -----------------------
                                               Secretary:  /s/  R.E. List
                                                         ----------------

                                      -16-<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                    STOCK OPTION AGREEMENT dated as of March 26, 2001 (this
               "Agreement"), by and between ALZA Corporation, a Delaware
               corporation ("Issuer"), and Johnson & Johnson, a New Jersey
               corporation ("Grantee").

                              RECITALS

          A.  Grantee, Express Merger Sub Inc., a Delaware corporation and
wholly owned Subsidiary of Grantee ("Sub"), and Issuer have entered into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"), providing for, among other things, the merger of Sub with and into
Issuer, with Issuer as the surviving corporation in the Merger and becoming a
wholly owned Subsidiary of Grantee; and

          B.  As a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below).

          NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:

          1.  Grant of Option.  Subject to the terms and conditions set forth
              ----------------
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 47,466,356 shares (as such number may be adjusted pursuant to
Section 6, the "Option Shares") of common stock, par value $0.005 per share, of
Issuer (the "Issuer Common Stock") at a purchase price of $41.84 per Option
Share (as such price may be adjusted pursuant to Section 6, the "Purchase
Price") provided, however, that in no event may the number of Option Shares
        --------  -------
exceed 19.9% of the issued and outstanding shares of Issuer Common Stock at the
time of exercise without giving effect to the issuance of Option Shares.

          2.  Exercise of Option.  (a)  Subject to the provisions of Section
              -------------------
2(c), Grantee may exercise the Option, with respect to any or all of the Option
Shares, at any time or times after the occurrence of any event as a result of
which Grantee is entitled to receive the Termination Fee pursuant to Section
5.08(b) of the Merger Agreement (a "Purchase Event"); provided, however, that
                                                      --------  -------
(i) except as
<PAGE>

                                                                               2

provided in the last sentence of this Section 2(a), the Option
will terminate and be of no further force and effect upon the earliest to occur
of (A) the Effective Time, (B) 12 months after the first occurrence of a
Purchase Event, and (C) termination of the Merger Agreement in accordance with
its terms prior to the occurrence of a Purchase Event, unless, in the case of
clause (C), Grantee has the right to receive the Termination Fee following such
termination upon the occurrence of certain events, in which case the Option will
not terminate until the later of (x) 10 business days following the time such
Termination Fee becomes payable and (y) the expiration of the period in which
Grantee has such right to receive the Termination Fee, and (ii) any purchase of
Option Shares upon exercise of the Option will be subject to compliance with the
HSR Act and the obtaining or making of any consents, approvals, orders,
notifications, filings or authorizations, the failure of which to have obtained
or made would have the effect of making the issuance of Option Shares to Grantee
violate any law or regulation to which Issuer is subject (the "Regulatory
Approvals").  Notwithstanding the termination of the Option, Grantee will be
entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and the
termination of the Option will not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such termination.

          (b)  In the event that Grantee is entitled to and wishes to exercise
the Option, Grantee shall send to Issuer a written notice (an "Exercise Notice";
the date of which being herein referred to as the "Notice Date") to that effect,
which Exercise Notice shall specify the number of Option Shares, if any, Grantee
wishes to purchase pursuant to this Section 2(b), the number of Option Shares,
if any, with respect to which Grantee wishes to exercise its Cash-Out Right (as
defined below) pursuant to Section 6(c), the denominations of the certificate or
certificates evidencing the Option Shares which Grantee wishes to purchase
pursuant to this Section 2(b) and a date (an "Option Closing Date"), which,
subject to the following sentence, shall not be earlier than three business days
nor later than 10 business days from the Notice Date for the closing of such
purchase (an "Option Closing").  Any Option Closing shall be at an agreed
location and time in New York, New York on the applicable Option Closing Date or
at such later date as may be necessary so as to comply with clause (ii) of the
proviso to the first sentence of Section 2(a).

          (c)  Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of
<PAGE>

                                                                               3

Option Shares shall be subject to compliance with applicable laws and
regulations, which may prohibit the purchase of all the Option Shares specified
in the Exercise Notice without first obtaining or making certain Regulatory
Approvals. In such event, if the Option is otherwise exercisable and Grantee
wishes to exercise the Option, the Option may be exercised in accordance with
Section 2(b) and Grantee shall acquire the maximum number of Option Shares
specified in the Exercise Notice that Grantee is then permitted to acquire under
the applicable laws and regulations, and if Grantee thereafter obtains the
Regulatory Approvals to acquire the remaining balance of the Option Shares
specified in the Exercise Notice, then Grantee shall be entitled to acquire such
remaining balance. Issuer agrees to use its commercially reasonable efforts to
assist Grantee in seeking the Regulatory Approvals.

          In the event (i) Grantee receives notice that a Regulatory Approval
required for the purchase of any Option Shares will not be issued or granted or
(ii) such Regulatory Approval has not been issued or granted within six months
of the date of the Exercise Notice, Grantee shall have the right to exercise its
Cash-Out Right pursuant to Section 6(c) with respect to the Option Shares for
which such Regulatory Approval will not be issued or granted or has not been
issued or granted.

          3.  Payment and Delivery of Certificates.  (a)  At any Option Closing,
              -------------------------------------
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at such Option
Closing.

          (b)  At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all Liens.  If at the time of issuance of Option Shares pursuant to an exercise
of the Option hereunder, Issuer shall have issued any securities similar to
rights under a stockholder rights plan, then each Option Share issued pursuant
to such exercise will also represent such a corresponding right with terms
substantially the same as and at least as favorable to Grantee as are provided
under any such stockholder rights plan then in effect.
<PAGE>

                                                                               4

          (c)  Certificates representing the Option Shares delivered at an
Option Closing will have typed or printed thereon a restrictive legend which
will read substantially as follows:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
     ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
     AVAILABLE.  SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
     TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF MARCH 26,
     2001, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF ALZA
     CORPORATION, AT ITS PRINCIPAL EXECUTIVE OFFICES."

It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.

          4.  Representations and Warranties of Issuer.  Issuer hereby
              -----------------------------------------
represents and warrants to Grantee as follows:

          Authorized Stock.  Issuer has taken all necessary corporate and other
          -----------------
     action to authorize and reserve and, subject to the expiration or
     termination of any required waiting period under the HSR Act, to permit it
     to issue, and, at all times from the date hereof until the obligation to
     deliver Option Shares upon an exercise of the Option terminates, shall have
     reserved for issuance, upon exercise of the Option, shares of Issuer Common
     Stock necessary for Grantee to exercise the Option, and Issuer will take
     all necessary corporate action to authorize and reserve for issuance all
     additional shares of Issuer Common Stock or other securities which may be
     issuable pursuant to Section 6
<PAGE>

                                                                               5

     upon exercise of the Option. The shares of Issuer Common Stock to be issued
     upon due exercise of the Option, including all additional shares of Issuer
     Common Stock or other securities which may be issuable upon exercise of the
     Option or any other securities which may be issuable pursuant to Section 6,
     upon issuance pursuant hereto, will be duly and validly issued, fully paid
     and nonassessable, and will be delivered free and clear of all Liens,
     including without limitation any preemptive rights of any stockholder of
     Issuer.

          5.  Representations and Warranties of Grantee.  Grantee hereby
              ------------------------------------------
represents and warrants to Issuer that:

          Purchase Not for Distribution.  Any Option Shares or other securities
          ------------------------------
     acquired by Grantee upon exercise of the Option will not be transferred or
     otherwise disposed of except in a transaction registered, or exempt from
     registration, under the Securities Act.

          6.  Adjustment upon Changes in Capitalization, Etc.  (a)  In the event
              -----------------------------------------------
of any change in Issuer Common Stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price thereof, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee will receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable.  Subject to Section 1, and
without limiting the parties' relative rights and obligations under the Merger
Agreement, if any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 6(a)) or if the number of outstanding shares of Issuer
Common Stock is reduced, the number of shares of Issuer Common Stock subject to
the Option will be adjusted so that, after such issuance or reduction, it equals
the same percentage of the aggregate number of shares of Issuer Common Stock
issued and outstanding after giving effect to such issuance or reduction as
immediately prior to such issuance or reduction, in each case without giving
effect to any shares subject to the Option.

          (b)  Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event
<PAGE>

                                                                               6

that Issuer enters into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and Issuer will not be
the continuing or surviving corporation in such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer will be the continuing or surviving corporation, but in
connection with such merger, the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will be changed into or
exchanged for stock or other securities of Issuer or any other person or cash or
any other property, or the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will, after such merger, represent less
than 50% of the outstanding voting securities of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised in full with
respect to all Option Shares then purchasable immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable, and make any other necessary adjustments.

          (c)  If, at any time during the period commencing on a Purchase Event
and ending on the termination of the Option in accordance with Section 2,
Grantee sends to Issuer an Exercise Notice indicating Grantee's election to
exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then
Issuer shall pay to Grantee, on the Option Closing Date, in exchange for the
cancellation of the Option with respect to such number of Option Shares as
Grantee specifies in the Exercise Notice, an amount in cash equal to such number
of Option Shares multiplied by the difference between (i) the average closing
price, for the 10 trading days commencing on the 12th trading day immediately
preceding the Notice Date, per share of Issuer Common Stock as reported on the
New York Stock Exchange, Inc. ("NYSE") Composite Transactions Tape (or, if not
listed on the NYSE, as reported on any other national securities exchange or
national securities quotation system on which the Issuer Common Stock is listed
or quoted, as reported in The Wall Street Journal (Northeast edition), or, if
                          -----------------------
not reported therein, as reported in any other authoritative
<PAGE>

                                                                               7

source) (the "Closing Price") and (ii) the Purchase Price. Notwithstanding the
termination of the Option, Grantee will be entitled to exercise its rights under
this Section 6(c) if Grantee has exercised such rights in accordance with the
terms hereof prior to the termination of the Option.

          7.  Profit Limitations. (a) Notwithstanding any other provision of
              -------------------
this Agreement, in no event shall the Total Option Profit (as defined below)
exceed in the aggregate $180,000,000 (such amount, the "Profit Limit") and, if
any payment to be made to Grantee otherwise would cause the Profit Limit to be
exceeded, Grantee, at its election and in its sole discretion, shall (i) reduce
the number of shares of Issuer Common Stock subject to the Option, (ii) deliver
to Issuer for cancellation Option Shares previously purchased by Grantee, (iii)
pay cash to Issuer or (iv) take any combination of the foregoing actions, so
that the Total Option Profit shall not exceed the Profit Limit after taking into
account all the foregoing actions taken by Grantee.

          (b)  Notwithstanding any other provision of this Agreement, the Option
may not be exercised for a number of shares of Issuer Common Stock as would, as
of the date of exercise, result in a Notional Total Option Profit (as defined
below) that would exceed in the aggregate the Profit Limit and, if the Notional
Total Option Profit otherwise would exceed such amount, Grantee, at its election
and in its sole discretion, shall on or prior to the date of exercise (i) reduce
the number of shares of Issuer Common Stock subject to such exercise, (ii)
deliver to Issuer for cancellation Option Shares previously purchased by
Grantee, (iii) pay cash to Issuer or (iv) take any combination of the foregoing
actions, so that the Notional Total Option Profit shall not exceed the Profit
Limit after taking into account all the foregoing actions taken by Grantee,
provided that this paragraph (b) shall not be construed as to restrict any
--------
exercise of the Option that is not prohibited hereby on any subsequent date.

          (c)  As used herein, the term "Total Option Profit" shall mean the
aggregate amount (before taxes) of the following:  (i) any amount received by
Grantee pursuant to the Cash-Out Right and (ii)(x) the net consideration, if
any, received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, valuing any non-cash consideration at its fair market value
(as defined below), less (y) the aggregate Purchase Price and any cash paid by
Grantee to Issuer pursuant to Section 7(a)(iii) or Section 7(b)(iii), as the
case may be.
<PAGE>

                                                                               8

          (d)  As used herein, the term "Notional Total Option Profit" with
respect to any number of shares of Issuer Common Stock as to which Grantee may
propose to exercise the Option shall be the aggregate of (i) the Total Option
Profit determined under paragraph (c) above with respect to prior exercises of
the Option and (ii) Total Option Profit determined under paragraph (c) above
with respect to (x) such number of shares of Issuer Common Stock as to which
Grantee proposes to exercise the Option and (y) all other shares of Issuer
Common Stock held by Grantee and its Affiliates as of such date that were
acquired by Grantee or its Affiliates pursuant to a prior exercise of the
Option, assuming that all such shares were sold for cash at the closing market
price for the Issuer Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions or underwriting discounts).

          (e)  As used herein, the "fair market value" of any non-cash
consideration consisting of:

          (i) securities listed on a national securities exchange or traded on
     The Nasdaq National Market ("Nasdaq") shall be equal to the average closing
     price per share of such security as reported on such exchange or Nasdaq for
     the five trading days after the date of determination; and

          (ii) consideration which is other than cash or securities of the form
     specified in clause (i) above shall be agreed upon in good faith by the
     parties or, in the absence of such agreement, determined by a nationally
     recognized independent investment banking firm mutually agreed upon by the
     parties within five business days of the event requiring selection of such
     banking firm, provided that if the parties are unable to agree within two
                   --------
     business days after the date of such event as to the investment banking
     firm, then the parties shall each select one investment banking firm, and
     those firms shall select a third nationally recognized independent
     investment banking firm, which third firm shall make such determination.

          8.  Registration Rights.  Issuer will, if requested by Grantee at any
              --------------------
time and from time to time within two years of the exercise of the Option, as
promptly as practicable (but in no event later than 90 days after receipt of
such request) prepare and file up to three registration statements ("demand
registration statements") under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of securities that have been acquired by or are
<PAGE>

                                                                               9

issuable to Grantee upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by Grantee, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision, and Issuer will use its best efforts to qualify such shares or other
securities under any applicable state securities laws. Grantee agrees to use its
commercially reasonable efforts to cause, and to cause any underwriters of any
sale or other disposition to cause, any sale or other disposition pursuant to
such registration statement to be effected on a widely distributed basis so that
upon consummation thereof no purchaser or transferee will own beneficially more
than 5% of the then-outstanding voting power of Issuer. Issuer will use its
commercially reasonable efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties which are
required therefor, and to keep such registration statement effective for such
period not in excess of 150 calendar days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sale or other disposition. The obligations of Issuer hereunder to file a
registration statement and to maintain its effectiveness may be suspended for up
to 90 calendar days in the aggregate if the Board of Directors of Issuer shall
have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Issuer or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Issuer or any other material transaction involving Issuer. Any
registration statement prepared and filed under this Section 8, and any sale
covered thereby, will be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of this
Section 8, Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the
right to participate in such registration (a "Piggyback Registration"), and such
participation will not affect the obligation of Issuer to effect demand
registration statements for Grantee under this Section 8; provided that, if the
                                                          --------
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such
<PAGE>

                                                                              10

offering, Issuer will include only that portion of the shares requested to be
included therein by Grantee that may, in the written opinion of the managing
underwriters, be included therein without adversely affecting the success of the
offering. In connection with any registration pursuant to this Section 8, Issuer
and Grantee will provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration. Issuer may withdraw any
Piggyback Registration without the consent of Grantee.

          9.  Transfers.  Shares of Issuer Common Stock acquired by Grantee
              ----------
pursuant to an exercise of the Option may not be sold, assigned, transferred, or
otherwise disposed of except (i) in an underwritten public offering as provided
in Section 8 or (ii) to any purchaser or transferee who would not, to the
knowledge of Grantee after reasonable inquiry, immediately following such sale,
assignment, transfer or disposal, beneficially own more than 5% of the then-
outstanding voting power of the Issuer; provided, however, that Grantee shall be
                                        --------  -------
permitted to sell any shares of Issuer Common Stock acquired pursuant to an
exercise of the Option if such sale is made pursuant to a tender or exchange
offer that has been approved or recommended by a majority of the members of the
Board of Directors of Issuer (which majority shall include a majority of
directors who were directors as of the date hereof).

          10.  Listing.  If the Issuer Common Stock or any other securities to
               --------
be acquired upon exercise of the Option are then listed on the NYSE (or any
other national securities exchange or approved for quotation on any national
securities quotation system), Issuer, upon the request of Grantee, shall
promptly file an application to list the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on the NYSE (or any such
other national securities exchange or file an application to have approved for
quotation on any such national securities quotation system) and will use its
commercially reasonable efforts to obtain approval of such listing (or
quotation) as promptly as practicable.

          11.  Loss or Mutilation.  Upon receipt by Issuer of evidence
               -------------------
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
<PAGE>

                                                                              11

          12.  Miscellaneous.  (a)  Expenses.  Except as otherwise provided in
               --------------       ---------
this Agreement or in the Merger Agreement, each of the parties hereto will bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants, and counsel.

          (b)  Amendment.  This Agreement may not be amended, except by an
               ----------
instrument in writing signed on behalf of each of the parties.

          (c)  Extension; Waiver.  Any agreement on the part of a party to waive
               ------------------
any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party.  The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.

          (d)  Entire Agreement; No Third-Party Beneficiaries.  This Agreement,
               -----------------------------------------------
the Merger Agreement (including the documents and instruments attached thereto
as exhibits or schedules or delivered in connection therewith) and the
Confidentiality Agreement (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, and (ii) except as
provided in Section 8.06 of the Merger Agreement, are not intended to confer
upon any person other than the parties any rights or remedies.

          (e)  Governing Law.  This Agreement will be governed by, and construed
               --------------
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws
thereof.

          (f)  Notices.  All notices, requests, claims, demands and other
               --------
communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Merger Agreement.

          (g)  Assignment.  Neither this Agreement, the Option nor any of the
               -----------
rights, interests or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise, by Issuer or
Grantee without the prior written consent of the other, except that Grantee may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to any direct or indirect wholly owned
Subsidiary of
<PAGE>

                                                                              12

Grantee, but no such assignment shall relieve Grantee of any of its obligations
hereunder. Any assignment or delegation in violation of the preceding sentence
shall be void. Subject to the first and second sentences of this Section 12(g),
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.

          (h)  Further Assurances.  In the event of any exercise of the Option
               -------------------
by Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.

          (i)  Specific Enforcement; Consent to Jurisdiction.  The parties agree
               ----------------------------------------------
that irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court
located in the State of Delaware or in any state court located in the State of
Delaware, the foregoing being in addition to any other remedy to which they are
entitled at law or in equity.  In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any state court located in the State of
Delaware in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the State of
Delaware or a state court located in the State of Delaware.

          (j)  Severability.  If any term or other provision of this Agreement
               -------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect.  Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as
<PAGE>

                                                                              13

possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.

          (k)  Defined Terms.  All terms used but not defined herein shall have
               --------------
the meanings ascribed to such terms in the Merger Agreement.
<PAGE>

                                                                              14

          IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the day
and year first written above.

                              ALZA CORPORATION,

                              by /s/ Ernest Mario
                                ----------------------
                                 Name: Ernest Mario
                                 Title: Chairman and
                                        Chief Executive Officer

                              JOHNSON & JOHNSON,

                                by /s/ R.S. Larsen
                                   -------------------
                                 Name: R.S. Larsen
                                 Title: Chairman and
                                        Chief Executive Officer

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