UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 31, 2000
(Date of earliest event reported)
SCIOS INC.
(Exact name of registrant as specified in its charter)
Delaware 0-11749 95-3701481
(State of other (Commission file number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
820 West Maude Avenue
Sunnyvale, California 94086
(Address of principal executive offices and zip code)
(408) 616-8200
(Registrant's telephone number)
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ITEM 5. OTHER EVENTS
On January 31, 2000, Scios Inc. (the "Company") entered into a
Settlement Agreement (the "Settlement Agreement") with Randal J. Kirk and
certain entities controlled by him (the "Stockholders") that had nominated (the
"Nomination") an alternate slate of Mr. Kirk and six other nominees (the
"Stockholder Nominees") for election to the Company's Board of Directors (the
"Company Board") at the 2000 annual meeting of stockholders of the Company (the
"2000 Annual Meeting").
The Settlement Agreement terminates the proxy contest between the
parties. Under the Settlement Agreement, Mr. Kirk has been added to the Company
Board's slate of nominees for election to a one-year term at the 2000 Annual
Meeting, increasing the total number of Company Board nominees to eight
(including the seven existing nominees of the Company Board, who are all current
members of the Company Board). The Company Board has agreed to recommend the
election of all eight nominees. The Stockholders have withdrawn the Nomination
and have agreed to discontinue all efforts (direct and indirect) to solicit
votes for the Stockholder Nominees or otherwise to pursue the Nomination.
The Settlement Agreement provides that the Stockholders will vote their
Company shares in favor of the Company Board's nominees and against the removal
of any director, and not pursue any unsolicited acquisition attempts or engage
in any proxy contest, for a specified period (the "Term"). The length of the
Term will depend on whether Mr. Kirk is elected at the 2000 Annual Meeting and,
if he is, on whether the Company Board chooses to re-nominate Mr. Kirk for the
2001 annual meeting of stockholders of the Company (the "2001 Annual Meeting").
If Mr. Kirk is not elected at the 2000 Annual Meeting, the Term will expire at
the conclusion of that meeting. If he is elected at that meeting, the Term will
expire at the earliest to occur of:
o Mr. Kirk's resignation from the Company Board within 15 days of
the Company Board deciding, at a meeting required to be held no
later than 90 days before the 2001 Annual Meeting, that he will
not be re-nominated at that meeting, in which event the
provisions of the Company's Bylaws requiring advance notice to be
given, by a specified date, of a stockholder's intention to
nominate directors, or propose other business, at an annual
meeting of stockholders (the "Advance Notice Bylaws") will be
waived to the extent necessary to permit any or all of the
Stockholders (but no other person) to nominate one or more of
their own candidates for election to the Company Board at the
2001 Annual Meeting;
o the conclusion of the 2001 Annual Meeting if Mr. Kirk is
re-nominated for election at that meeting but is not elected; or
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o the later of (i) the 30th day prior to the deadline established
by the Advance Notice Bylaws for nominations of candidates for
election to the Company Board at the 2002 annual meeting of
stockholders of the Company (the "2002 Annual Meeting") or (ii)
the date of Mr. Kirk's resignation from the Company Board, but in
no event beyond the conclusion of the 2002 Annual Meeting.
In addition, during the Term (or until Mr. Kirk resigns from the
Company Board before the end of the Term, if he is elected), the Stockholders:
o must vote all of their Company shares on all matters other than
the election or removal of directors either (as they choose in
their sole discretion) in accordance with the recommendation of a
majority of the Company Board or in the same proportion as shares
held by the other Company stockholders are voted;
o may not increase their aggregate ownership of Company shares
above 7.2% and must effect all purchases in compliance with all
then-applicable Company policies regarding compliance with the
federal securities laws and transactions in Company voting
securities by members of the Company Board and their affiliates
(the "Company Policies"); and
o must give the Company prior notice if they intend to dispose of
any of their Company shares (except that open-market sales of
less than 1%, in the aggregate, in any 90-day period are not
subject to this notice requirement) and must effect all sales in
compliance with the Company Policies.
The Settlement Agreement contains certain other provisions, including
restrictions on public announcements, mutual releases of claims in connection
with the proxy contest and related covenants not to sue, certain representations
and warranties, and the Company's agreement to reimburse 50% of certain of the
Stockholders' actual documented out-of-pocket costs in connection with the proxy
contest. In addition, the Company has agreed that, without Mr. Kirk's prior
consent (not to be unreasonably withheld), it will not change the date of the
2000 Annual Meeting, hold the 2001 Annual Meeting later than June 1, 2001, or
amend the Advance Notice Bylaws during the Term.
The Settlement Agreement permits Mr. Kirk to exercise his rights, and
fulfill his obligations, as a member of the Company Board while he is serving on
it, and to make confidential proposals to the Company Board, without violating
any of the provisions summarized above.
THE FOREGOING SUMMARY OF CERTAIN PROVISIONS OF THE SETTLEMENT AGREEMENT
IS QUALIFIED BY THE FULL TEXT THEREOF, WHICH IS FILED HEREWITH AS EXHIBIT 99.1
(SEE ITEM 7(C)).
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ITEM 7(C) EXHIBITS
Exhibit 99.1 The Settlement Agreement (excluding Exhibit 4.1
thereto, which is the form of joint press
release; see Exhibit 99.2)
Exhibit 99.2 Joint press release issued on January 31, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCIOS INC.
(Registrant)
/s/ John H. Newman
Date: February 1, 2000 _____________________________
John H. Newman
Senior Vice President,
General Counsel and Secretary
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SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is made as of January 31,
2000 by and among Scios Inc., a Delaware corporation (the "Company"), Randal J.
Kirk, a citizen of the United States ("Mr. Kirk"), and each of the following
entities that Mr. Kirk directly controls: RJK, L.L.C., a Virginia limited
liability company ("RJK"); Kirkfield, L.L.C., a Virginia limited liability
company ("Kirkfield"), and The Kirk Family Investment Plan, a joint account (the
"Plan" and, together with Mr. Kirk, RJK and Kirkfield, the "Stockholders").
RECITALS:
A. The Stockholders have reported on a Schedule 13D dated July 29,
1999, as amended (the "Schedule 13D"), that they are the beneficial owners of an
aggregate of 2,000,000 outstanding shares of the Company's common stock, par
value $.001 per share (the "Company Common Stock"), representing approximately
5.2% of the outstanding Company Common Stock.
B. By a letter dated December 2, 1999 addressed to the Company, as
modified by a Supplement dated January 19, 2000 to their proxy statement dated
January 11, 2000, the Stockholders have nominated (the "Nomination") Mr. Kirk
and six other candidates (the "Stockholder Nominees") for election to the
Board of Directors of the Company (the "Company Board"), in place of the
current members of the Company Board, at the 2000 annual meeting of stockholders
of the Company to be held on February 28, 2000 (as the same may be adjourned or
postponed from time to time, the "2000 Annual Meeting"). The current members
of the Company Board, all but one of whom are candidates for re-election at the
2000 Annual Meeting, have opposed the election of the Stockholder Nominees and
the parties to this Agreement (the "Parties") have commenced a proxy contest
(the "Proxy Contest") regarding the election of their respective nominees to the
Company Board at the 2000 Annual Meeting.
C. The Parties wish to settle the Proxy Contest, and enter into certain
agreements related thereto, on the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the Parties
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS
In addition to the other definitions contained elsewhere in this
Agreement, the following terms shall have the meanings specified below for the
purposes hereof:
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"Advance Notice Bylaws" means Sections 5(b) and 5(c), together, of the
Company's Bylaws as in effect on the date hereof or any amended version thereof
or successor thereto in effect at the time of determination under the applicable
provision hereof.
"Affiliate" has the meaning set forth in the 1934 Act.
"Associate" has the meaning set forth in the 1934 Act.
"Beneficially own" has the meaning set forth in the regulations
included in Rule 13d-3 of the 1934 Act; provided, however, that for purposes of
this Agreement, any option, warrant, right, conversion privilege or arrangement
to purchase, acquire or vote Company Voting Securities, regardless of the time
period during or the time at which it may be exercised and regardless of the
consideration paid, shall be deemed to give the holder thereof beneficial
ownership of the Company Voting Securities to which it relates. Any Company
Voting Securities which are subject to such options, warrants, rights,
conversion privileges or other arrangements shall be deemed to be outstanding
for purposes of computing the percentage of outstanding securities owned by such
Person but shall not be deemed to be outstanding for purposes of computing the
percentage of outstanding securities owned by any other Person.
"Company Voting Securities" means all classes of capital stock of the
Company which are then entitled to vote generally in the election of directors
and any securities exchanged for such classes of capital stock and any
securities convertible into or exchangeable or exercisable for such classes of
capital stock. For purposes of determining the amount or percentage of
outstanding Company Voting Securities beneficially owned by a Person, and for
purposes of calculating the aggregate voting power relating to such Company
Voting Securities, securities that are deemed to be outstanding shall be
included to the extent provided in the definition of "Beneficially own."
"1933 Act" means the Securities Act of 1933, as amended, and the
regulations promulgated under such statute.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the regulations promulgated under such statute.
"Person" means a natural person or any legal, commercial or
governmental entity, including, but not limited to, a corporation, partnership,
joint venture, trust, limited liability company, group acting in concert or any
person acting in a representative capacity.
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"Representatives" of a Party means: (a) the officers, directors,
partners, managers or other authorized representatives of such Party; (b) the
employees or agents of such Party but only to the extent that they act on behalf
of such Party; and (c) the outside professional advisors of such Party but only
to the extent that they act in concert with such Party and not solely in their
capacities as professional advisors.
"SEC" means the Securities and Exchange Commission.
"Securities Acts" means the 1933 Act and the 1934 Act.
"Term" means the period commencing on the date of this Agreement and
continuing until the earliest to occur of: (a) the conclusion of the 2000 Annual
Meeting should Mr. Kirk, having been nominated for election to the Company Board
thereat pursuant to Section 3.1, not be so elected thereat; (b) Mr. Kirk's
resignation from the Company Board pursuant to Section 3.5; (c) the conclusion
of the annual meeting of stockholders of the Company for the year 2001 (the
"2001 Annual Meeting") should Mr. Kirk, having been nominated for election to
the Company Board thereat pursuant to Section 3.4, not be so elected thereat; or
(d) the later of (i) the 30th day prior to the deadline established by the
Advance Notice Bylaws for nominations of candidates for election to the Company
Board at the annual meeting of stockholders of the Company for the year 2002
(the "2002 Annual Meeting"), or (ii) the date of Mr. Kirk's resignation from the
Company Board, but in no event beyond the conclusion of the 2002 Annual Meeting.
2. WITHDRAWAL OF THE NOMINATION
2.1. The Stockholders hereby irrevocably withdraw the Nomination.
2.2. The Stockholders shall forthwith discontinue all efforts (direct
and indirect) to solicit votes for the Stockholder Nominees and shall not engage
in any further solicitation activity (whether by press release, SEC filings,
mailings to the stockholders of the Company, communications with individual
stockholders of the Company, contacts with the media or otherwise) to solicit
votes for the Stockholder Nominees or otherwise to pursue the Nomination.
3. ADDITION OF MR. KIRK AS A COMPANY BOARD NOMINEE
3.1. The Company Board has taken all action necessary to cause Mr.
Kirk to become a nominee of the Company Board for election to the Company Board
at the 2000 Annual Meeting. If he is elected and chooses to serve, Mr. Kirk will
serve as a member of the Company Board for the same term as all other nominees
elected to the Company Board at the 2000 Annual Meeting, which term shall expire
when his successor is duly elected at the 2001 Annual Meeting and qualified or
upon his death, resignation or
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removal, all as provided in Article IV of the Company's Bylaws. As a result of
the addition of Mr. Kirk as a nominee of the Company Board for election to the
Company Board at the 2000 Annual Meeting, the total number of the Company Board
nominees for election at the 2000 Annual Meeting shall be eight and the Company
Board shall recommend to the Company's stockholders the election of all eight
nominees.
3.2. If, at any time, whether before the vote is taken on the
election of directors at the 2000 Annual Meeting or thereafter (assuming Mr.
Kirk is elected thereat), Mr. Kirk becomes unable or unwilling to serve as a
member of the Company Board, the Company Board shall have no obligation to
nominate, elect or appoint a successor or replacement to Mr. Kirk.
3.3. Mr. Kirk hereby confirms to the Company his consent to stand for
election as a nominee of the Company Board at the 2000 Annual Meeting. In
addition to the information that Mr. Kirk has provided to the Company in
connection with the negotiation and execution of this Agreement, Mr. Kirk shall
provide to the Company such additional information as it may from time to time
reasonably request for inclusion in materials to be disseminated in connection
with the 2000 Annual Meeting or otherwise in order for it to comply with its
disclosure requirements under the Securities Acts.
3.4. If Mr. Kirk is elected to the Company Board at the 2000 Annual
Meeting and is still a member of the Company Board at the meeting at which the
Company Board votes on its nominees (the "2001 Nominees") for election to the
Company Board at the 2001 Annual Meeting, which nomination meeting of the
Company Board (the "Nomination Meeting") the Company covenants to hold no later
than 90 days prior to the date of the 2001 Annual Meeting, then, at the
Nomination Meeting, the Company Board shall have the right (but not the
obligation) to vote to include Mr. Kirk as one of the 2001 Nominees, in which
case, if Mr. Kirk consents to stand for election as a 2001 Nominee: (a) the
Company Board shall recommend to the Company's stockholders his election,
together with the election of all other 2001 Nominees, at the 2001 Annual
Meeting; and (b) the provisions of the second sentence of Section 3.1 and the
entirety of Section 3.2 shall apply as if references therein to the 2000 Annual
Meeting were references to the 2001 Annual Meeting, and the reference in the
second sentence of Section 3.1 to the 2001 Annual Meeting was a reference to the
2002 Annual Meeting.
3.5. If, at the Nomination Meeting, the Company Board votes not to
include Mr. Kirk as one of the 2001 Nominees and Mr. Kirk resigns from the
Company Board within 15 days of such vote, the Advance Notice Bylaws shall
automatically be deemed waived to the extent necessary to permit any or all of
the Stockholders (but no other Person) to nominate one or more of their own
candidates for election to the Company Board at the 2001 Annual Meeting.
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3.6. If, at the Nomination Meeting, the Company Board votes to
include Mr. Kirk as one of the 2001 Nominees but Mr. Kirk does not consent to
stand for election as a 2001 Nominee, the Advance Notice Bylaws shall not be
deemed waived to any extent with respect to any of the Stockholders.
4. ANNOUNCEMENTS
4.1. As soon as practicable following the execution of this
Agreement: (a) the Company and Mr. Kirk shall issue a joint press release in the
form of Exhibit 4.1 hereto (the "Joint Press Release"), which the Company (but
not the Stockholders) shall file with the SEC as additional definitive proxy
materials under the 1934 Act; (b) the Company shall file with the SEC, and
disseminate to its stockholders, a letter to its stockholders and a supplement
to its proxy statement for the 2000 Annual Meeting disclosing, in a manner
consistent with the Joint Press Release, the terms of this Agreement and Mr.
Kirk's nomination pursuant to Section 3.1, together with the information
provided by Mr. Kirk, for inclusion in such supplement, with respect to himself,
the contents of which letter and supplement shall be subject to the approval of
Mr. Kirk (not to be unreasonably withheld); (c) the Company shall file with the
SEC a Current Report on Form 8-K to disclose this Agreement in a manner
consistent with the Joint Press Release, the contents of which Current Report
shall be subject to the approval of Mr. Kirk (not to be unreasonably withheld);
and (d) the Stockholders shall file with the SEC a Schedule 13D amendment to
disclose this Agreement in a manner consistent with the Joint Press Release, the
contents of which amendment shall be subject to the approval of the Company (not
to be unreasonably withheld)
4.2. From the date of this Agreement until the earlier to occur of
(a) the expiration of the Term or (b) the resignation of Mr. Kirk from the
Company Board (if he is elected thereto), none of the Parties shall make any
public statement (including any statement in any filing with the SEC or any
other governmental agency) regarding this Agreement or any event occurring prior
to the date hereof that is inconsistent with, or otherwise contrary to, the
Joint Press Release or that is critical of any other Party or its prior actions.
4.3. Any public statement (including any statement in any filing with
the SEC or any other governmental agency) by any Party regarding this Agreement
or any event occurring prior to the date hereof that is not prohibited by
Section 4.2 shall be made in compliance with applicable securities laws and
consistent with such Party's fiduciary duties to the Company.
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5. STANDSTILL PROVISIONS
5.1. Provided that the Company is not in material default under this
Agreement, the Stockholders agree, jointly and severally, that prior to the
expiration of the Term, unless such shall have been specifically invited in
writing by the Company, none of the Stockholders nor any of their Affiliates,
Associates or Representatives shall in any manner, directly or indirectly:
(a) effect or seek, offer or propose (whether publicly or
otherwise) to effect, or cause or participate in or in any way assist
any other person to effect or seek, offer or propose (whether publicly
or otherwise) to effect or participate in (i) any acquisition,
issuance or disposition of any securities (or beneficial ownership
thereof) or assets of the Company or any of its subsidiaries (except
as otherwise expressly provided by Section 6.4), (ii) any tender or
exchange offer, merger or other business combination involving the
Company or any of its subsidiaries, (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its subsidiaries,
(iv) any acquisition of the securities or assets of any other business
enterprise by the Company or any of its subsidiaries, or (v) any
"solicitation" of "proxies" (as such terms are used in the proxy rules
of the SEC);
(b) form, join or in any way participate in a "group" (as defined
under the 1934 Act) with respect to the Company (other than with any
other Stockholder);
(c) otherwise act, alone or in concert with others, to seek to
control the management, the Company Board or the policies of the
Company, including, without limitation, by (i) initiating or
instituting a stockholder solicitation for any such purpose, or (ii)
nominating or causing others to nominate or otherwise seeking to elect
directors of the Company other than those nominated by the Board;
(d) take any action which might force the Company to make a
public announcement regarding any of the types of matters set forth in
5(a) above;
(e) enter into any discussions or arrangements with any third
party with respect to any of the foregoing; or
(f) request the Company to amend, waive or terminate any
provision of this Agreement (including this sentence).
5.2. Notwithstanding anything to the contrary in Section 5.1: (a) the
mere act of selling any Company Voting Securities beneficially owned by any of
the Stockholders shall not by itself be deemed to constitute the participation
in or assistance by any of the Stockholders with respect to any of the foregoing
provided such act is consistent with Section 6.5; (b) Mr. Kirk's exercise of his
rights, or fulfillment of his obligations, as a
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member of the Company Board while he is serving thereon shall not be a violation
of Section 5.1; and (c) Mr. Kirk may make a proposal that would otherwise be
prohibited by Section 5.1 provided it is made confidentially to the Company
Board.
6. CERTAIN AGREEMENTS RELATING TO COMPANY VOTING SECURITIES
Provided that the Company is not in material default under this
Agreement, the Stockholders agree, jointly and severally as follows:
6.1. At any meeting of the stockholders of the Company held at any
time between the date of this Agreement and the expiration of the Term, they
shall: (a) vote, or cause to be voted, all Company Voting Securities
beneficially owned by any of them as of the applicable record date for such
meeting in favor of the election to the Company Board of the Persons nominated
by the Company Board for election to the Company Board at such meeting; and (b)
except as otherwise instructed by a vote of at least a majority of the members
of the Company Board, not vote, or cause to be voted, any such Company Voting
Securities in favor of the removal from the Company Board of any director or in
favor of any candidate or slate of candidates for election to the Company Board
not nominated by the Company Board.
6.2. At any meeting of the stockholders of the Company held at any
time between the date of this Agreement and the earlier to occur of (a) the
expiration of the Term or (b) Mr. Kirk's resignation from the Company Board (if
he is elected thereto), the Stockholders shall, with respect to any proposal to
be voted upon at such meeting other than the election of candidates to the
Company Board or the removal of any member of the Company Board, either (the
choice between the following alternatives being within the sole discretion of
the Stockholders): (i) vote, or cause to be voted, all Company Voting Securities
beneficially owned by any of them as of the applicable record date for such
meeting in accordance with the recommendation of at least a majority of the
Company Board with respect to such proposal; or (ii) vote, or cause to be
voted, all such Company Voting Securities in the same proportion as the
percentage of votes cast by the other holders of Company Voting Securities in
favor of, against and abstaining from such proposal.
6.3. At any meeting of the stockholders of the Company held at any
time between the date of this Agreement and the earlier to occur of (a) the
expiration of the Term or (b) Mr. Kirk's resignation from the Company Board (if
he is elected thereto), the Stockholders shall cause all Company Voting
Securities beneficially owned by any of them or any of their respective
Affiliates, Associates or Representatives to be present, in person or by proxy,
so that all such Company Voting Securities can be counted for the purpose of
determining the presence of a quorum at each such meeting.
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6.4. From the date of this Agreement until the earlier to occur of
(a) the expiration of the Term or (b) Mr. Kirk's resignation from the Company
Board (if he is elected thereto), none of the Stockholders, nor any of their
Affiliates, Associates or Representatives, shall, directly or indirectly,
Beneficially own any Company Voting Securities exceeding, in the aggregate
among all of the Stockholders and their respective Affiliates, Associates and
Representatives, 7.2% of the then-outstanding Company Voting Securities. Any
acquisitions of beneficial ownership of Company Voting Securities by any of the
Stockholders, or their respective Affiliates, Associates or Representatives,
during the period referred to in the immediately preceding sentence shall be
made in a manner consistent with the then-applicable policies of the Company
Board regarding compliance with the Securities Acts and transactions in
Company Voting Securities by members of the Company Board and their Affiliates
(collectively, the "Company Policies") and in compliance with all applicable
laws.
6.5. From the date of this Agreement until the earlier to occur of
(a) the expiration of the Term or (b) Mr. Kirk's resignation from the Company
Board (if he is elected thereto), none of the Stockholders shall dispose of any
Company Voting Securities they currently Beneficially own unless the Company
Board (through its Chairman) receives 2 business days prior written notice of
the applicable Stockholder's intention with respect to the disposition,
including the details thereof (by way of example only, the number of Company
Voting Securities to be disposed of, and the proposed price and buyer or other
transferee or a statement of its intention to engage in open market sale);
provided, however, that the foregoing notice requirement shall not apply to
open-market sales by the Stockholders of less than 1% of the outstanding Company
Common Stock in the aggregate in any 90-day period provided such sales are
effected in accordance with the Company Policies. Any disposition of beneficial
ownership of Company Voting Securities by any of the Stockholders during the
period referred to in the immediately preceding sentence shall be made in a
manner consistent with Company Policies and in compliance with all applicable
laws.
7. SPECIAL RELEASES AND COVENANTS NOT TO SUE
7.1. The Company: (a) fully releases, remises, exonerates forever
and unconditionally discharges each of the Stockholders and their respective
Affiliates, Associates, Representatives, employees, agents and advisors (each, a
"Stockholder Releasee") from any and all liability and responsibility for any
and all Company Claims (as hereinafter defined) and; (b) covenants and agrees
not to participate in, commence or permit (to the extent within its control) the
assertion or commencement of any demand, allegation, litigation, proceeding or
action relating to any Company Claim, and not to encourage, assist or cooperate
with any Person in pursuing or asserting any Company Claim, against any
Stockholder Releasee. As used in this agreement, "Company Claim" means any
actual or alleged liability, claim, action, suit, cause of action, obligation,
debt,
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controversy, promise, contract, lien, judgement, account, reckoning, bond,
bill, covenant, agreement, demand, of any kind or nature, loss, cost, damage,
penalty or expense (including, without limitation, reasonable attorneys' fees
and expenses, and the cost of investigation and litigation), whether in law or
in equity, whether known or unknown, whether matured or unmatured and whether
foreseen or unforeseen, that the Company may or could have had or now or
hereafter may have, for, upon, or by reason of, any matter, cause or thing
whatsoever resulting from, arising out of, relating to, connected in any way
with, or alleged, suggested or mentioned in connection with, (i) the Proxy
Contest or any part or aspect thereof, (ii) any action taken, or statement made,
in connection with the Proxy Contest, (iii) the acquisition or ownership of any
shares of Company Common Stock by any of the Stockholder Releasees, or (iv) any
action, failure to act, representation, event, transaction, occurrence or other
subject matter resulting from, arising out of, relating to, connected in any way
with, or alleged, suggested or mentioned, in connection with the foregoing.
7.2. The Stockholders jointly and severally: (a) fully release,
revise, exonerate and forever and unconditionally discharge the Company and each
of its Affiliates, Associates, Representatives, employees, agents and advisors
(each, a "Company Releasee") from any and all liability and responsibility for
any and all Stockholder Claims (as hereinafter defined); and (b)covenant and
agree not to participate in, commence or permit (to the extent within its
respective control) the assertion or commencement of any demand, allegation,
litigation, proceeding or action relating to any Stockholder Claim, and not to
encourage, assist or cooperate with any Person in pursuing or asserting any
Stockholder Claim against any Company Releasee. As used in this Agreement,
"Stockholder Claim" means any actual or alleged liability, claim, action, suit,
cause of action, obligation, debt, controversy, promise, contract, lien,
judgment, account, reckoning, bond, bill, covenant, agreement, demand of any
kind or nature, loss, cost, damage, penalty or expense (including, without
limitation, reasonable attorneys' fees and expenses, and the costs of
investigation and litigation), whether in law or in equity, whether known or
unknown, whether matured or unmatured and whether foreseen or unforeseen, that
any Stockholder may or could have had or now or hereafter may have, for, upon,
or by reason of, any matter, cause or thing whatsoever resulting from, arising
out of, relating to, connected in any way with, or alleged, suggested or
mentioned in connection with, (i) the Proxy Contest or any part or aspect
thereof, (ii) any action taken, or statement made, in connection with the Proxy
Contest, or (iii) any action, failure to act, representation, event,
transaction, occurrence or other subject matter resulting from, arising out of,
relating to, connected in any way with, or alleged, suggested or mentioned in
connection with the foregoing.
7.3. The Company, in connection with the release and covenant
contained in Section 7.1, and each of the Stockholders, in connection with the
release and covenant contained in Section 7.2, each hereby waive the provisions
of 1542 of the California Civil
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Code but only to the extent it applies to their respective releases contained in
the applicable such Section. Section 1542 of the California Civil Code provides
as follows:
A general release does not extend the claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected settlement
with the debtor.
7.4. The Company expressly acknowledges that each Stockholder
Releasee that is not a Stockholder is an intended third party beneficiary of
the release and covenant contained in Section 7.1 and the Stockholders jointly
and severally acknowledge that each Company Releasee other than the Company is
an intended third party beneficiary of the release and covenant contained in
Section 7.2.
8. CERTAIN REPRESENTATIONS AND WARRANTIES
8.1. The Company represents and warrants to each of the Stockholders
that: (a) its execution, delivery and performance of this Agreement has been
approved by the Company Board and does not violate its Certificate of
Incorporation, Bylaws or any agreement to which it is a party; and (b) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally.
8.2. The Stockholders jointly and severally represent to the Company
that: (a) the execution, delivery and performance of this Agreement by RJK,
Kirkfield and the Plan have been approved by their respective managers, members,
administrators, or other governing bodies or authorities, as the case may be,
and does not violate their respective organizational or constituent document,
(b) their execution, delivery and performance of this Agreement does not violate
any agreement to which any of them is a party; (c) this Agreement constitutes a
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally; (d) they have consulted with counsel of their choice in
connection with their decision to enter into and be bound by this Agreement; and
(e) Recital A to this Agreement is a true statement of their current aggregate
beneficial ownership of Company Common Stock and, to their best knowledge, after
due inquiry, none of their respective Affiliates, Associates or Representatives
Beneficially owns any other Company Voting Securities.
10
<PAGE>
9. MISCELLANEOUS
9.1. This Agreement constitutes the entire agreement of the parties
with respect to its subject matter and supersedes any and all prior
representations, agreements or understandings, whether written or oral, between
or among any of them with respect to such subject matter. This Agreement may be
amended only by a written agreement duly executed by the parties.
9.2. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without regard to its conflict of law
principles. Exclusive jurisdiction to resolve any dispute arising under or in
connection with this Agreement is hereby conferred on the Delaware Chancery
Court (or, if such Court determines that it lacks jurisdiction over the
particular dispute, any other applicable court of the State of Delaware) or, if
the dispute involves issues of federal law or over which the Delaware Chancery
Court (or such other court of the State of Delaware) lacks or declines
jurisdiction, on the United States Federal District Court for the District of
Delaware. The Parties hereby submit to the exclusive jurisdiction of each of
such courts.
9.3. This Agreement may not be assigned by any Party without the
prior written consent of the other Parties. This Agreement shall be binding
upon, and inure to the benefit of, the respective successors and permitted
assigns of the Parties. Except as expressly set forth in Section 7.4, this
Agreement shall confer no rights or benefits upon any Person other than the
Parties.
9.4. Any waiver by any Party of a breach of any provision of this
Agreement shall not be deemed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement.
9.5. This Agreement may be executed in counterparts, each of which
shall constitute an original but all of which shall together constitute a single
instrument.
9.6. The Stockholders jointly and severally covenant that they shall
each use their commercially reasonable efforts to cause the Stockholder Nominees
other than Mr. Kirk to comply with the provisions of Section 5 to the same
extent as if such other Stockholder Nominees were express parties thereto.
9.7. The Company shall reimburse the Stockholders for 50% of their
actual documented out-of-pocket costs in respect of: (a) fees and expenses paid
and payable by them, in connection with services provided for the Proxy Contest,
to the law firm, public relations firm and proxy solicitation firm that have
advised them in connection with the Proxy Contest; and (b) amounts paid and
payable to ADP Proxy Services in respect of the dissemination of the written
materials issued by the Stockholders during the course of the Proxy Contest.
11
<PAGE>
9.8 Without Mr. Kirk's prior consent (which shall not be
unreasonably withheld), the Company shall not: (a) change the date on which the
2000 Annual Meeting is currently scheduled to convene; (b) hold the 2001 Annual
Meeting later than June 1, 2001; or (c) amend the Advance Notice Bylaws during
the Term.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties as of the date first above written.
SCIOS INC. RANDAL J. KIRK
/s/ Richard B. Brewer /s/ Randal J. Kirk
By:______________________________ _______________________________
Richard B. Brewer, Randal J. Kirk
President and Chief
Executive Officer
RJK, LLC
/s/ Randal J. Kirk
By:____________________________
Randal J. Kirk
Manager
KIRKFIELD, LLC
/s/ Randal J. Kirk
By:____________________________
Randal J. Kirk
Manager
THE KIRK FAMILY INVESTMENT PLAN
/s/ Randal J. Kirk
By:____________________________
Randal J. Kirk, individually
and as attorney-in-fact for
each of Donna P. Kirk, Julian
P. Kirk, Martin G. Kirk and
Kellie Leigh Banks
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<PAGE>
Exhibit 4.1
FORM OF JOINT PRESS RELEASE
[Intentionally omitted; see Exhibit 99.2]
14
[SCIOS LOGO]
820 West Maude Avenue
Sunnyvale, CA 94086
www.sciosinc.com
CONTACT:
Wendy Carhart For Randal J. Kirk:
Scios Inc. Caroline Gentile
408/616-8325 Kekst and Company
or 212/521-4800
Stanley J. Kay
MacKenzie Partners, Inc.
212/929-5940
FOR IMMEDIATE RELEASE:
SCIOS AND R. J. KIRK AGREE TO END PROXY CONTEST
Parties Focused On Building Stockholder Value
SUNNYVALE, CALIFORNIA and RADFORD, VIRGINIA--January 31, 2000--Scios Inc.
(NASDAQ:SCIO) and Randal J. Kirk jointly announced today a definitive agreement
which enables Scios management to move forward with its business strategy and
expands the board of directors, if elected by stockholders, to one that will,
together with management, report beneficial ownership of nearly ten percent of
the company's fully diluted shares.
Under the agreement, which ends Mr. Kirk's proxy solicitation to elect a new
slate of directors, Mr. Kirk will be added to the slate of candidates nominated
by the Scios Board for election as directors at the 2000 annual meeting of
stockholders to be held on February 28, 2000. This will raise the number of
Board candidates to eight, including the seven current Scios Board members who
are standing for re-election. If elected, Mr. Kirk as well as all other
directors will serve for a one-year term.
Accordingly, Mr. Kirk and certain entities he controls, which own approximately
5.2% of Scios' outstanding shares will vote their Scios shares in favor of the
Board's nominees at the upcoming annual meeting.
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<PAGE>
January 31, 2000
Page 2
Randal J. Kirk stated, "I strongly believe that there is substantial shareholder
value to be realized at Scios as evidenced by the size of my holdings, and I am
pleased to be nominated to a slate of this caliber. I am convinced that
Natrecor(R), for example, is a product with extremely attractive commercial
potential, and that Scios' management should be in a position to devote its full
energies to obtaining FDA approval for this product. At the same time, Scios'
offer to have me on its board will enable me, if elected, to work with the other
directors and management to build value for all Scios stockholders."
Donald B. Rice, Scios' Chairman, and Richard B. Brewer, President and Chief
Executive Officer, said, "The priority of the board and management of Scios is
to achieve enhanced value for all stockholders. This negotiated agreement is
consistent with that priority. By ending a distractive situation we can now
devote everyone's energies to the business of growing Scios. Scios can now move
forward with a board that is strong in business experience, industry expertise
and stockholder representation. We believe Mr. Kirk can bring a valuable
perspective to the board."
Consistent with the agreement's spirit of cooperation, Mr. Kirk and his entities
have agreed to certain "stand still" provisions. Both parties will file the
definitive settlement agreement with the SEC shortly and Scios will be
supplementing its proxy statement to add Mr. Kirk as a nominee to its Board.
Scios, Inc.
Scios is a biopharmaceutical company engaged in the discovery, development, and
commercialization of novel human therapeutics. Scios has commercial or research
and development relationships with Chiron Corporation, The DuPont
Pharmaceuticals Company, Eli Lilly and Company, GenVec Inc., Kaken
Pharmaceutical Co., Ltd., and Novo Nordisk A/S of Denmark. Scios' Psychiatric
Sales and Marketing Division successfully markets seven psychiatric products,
including co-promotion arrangements with Janssen Pharmaceutica's Risperdal(R)
(risperidone) and SmithKline Beecham's Paxil(R) (paroxetine hydrochloride).
Additional information on Scios is available at its web site located at
www.sciosinc.com and in the Company's various filings with the Securities and
Exchange Commission.
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