SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 12, 2000
SCIOS INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-11749 95-3701481
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
820 West Maude Avenue, Sunnyvale, California 94086
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (408) 616-8200
<PAGE>
Item 5. Other Events
On January 12, 2000, Scios Inc. announced its Board of Directors had
adopted a retention program applicable to all employees. The program is
intended to encourage employees to remain with the Company despite the potential
instability and uncertainty created by the proxy contest threatened by Randal J.
Kirk.
The program provides that any employee who is involuntarily terminated
without cause or who voluntarily terminates his or her employment for good
reason within 12 months after a change of control is entitled to a lump sum cash
payment and continuation of health benefits based on the employee's level within
the Company. The program will expire if a change of control has not occurred by
December 31, 2001, unless extended by the Board. A change of control under the
program includes significant changes in the ownership of the Company due to
change of control transactions as well as a change in a majority of the current
Board.
The program consists of agreements specific to six groups of employees.
Copies of the agreements are attached as exhibits.
Exhibits.
99.1 Press Release dated January 12, 2000
99.2 Scios Inc. Change of Control Severance Plan:
Levels 0-17
99.3 Scios Inc. Change of Control Severance Plan:
Level 12 PPR (Psychiatric Sales Representatives)
99.4 Scios Inc. Change of Control Severance Plan:
Levels 18-20
99.5 Scios Inc. Change of Control Severance Plan:
Levels 21-24
99.6 Form of Scios Inc. Change of Control Severance Plan:
Corporate Officers
99.7 Form of Scios Inc. Change of Control Severance Plan:
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf of the
undersigned, thereunto duly authorized.
SCIOS INC.
/S/
Date: January 24, 2000 By:____________________________
John H. Newman
Senior Vice President,
General Counsel and Secretary
<PAGE>
INDEX TO EXHIBITS
SCIOS INC.
Report on Form 8-K dated January 24, 2000
Exhibit Description Method of Filing
99.1 Press Release dated January 12, 2000 Filed electronically herewith
99.2 Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Levels 0-17
99.3 Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Level 12 PPR
(Psychiatric Sales Representatives)
99.4 Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Levels 18-20
99.5 Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Levels 21-24
99.6 Form of Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Corporate Officers
99.7 Scios Inc. Change of Control Filed electronically herewith
Severance Plan: Chief Executive
Officer
EXHIBIT 99.1
[SCIOS LETTERHEAD]
CONTACT:
Wendy Carhart
Scios Inc.
408/616-8325
or
Stanley J. Kay
MacKenzie Partners, Inc.
212/929-5940
FOR IMMEDIATE RELEASE:
SCIOS BOARD ADOPTS EMPLOYEE RETENTION PROGRAM
SUNNYVALE, CALIFORNIA - January 12, 2000 - Scios Inc. (NASDAQ: SCIO) announced
today that its Board of Directors has adopted a two-year retention program
applicable to all employees. The program is intended to encourage employees to
remain with the Company despite the potential instability and uncertainty
created by the proxy contest threatened by Randal J. Kirk.
"The Scios Board believes it is in the best interests of the Company, its
stockholders and its employees to adopt a retention program for all our valued
employees to ensure their continued commitment as Scios moves forward with our
focused new business plan," said Donald B. Rice, Ph.D., Chairman of Scios' Board
of Directors. "Following the strides Scios made under its new leadership
throughout the past year, the Board felt this short-term action was necessary to
minimize the impact of the threatened proxy fight and the inherent distraction
it could cause. Our retention program was thoroughly reviewed to make certain
that it is consistent with similar programs."
"Retaining our scientists, researchers, and other staff is critical to our
Natrecor and p38-kinase inhibitor programs - the two key products in our
pipeline." added Richard B. Brewer, President and Chief Executive Officer.
"Considering how highly-competitive the market is for skilled employees in our
industry, the entire Board believes it is important at this critical time to
provide our employees with appropriate protection and incentives."
-- more --
<PAGE>
January 12, 2000
Page 2
The program provides that any employee who is involuntarily terminated without
cause or who voluntarily terminates his or her employment for good reason within
12 months after a change of control is entitled to a lump sum cash payment and
continuation of health benefits based on the employee's level within the
Company. The program will expire if a change of control has not occurred by
December 31, 2001, unless extended by the Board. A change of control under the
program includes significant changes in the ownership of the Company due to
change of control transactions as well as a change in a majority of the current
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 on 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. For information about the Year 2000 Annual Meeting, visit
www.sciosinc.com/election.
EXHIBIT 99.2
[Scios Logo]
To: Scios Employees in Levels 0-17
From: The Board of Directors
Re: Scios Inc. Change of Control Severance Plan: Levels 0-17
Date: January 11, 2000
The Board of Directors of the Company has approved the Scios Inc.
Change of Control Severance Plan: Levels 0-17 (the "Plan") which provides
certain severance benefits for you, effective immediately, in the event that you
lose your job as a result of a change of control of Scios Inc. that occurs at
any time on or after January 11, 2000 and on or prior to December 31, 2001 (the
"Plan Term").
All words that appear in italics in this memorandum are defined in
Attachment A to this memorandum.
Severance Benefits. If your employment is involuntarily terminated for
any reason (other than for Cause, your death or your Disability), or you
voluntarily terminate your employment for Good Reason, in either case, within
365 days on or after a Change of Control occurring during the Plan Term, you
will be entitled to receive the following payments and benefits:
(a) A lump sum severance payment equal to two times your
weekly Compensation for each full year you have been employed by the Company;
provided that your minimum severance payment will be equal to 12 times your
weekly Compensation. The severance amount to which you are entitled will be paid
to you in cash within 15 calendar days after the date your employment is
terminated and your general release described below becomes irrevocable.
(b) Payment by the Company for up to three months of COBRA for
continuation of health care benefits (including any medical, dental and vision
coverage) for you and your dependents under the same plans or substantially
similar plan(s) established by the Company or its subsidiaries thereafter. Such
health coverage will be paid for by the Company only to the same extent as if
you were still employed by the Company, and you will be required to pay for such
health benefits to the same extent that you would be required to do so if you
were still employed by the Company. These benefits will terminate on the date
you become covered under any other group health plan not maintained by the
Company or its subsidiaries which provides equal or greater benefits than such
plan and which does not exclude any pre-existing condition that you or your
dependents may have at that time.
(c) Provision of outplacement services by an organization
selected by the Company up to a maximum cost of $1,800.
<PAGE>
Withholding of Taxes. The Company will withhold from any of the
foregoing amounts payable to you all federal, state, city or other taxes
required by applicable law to be withheld by the Company.
Other Benefits. The severance benefits described here are intended to
be provided in lieu of and to replace any similar or duplicative benefits to
which you may be entitled from the Company or its subsidiaries in connection
with the termination of your employment after a Change of Control occurring
during the Plan Term under any other severance plan, agreement, policy or
program. This Plan does not obligate the Company to provide you or any other
employees with any severance benefits if your employment terminates under
circumstances not covered by this Plan. However, this is not intended to reduce
any amounts otherwise payable, or in any way diminish your rights under any
incentive, retirement, pension, profit sharing, stock purchase or benefit plan
or other arrangement not related to severance following a Change of Control.
These severance benefits will not affect your rights to any stock options,
restricted stock or other equity interests granted by the Company now or in the
future.
No Employment. This Plan is not an employment agreement and nothing in
this Plan requires you to stay in the employment of the Company, requires the
Company to retain you in your present position or any other position, or changes
the status of your employment at will.
No Setoff. The Company's obligation to make severance payments to you
under this Plan and otherwise to perform its obligations will not be affected by
any circumstances, including, but not limited to, any setoff, counterclaim,
recoupment, defense or other right which the Company or its subsidiaries may
have against you or others.
Claims and Disputes. You will have the right (but not the obligation)
to elect (in lieu of litigation) to have any dispute arising under or in
connection with this Plan which is not otherwise resolved through the claims
procedure described in Attachment B settled by arbitration, conducted by one
arbitrator sitting in a location selected by you within fifty (50) miles from
the location of your job with the Company in accordance with the rules of the
American Arbitration Association then in effect. Judgement may be entered on the
award of the arbitrator in any court having jurisdiction. All arbitration
expenses, including all attorney fees incurred in good faith, will be paid by
the Company. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
Legal Fees. If the Company refuses or fails to provide you with any
severance benefits under this Plan or contests the validity of the Plan or your
rights to benefits, the Company will pay, as they become due, all legal fees,
costs of litigation and other expenses incurred in good faith by you. You shall
be conclusively presumed to have acted in good faith unless a court makes a
final determination not otherwise subject to appeal to the contrary.
Notice of Termination. Following a Change of Control occurring during
the Plan Term, any purported termination of your employment by the Company or
its subsidiaries shall be communicated by written notice which will indicate, if
it is based on Cause, the specific reasons relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination for Cause.
<PAGE>
Term. This Plan will expire on the last day of the Plan Term (i.e.,
December 31, 2001) if a Change of Control has not occurred by that date. If a
Change of Control occurs on or before that date, the Plan will continue in
effect and not expire until 366 calendar days from and including the date of the
Change of Control, at which time the Plan will expire except if you become
entitled to the severance benefits described above prior to such time. If you
become entitled to severance benefits, the Plan will continue until you or any
other person covered have received in full all severance payments and other
benefits due.
Amendment. This Plan may not be terminated or amended in any manner
which may adversely affect your rights under it, unless you expressly agree.
Successor. The Company will require any successor to its business or
substantially all of its assets to assume and agree to perform the Company's
obligations to you under this Plan.
ERISA. This Plan is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). See Attachment B, which is part of the Plan,
for a statement of certain Plan information and the rules applicable under
ERISA.
General Release. A condition to your receipt of any severance payments
under this Plan will be your execution and delivery (and the expiration of any
applicable revocability period given by law) of a general release as described
in Attachment C in a form reasonably satisfactory to the Company. The release
will also have (a) appropriate provisions necessary to insure that it is valid
and enforceable under applicable laws, including the Older Workers Benefit
Protection Act and (b) a waiver of California Civil Code Section 1542 (which
provides that unless you specifically agree to release claims you do not know
about, they are not released by a general release). Your payments will be
considered independent consideration made in exchange for your release.
We believe this Plan will help satisfy some of the concern you may have
in this uncertain period. If you have any questions about your benefits under
this Plan, please call Lauretta C. Cesario at (408) 616-8306.
Sincerely,
/s/
Richard B. Brewer
President and CEO
<PAGE>
Exhibit A
Definitions
Whenever used in this memorandum, the following italicized words have
the meanings set forth below:
"Cause" means a termination for any of the following reasons: (i) engaging in
intentional misconduct which would tend to discredit the Company or your
position; (ii) being convicted of a felony; (iii) committing an act of fraud
against the Company or the willful material misappropriation of property
belonging to the Company; (iv) materially breaching any proprietary information
agreement between you and the Company or (v) willfully disregarding your duties
despite adequate warnings from the Company.
"Change of Control" of the Company means and includes any of the following:
o "Any person" or "group" (as those terms are defined in the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder)
is or becomes, on or prior to December 31, 2001, the
"beneficial owner (as defined in Rule 13d-3 under the
Exchange Act)", directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the
voting power of then outstanding securities of the Company.
o Any person or group is or becomes, on or prior to December
31, 2001, the beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%)
or more of the voting power of the then outstanding
securities of the Company, unless such acquisition was
approved in advance by the Company's Board of Directors.
o The individuals who, as of the date hereof, are members of
the Company's Board of Directors (the "Existing Directors"),
cease, on or prior to December 31, 2001, for any reason, to
constitute more than fifty percent (50%) of the number of
authorized directors of the Company as determined in the
manner prescribed in the Company's Certificate of
Incorporation and Bylaws; provided, however, that if the
appointment, or the election, or nomination for election, by
the Company's stockholders of any new director, was approved
by a vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an Existing
Director; provided further, however, that no individual
shall be considered an Existing Director if such individual
initially assumed office as a result of either an actual or
threatened election contest (as described in Rule 14a-11 or,
effective January 24, 2000, Rule 14a-12(c) promulgated under
the Exchange Act) or other actual or threatened solicitation
of proxies by or on behalf of anyone other than the Board of
Directors (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any election contest
or Proxy Contest.
<PAGE>
o The consummation, on or prior to December 31, 2001, of a
merger, consolidation or reorganization to which the Company
is a party, whether or not the Company is the person
surviving or resulting therefrom, in one transaction or a
series of related transactions, to any person(s) other than
a subsidiary, provided, however, that no such transaction
shall constitute a "Change of Control" under this clause if
the persons who were the stockholders of the Company
immediately before the consummation of such transaction are
the beneficial owners, immediately following the
consummation of such transaction, of fifty percent (50%) or
more of the combined voting power of the then outstanding
voting securities of the person surviving or resulting from
any merger, consolidation or reorganization.
o The consummation, on or prior to December 31, 2001, of a
sale, assignment, lease, conveyance or other disposition of
50% or more of the assets or assets representing 50% or more
of the earning power of the Company, in one or a series of
related transactions to any Person(s) other than a
Subsidiary.
o A complete liquidation of the Company.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Compensation" means your base salary per week at the time your employment is
terminated attributable to your employment with the Company and/or any of its
Subsidiaries (including, but not limited to, any amounts excluded at your
election from your gross income for federal income tax purposes pursuant to
Section 125 or Section 401(k) of the Internal Revenue Code of 1986, as amended,
or deferred pursuant to any Company or Subsidiary plan or program).
"Disability" means a physical or mental infirmity which substantially impairs
your ability to perform your material duties for a period of at least one
hundred eighty (180) consecutive calendar days and, as a result of such
Disability, you have not returned to your full-time regular employment prior to
termination.
"Good Reason" means either of the following: (i) any material breach by the
Company of any provision of this Plan; or (ii) a reduction in the amount equal
to the sum of (a) your total annual cash salary and (b) your bonus opportunity,
if any, in each case as in effect on the date hereof or as the same may be
increased from time to time.
<PAGE>
Attachment B
ERISA Supplement
Rules applicable under the Employee Retirement Security Act (ERISA) to
the Scios Inc. Change of Control Severance Plan: Levels 0-17 (the "Plan"):
Claims Procedure. All claims and appeals of denied claims under this
Plan shall be processed by the Plan Administrator. A claim must be filed in
writing within 90 days of the time it arises. The Plan Administrator shall
respond to the claim within 90 days unless a longer time period (up to an
additional 90 days) is required and proper notice is given. If a claim is
denied, a written denial shall be issued which contains the information required
by the Employee Retirement Income Security Act of 1974 (ERISA). Review of a
denied claim may be requested by written application to the Plan Administrator
within 60 days of the denial. The Plan Administrator shall complete the review
within 60 days of the request unless a longer period (up to an additional 60
days) is required and proper notice is given. The decision on appeal shall be in
writing and shall contain the information required by ERISA. The Plan
Administrator may adopt rules which specify the procedures for a claim and
review in more detail and such procedures shall be binding to the same extent as
if originally included in this Plan.
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
this memorandum, and its attachments, also constitutes the summary plan
description required by ERISA. The Plan sponsor is Scios Inc. which bears the
costs of all the benefits under the Plan. The Employer Identification number of
Scios is 95-3701481; and the Plan number assigned by Scios is 502. The Plan
Administrator's name, business address, and telephone number are: Scios Inc.,
820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The Plan
Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
<PAGE>
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
a suit in a state or federal court. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
Governing Law. The Plan shall be interpreted, administered, and
enforced in accordance with ERISA and the rights of the participants and all
other person shall be determined in accordance with that law. To the extent that
state law is applicable, however, the substantive laws of the state of
California shall govern.
<PAGE>
Attachment C
Provisions of General Release
The release will provide that your acceptance of severance benefits
under the Plan will constitute a full and complete release by you of any and all
claims you may have against the Company, any of its past, present or future
stockholders or any of their respective officers, directors, employees, and
affiliates (past, present or future), including, but not limited to, claims you
might have relating to your employment and/or cessation of employment with the
Company, including without limitation, tort, contract and common law claims and
claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, or any
other similar federal, state or local statute, rule or regulation; provided
that, there shall be excluded from the scope of such general release the
following:
o claims that you may have against the Company for
reimbursement of reasonable and necessary business expenses
incurred by you during the course of your employment;
o claims that may be made by you for payment of accrued
salary, stock options, pension benefits or other continuing
benefits as specifically provided for in the Plan.
The release will also have the provisions set forth in the memorandum.
EXHIBIT 99.3
[Scios Logo]
To: Scios Professional Psychiatric Sales Representatives
From: The Board of Directors
Re: Scios Inc. Change of Control Severance Plan: Level 12 PPR
Date: January 11, 2000
The Board of Directors of the Company has approved the Scios Inc.
Change of Control Severance Plan: Level 12-PPR (the "Plan") which provides
certain severance benefits for you, effective immediately, in the event that you
lose your job as a result of a change of control of Scios Inc. that occurs at
any time on or after January 11, 2000 and on or prior to December 31, 2001 (the
"Plan Term").
All words that appear in italics in this memorandum are defined in
Attachment A to this memorandum.
Severance Benefits. If your employment is involuntarily terminated for
any reason (other than for Cause, your death or your Disability), or you
voluntarily terminate your employment for Good Reason, in either case, within
365 days on or after a Change of Control occurring during the Plan Term, you
will be entitled to receive the following payments and benefits:
(a) A lump sum severance payment equal to two times your
weekly Compensation for each full year you have been employed by the Company;
provided that your minimum severance payment will be equal to 12 times your
weekly Compensation. The severance amount to which you are entitled will be paid
to you in cash within 15 calendar days after the date your employment is
terminated and your general release described below becomes irrevocable.
(b) Payment by the Company for up to three months of COBRA for
continuation of health care benefits (including any medical, dental and vision
coverage) for you and your dependents under the same plans or substantially
similar plan(s) established by the Company or its subsidiaries thereafter. Such
health coverage will be paid for by the Company only to the same extent as if
you were still employed by the Company, and you will be required to pay for such
health benefits to the same extent that you would be required to do so if you
were still employed by the Company. These benefits will terminate on the date
you become covered under any other group health plan not maintained by the
Company or its subsidiaries which provides equal or greater benefits than such
plan and which does not exclude any pre-existing condition that you or your
dependents may have at that time.
(c) Provision of outplacement services by an organization
selected by the Company up to a maximum cost of $1,800.
<PAGE>
Withholding of Taxes. The Company will withhold from any of the
foregoing amounts payable to you all federal, state, city or other taxes
required by applicable law to be withheld by the Company.
Other Benefits. The severance benefits described here are intended to
be provided in lieu of and to replace any similar or duplicative benefits to
which you may be entitled from the Company or its subsidiaries in connection
with the termination of your employment after a Change of Control occurring
during the Plan Term under any other severance plan, agreement, policy or
program. This Plan does not obligate the Company to provide you or any other
employees with any severance benefits if your employment terminates under
circumstances not covered by this Plan. However, this is not intended to reduce
any amounts otherwise payable, or in any way diminish your rights under any
incentive, retirement, pension, profit sharing, stock purchase or benefit plan
or other arrangement not related to severance following a Change of Control.
These severance benefits will not affect your rights to any stock options,
restricted stock or other equity interests granted by the Company now or in the
future.
No Employment. This Plan is not an employment agreement and nothing in
this Plan requires you to stay in the employment of the Company, requires the
Company to retain you in your present position or any other position, or changes
the status of your employment at will.
No Setoff. The Company's obligation to make severance payments to you
under this Plan and otherwise to perform its obligations will not be affected by
any circumstances, including, but not limited to, any setoff, counterclaim,
recoupment, defense or other right which the Company or its subsidiaries may
have against you or others.
Claims and Disputes. You will have the right (but not the obligation)
to elect (in lieu of litigation) to have any dispute arising under or in
connection with this Plan which is not otherwise resolved through the claims
procedure described in Attachment B settled by arbitration, conducted by one
arbitrator sitting in a location selected by you within fifty (50) miles from
the location of your job with the Company in accordance with the rules of the
American Arbitration Association then in effect. Judgement may be entered on the
award of the arbitrator in any court having jurisdiction. All arbitration
expenses, including all attorney fees incurred in good faith, will be paid by
the Company. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
Legal Fees. If the Company refuses or fails to provide you with any
severance benefits under this Plan or contests the validity of the Plan or your
rights to benefits, the Company will pay, as they become due, all legal fees,
costs of litigation and other expenses incurred in good faith by you. You shall
be conclusively presumed to have acted in good faith unless a court makes a
final determination not otherwise subject to appeal to the contrary.
<PAGE>
Notice of Termination. Following a Change of Control occurring during
the Plan Term, any purported termination of your employment by the Company or
its subsidiaries shall be communicated by written notice which will indicate, if
it is based on Cause, the specific reasons relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination for Cause.
Term. This Plan will expire on the last day of the Plan Term (i.e.,
December 31, 2001) if a Change of Control has not occurred by that date. If a
Change of Control occurs on or before that date, the Plan will continue in
effect and not expire until 366 calendar days from and including the date of the
Change of Control, at which time the Plan will expire except if you become
entitled to the severance benefits described above prior to such time. If you
become entitled to severance benefits, the Plan will continue until you or any
other person covered have received in full all severance payments and other
benefits due.
Amendment. This Plan may not be terminated or amended in any manner
which may adversely affect your rights under it, unless you expressly agree.
Successor. The Company will require any successor to its business or
substantially all of its assets to assume and agree to perform the Company's
obligations to you under this Plan.
ERISA. This Plan is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). See Attachment B, which is part of the Plan,
for a statement of certain Plan information and the rules applicable under
ERISA.
General Release. A condition to your receipt of any severance payments
under this Plan will be your execution and delivery (and the expiration of any
applicable revocability period given by law) of a general release as described
in Attachment C in a form reasonably satisfactory to the Company. The release
will also have (a) appropriate provisions necessary to insure that it is valid
and enforceable under applicable laws, including the Older Workers Benefit
Protection Act and (b) a waiver of California Civil Code Section 1542 (which
provides that unless you specifically agree to release claims you do not know
about, they are not released by a general release). Your payments will be
considered independent consideration made in exchange for your release.
We believe this Plan will help satisfy some of the concern you may have
in this uncertain period. If you have any questions about your benefits under
this Plan, please call Lauretta C. Cesario at (408) 616-8306.
Sincerely,
/s/
Richard B. Brewer
President and CEO
<PAGE>
Exhibit A
Definitions
Whenever used in this memorandum, the following italicized words have
the meanings set forth below:
"Cause" means a termination for any of the following reasons: (i) engaging in
intentional misconduct which would tend to discredit the Company or your
position; (ii) being convicted of a felony; (iii) committing an act of fraud
against the Company or the willful material misappropriation of property
belonging to the Company; (iv) materially breaching any proprietary information
agreement between you and the Company or (v) willfully disregarding your duties
despite adequate warnings from the Company.
"Change of Control" of the Company means and includes any of the following:
o "Any person" or "group" (as those terms are defined in
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations
promulgated thereunder) is or becomes, on or prior to
December 31, 2001, the "beneficial owner (as defined in
Rule 13d-3 under the Exchange Act)", directly or
indirectly, of securities of the Company representing
fifty percent (50%) or more of the voting power of then
outstanding securities of the Company.
o Any person or group is or becomes, on or prior to
December 31, 2001, the beneficial owner, directly or
indirectly, of securities of the Company representing
twenty percent (20%) or more of the voting power of the
then outstanding securities of the Company, unless such
acquisition was approved in advance by the Company's
Board of Directors.
o The individuals who, as of the date hereof, are members
of the Company's Board of Directors (the "Existing
Directors"), cease, on or prior to December 31, 2001,
for any reason, to constitute more than fifty percent
(50%) of the number of authorized directors of the
Company as determined in the manner prescribed in the
Company's Certificate of Incorporation and Bylaws;
provided, however, that if the appointment, or the
election, or nomination for election, by the Company's
stockholders of any new director, was approved by a
vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an
Existing Director; provided further, however, that no
individual shall be considered an Existing Director if
such individual initially assumed office as a result of
either an actual or threatened election contest (as
described in Rule 14a-11 or, effective January 24,
2000, Rule 14a-12(c) promulgated under the Exchange
Act) or other actual or threatened solicitation of
proxies by or on behalf of anyone other than the Board
of Directors (a "Proxy Contest"), including by reason
of any agreement intended to avoid or settle any
election contest or Proxy Contest.
<PAGE>
o The consummation, on or prior to December 31, 2001, of
a merger, consolidation or reorganization to which the
Company is a party, whether or not the Company is the
person surviving or resulting therefrom, in one
transaction or a series of related transactions, to any
person(s) other than a subsidiary, provided, however,
that no such transaction shall constitute a "Change of
Control" under this clause if the persons who were the
stockholders of the Company immediately before the
consummation of such transaction are the beneficial
owners, immediately following the consummation of such
transaction, of fifty percent (50%) or more of the
combined voting power of the then outstanding voting
securities of the person surviving or resulting from
any merger, consolidation or reorganization.
o The consummation, on or prior to December 31, 2001, of
a sale, assignment, lease, conveyance or other
disposition of 50% or more of the assets or assets
representing 50% or more of the earning power of the
Company, in one or a series of related transactions to
any Person(s) other than a Subsidiary.
o A complete liquidation of the Company.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Compensation" means your base salary per week at the time your employment is
terminated attributable to your employment with the Company and/or any of its
Subsidiaries (including, but not limited to, any amounts excluded at your
election from your gross income for federal income tax purposes pursuant to
Section 125 or Section 401(k) of the Internal Revenue Code of 1986, as amended,
or deferred pursuant to any Company or Subsidiary plan or program). As a Level
12-PPR, your base salary per week shall be the average of your weekly pay over
either (1) the 6 month period immediately preceding your termination or (2) the
6 month period immediately preceding the Change of Control, whichever is
greater.
"Disability" means a physical or mental infirmity which substantially impairs
your ability to perform your material duties for a period of at least one
hundred eighty (180) consecutive calendar days and, as a result of such
Disability, you have not returned to your full-time regular employment prior to
termination.
"Good Reason" means either of the following: (i) any material breach by the
Company of any provision of this Plan; or (ii) a reduction in the amount equal
to the sum of (a) your total annual cash salary and (b) your bonus opportunity,
if any, in each case as in effect on the date hereof or as the same may be
increased from time to time.
<PAGE>
Attachment B
ERISA Supplement
Rules applicable under the Employee Retirement Security Act (ERISA) to
the Scios Inc. Change of Control Severance Plan: Level 12 PPR (the "Plan"):
Claims Procedure. All claims and appeals of denied claims under this
Plan shall be processed by the Plan Administrator. A claim must be filed in
writing within 90 days of the time it arises. The Plan Administrator shall
respond to the claim within 90 days unless a longer time period (up to an
additional 90 days) is required and proper notice is given. If a claim is
denied, a written denial shall be issued which contains the information required
by the Employee Retirement Income Security Act of 1974 (ERISA). Review of a
denied claim may be requested by written application to the Plan Administrator
within 60 days of the denial. The Plan Administrator shall complete the review
within 60 days of the request unless a longer period (up to an additional 60
days) is required and proper notice is given. The decision on appeal shall be in
writing and shall contain the information required by ERISA. The Plan
Administrator may adopt rules which specify the procedures for a claim and
review in more detail and such procedures shall be binding to the same extent as
if originally included in this Plan.
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
this memorandum, and its attachments, also constitutes the summary plan
description required by ERISA. The Plan sponsor is Scios Inc. which bears the
costs of all the benefits under the Plan. The Employer Identification number of
Scios is 95-3701481; and the Plan number assigned by Scios is 502. The Plan
Administrator's name, business address, and telephone number are: Scios Inc.,
820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The Plan
Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
<PAGE>
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
a suit in a state or federal court. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
Governing Law. The Plan shall be interpreted, administered, and
enforced in accordance with ERISA and the rights of the participants and all
other person shall be determined in accordance with that law. To the extent that
state law is applicable, however, the substantive laws of the state of
California shall govern.
<PAGE>
Attachment C
Provisions of General Release
The release will provide that your acceptance of severance benefits
under the Plan will constitute a full and complete release by you of any and all
claims you may have against the Company, any of its past, present or future
stockholders or any of their respective officers, directors, employees, and
affiliates (past, present or future), including, but not limited to, claims you
might have relating to your employment and/or cessation of employment with the
Company, including without limitation, tort, contract and common law claims and
claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, or any
other similar federal, state or local statute, rule or regulation; provided
that, there shall be excluded from the scope of such general release the
following:
o claims that you may have against the Company for
reimbursement of reasonable and necessary business
expenses incurred by you during the course of your
employment;
o claims that may be made by you for payment of accrued
salary, stock options, pension benefits or other
continuing benefits as specifically provided for in the
Plan.
The release will also have the provisions set forth in the memorandum.
EXHIBIT 99.4
[Scios Logo]
To: Scios Employees in Levels 18-20
From: The Board of Directors
Re: Scios Inc. Change of Control Severance Plan: Levels 18-20
Date: January 11, 2000
The Board of Directors of the Company has approved the Scios Inc.
Change of Control Severance Plan: Levels 18-20 (the "Plan") which provides
certain severance benefits for you, effective immediately, in the event that you
lose your job as a result of a change of control of Scios Inc. that occurs at
any time on or after January 11, 2000 and on or prior to December 31, 2001 (the
"Plan Term").
All words that appear in italics in this memorandum are defined in
Attachment A to this memorandum.
Severance Benefits. If your employment is involuntarily terminated for
any reason (other than for Cause, your death or your Disability), or you
voluntarily terminate your employment for Good Reason, in either case, within
365 days on or after a Change of Control occurring during the Plan Term, you
will be entitled to receive the following payments and benefits:
(a) A lump sum severance payment equal to three times your
weekly Compensation for each full year you have been employed by the Company;
provided that your minimum severance payment will be equal to 12 times your
weekly Compensation. The severance amount to which you are entitled will be paid
to you in cash within 15 calendar days after the date your employment is
terminated and your general release described below becomes irrevocable.
(b) Payment by the Company for up to three months of COBRA for
continuation of health care benefits (including any medical, dental and vision
coverage) for you and your dependents under the same plans or substantially
similar plan(s) established by the Company or its subsidiaries thereafter. Such
health coverage will be paid for by the Company only to the same extent as if
you were still employed by the Company, and you will be required to pay for such
health benefits to the same extent that you would be required to do so if you
were still employed by the Company. These benefits will terminate on the date
you become covered under any other group health plan not maintained by the
Company or its subsidiaries which provides equal or greater benefits than such
plan and which does not exclude any pre-existing condition that you or your
dependents may have at that time.
<PAGE>
(c) Provision of outplacement services by an organization
selected by the Company up to a maximum cost of $5,000.
Withholding of Taxes. The Company will withhold from any of the
foregoing amounts payable to you all federal, state, city or other taxes
required by applicable law to be withheld by the Company.
Other Benefits. The severance benefits described here are intended to
be provided in lieu of and to replace any similar or duplicative benefits to
which you may be entitled from the Company or its subsidiaries in connection
with the termination of your employment after a Change of Control occurring
during the Plan Term under any other severance plan, agreement, policy or
program. This Plan does not obligate the Company to provide you or any other
employees with any severance benefits if your employment terminates under
circumstances not covered by this Plan. However, this is not intended to reduce
any amounts otherwise payable, or in any way diminish your rights under any
incentive, retirement, pension, profit sharing, stock purchase or benefit plan
or other arrangement not related to severance following a Change of Control.
These severance benefits will not affect your rights to any stock options,
restricted stock or other equity interests granted by the Company now or in the
future.
No Employment. This Plan is not an employment agreement and nothing in
this Plan requires you to stay in the employment of the Company, requires the
Company to retain you in your present position or any other position, or changes
the status of your employment at will.
No Setoff. The Company's obligation to make severance payments to you
under this Plan and otherwise to perform its obligations will not be affected by
any circumstances, including, but not limited to, any setoff, counterclaim,
recoupment, defense or other right which the Company or its subsidiaries may
have against you or others.
Claims and Disputes. You will have the right (but not the obligation)
to elect (in lieu of litigation) to have any dispute arising under or in
connection with this Plan which is not otherwise resolved through the claims
procedure described in Attachment B settled by arbitration, conducted by one
arbitrator sitting in a location selected by you within fifty (50) miles from
the location of your job with the Company in accordance with the rules of the
American Arbitration Association then in effect. Judgement may be entered on the
award of the arbitrator in any court having jurisdiction. All arbitration
expenses, including all attorney fees incurred in good faith, will be paid by
the Company. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
Legal Fees. If the Company refuses or fails to provide you with any
severance benefits under this Plan or contests the validity of the Plan or your
rights to benefits, the Company will pay, as they become due, all legal fees,
costs of litigation and other expenses incurred in good faith by you. You shall
be conclusively presumed to have acted in good faith unless a court makes a
final determination not otherwise subject to appeal to the contrary.
Notice of Termination. Following a Change of Control occurring during
the Plan Term, any purported termination of your employment by the Company or
its subsidiaries shall be
<PAGE>
communicated by written notice which will indicate, if it is based on Cause,
the specific reasons relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination for Cause.
Term. This Plan will expire on the last day of the Plan Term (i.e.,
December 31, 2001) if a Change of Control has not occurred by that date. If a
Change of Control occurs on or before that date, the Plan will continue in
effect and not expire until 366 calendar days from and including the date of the
Change of Control, at which time the Plan will expire except if you become
entitled to the severance benefits described above prior to such time. If you
become entitled to severance benefits, the Plan will continue until you or any
other person covered have received in full all severance payments and other
benefits due.
Amendment. This Plan may not be terminated or amended in any manner
which may adversely affect your rights under it, unless you expressly agree.
Successor. The Company will require any successor to its business or
substantially all of its assets to assume and agree to perform the Company's
obligations to you under this Plan.
ERISA. This Plan is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). See Attachment B, which is part of the Plan,
for a statement of certain Plan information and the rules applicable under
ERISA.
General Release. A condition to your receipt of any severance payments
under this Plan will be your execution and delivery (and the expiration of any
applicable revocability period given by law) of a general release as described
in Attachment C in a form reasonably satisfactory to the Company. The release
will also have (a) appropriate provisions necessary to insure that it is valid
and enforceable under applicable laws, including the Older Workers Benefit
Protection Act and (b) a waiver of California Civil Code Section 1542 (which
provides that unless you specifically agree to release claims you do not know
about, they are not released by a general release). Your payments will be
considered independent consideration made in exchange for your release.
We believe this Plan will help satisfy some of the concern you may have
in this uncertain period. If you have any questions about your benefits under
this Plan, please call Lauretta C. Cesario at (408) 616-8306.
Sincerely,
/s/
Richard B. Brewer
President and CEO
<PAGE>
Exhibit A
Definitions
Whenever used in this memorandum, the following italicized words have
the meanings set forth below:
"Cause" means a termination for any of the following reasons: (i) engaging in
intentional misconduct which would tend to discredit the Company or your
position; (ii) being convicted of a felony; (iii) committing an act of fraud
against the Company or the willful material misappropriation of property
belonging to the Company; (iv) materially breaching any proprietary information
agreement between you and the Company or (v) willfully disregarding your duties
despite adequate warnings from the Company.
"Change of Control" of the Company means and includes any of the following:
o "Any person" or "group" (as those terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations promulgated thereunder) is or becomes, on or prior to
December 31, 2001, the "beneficial owner (as defined in Rule 13d-3
under the Exchange Act)", directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the voting power
of then outstanding securities of the Company.
o Any person or group is or becomes, on or prior to December 31, 2001,
the beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the voting power
of the then outstanding securities of the Company, unless such
acquisition was approved in advance by the Company's Board of
Directors.
o The individuals who, as of the date hereof, are members of the
Company's Board of Directors (the "Existing Directors"), cease, on or
prior to December 31, 2001, for any reason, to constitute more than
fifty percent (50%) of the number of authorized directors of the
Company as determined in the manner prescribed in the Company's
Certificate of Incorporation and Bylaws; provided, however, that if
the appointment, or the election, or nomination for election, by the
Company's stockholders of any new director, was approved by a vote of
at least fifty percent (50%) of the Existing Directors, such new
director shall be considered an Existing Director; provided further,
however, that no individual shall be considered an Existing Director
if such individual initially assumed office as a result of either an
actual or threatened election contest (as described in Rule 14a-11 or,
effective January 24, 2000, Rule 14a-12(c) promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies by
or on behalf of anyone other than the Board of Directors (a "Proxy
Contest"), including by reason of any agreement intended to avoid or
settle any election contest or Proxy Contest.
<PAGE>
o The consummation, on or prior to December 31, 2001, of a merger,
consolidation or reorganization to which the Company is a party,
whether or not the Company is the person surviving or resulting
therefrom, in one transaction or a series of related transactions, to
any person(s) other than a subsidiary, provided, however, that no such
transaction shall constitute a "Change of Control" under this clause
if the persons who were the stockholders of the Company immediately
before the consummation of such transaction are the beneficial owners,
immediately following the consummation of such transaction, of fifty
percent (50%) or more of the combined voting power of the then
outstanding voting securities of the person surviving or resulting
from any merger, consolidation or reorganization.
o The consummation, on or prior to December 31, 2001, of a sale,
assignment, lease, conveyance or other disposition of 50% or more of
the assets or assets representing 50% or more of the earning power of
the Company, in one or a series of related transactions to any
Person(s) other than a Subsidiary.
o A complete liquidation of the Company.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Compensation" means your base salary per week at the time your employment is
terminated attributable to your employment with the Company and/or any of its
Subsidiaries (including, but not limited to, any amounts excluded at your
election from your gross income for federal income tax purposes pursuant to
Section 125 or Section 401(k) of the Internal Revenue Code of 1986, as amended,
or deferred pursuant to any Company or Subsidiary plan or program).
"Disability" means a physical or mental infirmity which substantially impairs
your ability to perform your material duties for a period of at least one
hundred eighty (180) consecutive calendar days and, as a result of such
Disability, you have not returned to your full-time regular employment prior to
termination.
"Good Reason" means either of the following: (i) any material breach by the
Company of any provision of this Plan; or (ii) a reduction in the amount equal
to the sum of (a) your total annual cash salary and (b) your bonus opportunity,
if any, in each case as in effect on the date hereof or as the same may be
increased from time to time.
<PAGE>
Attachment B
ERISA Supplement
Rules applicable under the Employee Retirement Security Act (ERISA) to
the Scios Inc. Change of Control Severance Plan: Levels 18-20 (the "Plan"):
Claims Procedure. All claims and appeals of denied claims under this
Plan shall be processed by the Plan Administrator. A claim must be filed in
writing within 90 days of the time it arises. The Plan Administrator shall
respond to the claim within 90 days unless a longer time period (up to an
additional 90 days) is required and proper notice is given. If a claim is
denied, a written denial shall be issued which contains the information required
by the Employee Retirement Income Security Act of 1974 (ERISA). Review of a
denied claim may be requested by written application to the Plan Administrator
within 60 days of the denial. The Plan Administrator shall complete the review
within 60 days of the request unless a longer period (up to an additional 60
days) is required and proper notice is given. The decision on appeal shall be in
writing and shall contain the information required by ERISA. The Plan
Administrator may adopt rules which specify the procedures for a claim and
review in more detail and such procedures shall be binding to the same extent as
if originally included in this Plan.
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
this memorandum, and its attachments, also constitutes the summary plan
description required by ERISA. The Plan sponsor is Scios Inc. which bears the
costs of all the benefits under the Plan. The Employer Identification number of
Scios is 95-3701481; and the Plan number assigned by Scios is 503. The Plan
Administrator's name, business address, and telephone number are: Scios Inc.,
820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The Plan
Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
<PAGE>
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
a suit in a state or federal court. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
Governing Law. The Plan shall be interpreted, administered, and
enforced in accordance with ERISA and the rights of the participants and all
other person shall be determined in accordance with that law. To the extent that
state law is applicable, however, the substantive laws of the state of
California shall govern.
<PAGE>
Attachment C
Provisions of General Release
The release will provide that your acceptance of severance benefits
under the Plan will constitute a full and complete release by you of any and all
claims you may have against the Company, any of its past, present or future
stockholders or any of their respective officers, directors, employees, and
affiliates (past, present or future), including, but not limited to, claims you
might have relating to your employment and/or cessation of employment with the
Company, including without limitation, tort, contract and common law claims and
claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, or any
other similar federal, state or local statute, rule or regulation; provided
that, there shall be excluded from the scope of such general release the
following:
o claims that you may have against the Company for
reimbursement of reasonable and necessary business
expenses incurred by you during the course of your
employment;
o claims that may be made by you for payment of accrued
salary, stock options, pension benefits or other
continuing benefits as specifically provided for in the
Plan.
The release will also have the provisions set forth in the memorandum.
EXHIBIT 99.5
[Scios Logo]
To: Scios Employees in Levels 21-24
From: The Board of Directors
Re: Scios Inc. Change of Control Severance Plan: Levels 21-24
Date: January 11, 2000
The Board of Directors of the Company has approved the Scios Inc.
Change of Control Severance Plan: Levels 21-24 (the "Plan") which provides
certain severance benefits for you, effective immediately, in the event that you
lose your job as a result of a change of control of Scios Inc. that occurs at
any time on or after January 11, 2000 and on or prior to December 31, 2001 (the
"Plan Term").
All words that appear in italics in this memorandum are defined in
Attachment A to this memorandum.
Severance Benefits. If your employment is involuntarily terminated for
any reason (other than for Cause, your death or your Disability), or you
voluntarily terminate your employment for Good Reason, in either case, within
365 days on or after a Change of Control occurring during the Plan Term, you
will be entitled to receive the following payments and benefits:
(a) A lump sum severance payment equal to four times your
weekly Compensation for each full year you have been employed by the Company;
provided that your minimum severance payment will be equal to 16 times your
weekly Compensation. The severance amount to which you are entitled will be paid
to you in cash within 15 calendar days after the date your employment is
terminated and your general release described below becomes irrevocable.
(b) Payment by the Company for up to three months of COBRA for
continuation of health care benefits (including any medical, dental and vision
coverage) for you and your dependents under the same plans or substantially
similar plan(s) established by the Company or its subsidiaries thereafter. Such
health coverage will be paid for by the Company only to the same extent as if
you were still employed by the Company, and you will be required to pay for such
health benefits to the same extent that you would be required to do so if you
were still employed by the Company. These benefits will terminate on the date
you become covered under any other group health plan not maintained by the
Company or its subsidiaries which provides equal or greater benefits than such
plan and which does not exclude any pre-existing condition that you or your
dependents may have at that time.
(c) Provision of outplacement services by an organization
selected by the Company up to a maximum cost of $6,000.
<PAGE>
Withholding of Taxes. The Company will withhold from any of the
foregoing amounts payable to you all federal, state, city or other taxes
required by applicable law to be withheld by the Company.
Other Benefits. The severance benefits described here are intended to
be provided in lieu of and to replace any similar or duplicative benefits to
which you may be entitled from the Company or its subsidiaries in connection
with the termination of your employment after a Change of Control occurring
during the Plan Term under any other severance plan, agreement, policy or
program. This Plan does not obligate the Company to provide you or any other
employees with any severance benefits if your employment terminates under
circumstances not covered by this Plan. However, this is not intended to reduce
any amounts otherwise payable, or in any way diminish your rights under any
incentive, retirement, pension, profit sharing, stock purchase or benefit plan
or other arrangement not related to severance following a Change of Control.
These severance benefits will not affect your rights to any stock options,
restricted stock or other equity interests granted by the Company now or in the
future.
No Employment. This Plan is not an employment agreement and nothing in
this Plan requires you to stay in the employment of the Company, requires the
Company to retain you in your present position or any other position, or changes
the status of your employment at will.
No Setoff. The Company's obligation to make severance payments to you
under this Plan and otherwise to perform its obligations will not be affected by
any circumstances, including, but not limited to, any setoff, counterclaim,
recoupment, defense or other right which the Company or its subsidiaries may
have against you or others.
Claims and Disputes. You will have the right (but not the obligation)
to elect (in lieu of litigation) to have any dispute arising under or in
connection with this Plan which is not otherwise resolved through the claims
procedure described in Attachment B settled by arbitration, conducted by one
arbitrator sitting in a location selected by you within fifty (50) miles from
the location of your job with the Company in accordance with the rules of the
American Arbitration Association then in effect. Judgement may be entered on the
award of the arbitrator in any court having jurisdiction. All arbitration
expenses, including all attorney fees incurred in good faith, will be paid by
the Company. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
Legal Fees. If the Company refuses or fails to provide you with any
severance benefits under this Plan or contests the validity of the Plan or your
rights to benefits, the Company will pay, as they become due, all legal fees,
costs of litigation and other expenses incurred in good faith by you. You shall
be conclusively presumed to have acted in good faith unless a court makes a
final determination not otherwise subject to appeal to the contrary.
Notice of Termination. Following a Change of Control occurring during
the Plan Term, any purported termination of your employment by the Company or
its subsidiaries shall be communicated by written notice which will indicate, if
it is based on Cause, the specific reasons relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination for Cause.
<PAGE>
Term. This Plan will expire on the last day of the Plan Term (i.e.,
December 31, 2001) if a Change of Control has not occurred by that date. If a
Change of Control occurs on or before that date, the Plan will continue in
effect and not expire until 366 calendar days from and including the date of the
Change of Control, at which time the Plan will expire except if you become
entitled to the severance benefits described above prior to such time. If you
become entitled to severance benefits, the Plan will continue until you or any
other person covered have received in full all severance payments and other
benefits due.
Amendment. This Plan may not be terminated or amended in any manner
which may adversely affect your rights under it, unless you expressly agree.
Successor. The Company will require any successor to its business or
substantially all of its assets to assume and agree to perform the Company's
obligations to you under this Plan.
ERISA. This Plan is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). See Attachment B, which is part of the Plan,
for a statement of certain Plan information and the rules applicable under
ERISA.
General Release. A condition to your receipt of any severance payments
under this Plan will be your execution and delivery (and the expiration of any
applicable revocability period given by law) of a general release as described
in Attachment C in a form reasonably satisfactory to the Company. The release
will also have (a) appropriate provisions necessary to insure that it is valid
and enforceable under applicable laws, including the Older Workers Benefit
Protection Act and (b) a waiver of California Civil Code Section 1542 (which
provides that unless you specifically agree to release claims you do not know
about, they are not released by a general release). Your payments will be
considered independent consideration made in exchange for your release.
We believe this Plan will help satisfy some of the concern you may have
in this uncertain period. If you have any questions about your benefits under
this Plan, please call Lauretta C. Cesario at (408) 616-8306.
Sincerely,
/s/
Richard B. Brewer
President and CEO
<PAGE>
Exhibit A
Definitions
Whenever used in this memorandum, the following italicized words have
the meanings set forth below:
"Cause" means a termination for any of the following reasons: (i) engaging in
intentional misconduct which would tend to discredit the Company or your
position; (ii) being convicted of a felony; (iii) committing an act of fraud
against the Company or the willful material misappropriation of property
belonging to the Company; (iv) materially breaching any proprietary information
agreement between you and the Company or (v) willfully disregarding your duties
despite adequate warnings from the Company.
"Change of Control" of the Company means and includes any of the following:
o "Any person" or "group" (as those terms are defined in
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations
promulgated thereunder) is or becomes, on or prior to
December 31, 2001, the "beneficial owner (as defined in
Rule 13d-3 under the Exchange Act)", directly or
indirectly, of securities of the Company representing
fifty percent (50%) or more of the voting power of then
outstanding securities of the Company.
o Any person or group is or becomes, on or prior to
December 31, 2001, the beneficial owner, directly or
indirectly, of securities of the Company representing
twenty percent (20%) or more of the voting power of the
then outstanding securities of the Company, unless such
acquisition was approved in advance by the Company's
Board of Directors.
o The individuals who, as of the date hereof, are members
of the Company's Board of Directors (the "Existing
Directors"), cease, on or prior to December 31, 2001,
for any reason, to constitute more than fifty percent
(50%) of the number of authorized directors of the
Company as determined in the manner prescribed in the
Company's Certificate of Incorporation and Bylaws;
provided, however, that if the appointment, or the
election, or nomination for election, by the Company's
stockholders of any new director, was approved by a
vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an
Existing Director; provided further, however, that no
individual shall be considered an Existing Director if
such individual initially assumed office as a result of
either an actual or threatened election contest (as
described in Rule 14a-11 or, effective January 24,
2000, Rule 14a-12(c) promulgated under the Exchange
Act) or other actual or threatened solicitation of
proxies by or on behalf of anyone other than the Board
of Directors (a "Proxy Contest"), including by reason
of any agreement intended to avoid or settle any
election contest or Proxy Contest.
<PAGE>
o The consummation, on or prior to December 31, 2001, of
a merger, consolidation or reorganization to which the
Company is a party, whether or not the Company is the
person surviving or resulting therefrom, in one
transaction or a series of related transactions, to any
person(s) other than a subsidiary, provided, however,
that no such transaction shall constitute a "Change of
Control" under this clause if the persons who were the
stockholders of the Company immediately before the
consummation of such transaction are the beneficial
owners, immediately following the consummation of such
transaction, of fifty percent (50%) or more of the
combined voting power of the then outstanding voting
securities of the person surviving or resulting from
any merger, consolidation or reorganization.
o The consummation, on or prior to December 31, 2001, of
a sale, assignment, lease, conveyance or other
disposition of 50% or more of the assets or assets
representing 50% or more of the earning power of the
Company, in one or a series of related transactions to
any Person(s) other than a Subsidiary.
o A complete liquidation of the Company.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Compensation" means your base salary per week at the time your employment is
terminated attributable to your employment with the Company and/or any of its
Subsidiaries (including, but not limited to, any amounts excluded at your
election from your gross income for federal income tax purposes pursuant to
Section 125 or Section 401(k) of the Internal Revenue Code of 1986, as amended,
or deferred pursuant to any Company or Subsidiary plan or program).
"Disability" means a physical or mental infirmity which substantially impairs
your ability to perform your material duties for a period of at least one
hundred eighty (180) consecutive calendar days and, as a result of such
Disability, you have not returned to your full-time regular employment prior to
termination.
"Good Reason" means either of the following: (i) any material breach by the
Company of any provision of this Plan; or (ii) a reduction in the amount equal
to the sum of (a) your total annual cash salary and (b) your bonus opportunity,
if any, in each case as in effect on the date hereof or as the same may be
increased from time to time.
<PAGE>
Attachment B
ERISA Supplement
Rules applicable under the Employee Retirement Security Act (ERISA) to
the Scios Inc. Change of Control Severance Plan: Levels 21-24 (the "Plan"):
Claims Procedure. All claims and appeals of denied claims under this
Plan shall be processed by the Plan Administrator. A claim must be filed in
writing within 90 days of the time it arises. The Plan Administrator shall
respond to the claim within 90 days unless a longer time period (up to an
additional 90 days) is required and proper notice is given. If a claim is
denied, a written denial shall be issued which contains the information required
by the Employee Retirement Income Security Act of 1974 (ERISA). Review of a
denied claim may be requested by written application to the Plan Administrator
within 60 days of the denial. The Plan Administrator shall complete the review
within 60 days of the request unless a longer period (up to an additional 60
days) is required and proper notice is given. The decision on appeal shall be in
writing and shall contain the information required by ERISA. The Plan
Administrator may adopt rules which specify the procedures for a claim and
review in more detail and such procedures shall be binding to the same extent as
if originally included in this Plan.
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
this memorandum, and its attachments, also constitutes the summary plan
description required by ERISA. The Plan sponsor is Scios Inc. which bears the
costs of all the benefits under the Plan. The Employer Identification number of
Scios is 95-3701481; and the Plan number assigned by Scios is 504. The Plan
Administrator's name, business address, and telephone number are: Scios Inc.,
820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The Plan
Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
<PAGE>
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
a suit in a state or federal court. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
Governing Law. The Plan shall be interpreted, administered, and
enforced in accordance with ERISA and the rights of the participants and all
other person shall be determined in accordance with that law. To the extent that
state law is applicable, however, the substantive laws of the state of
California shall govern.
<PAGE>
Attachment C
Provisions of General Release
The release will provide that your acceptance of severance benefits
under the Plan will constitute a full and complete release by you of any and all
claims you may have against the Company, any of its past, present or future
stockholders or any of their respective officers, directors, employees, and
affiliates (past, present or future), including, but not limited to, claims you
might have relating to your employment and/or cessation of employment with the
Company, including without limitation, tort, contract and common law claims and
claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, or any
other similar federal, state or local statute, rule or regulation; provided
that, there shall be excluded from the scope of such general release the
following:
o claims that you may have against the Company for
reimbursement of reasonable and necessary business
expenses incurred by you during the course of your
employment;
o claims that may be made by you for payment of accrued
salary, stock options, pension benefits or other
continuing benefits as specifically provided for in the
Plan.
The release will also have the provisions set forth in the memorandum.
EXHIBIT 99.6
SCIOS INC.
820 West Maude Avenue
Sunnyvale, California 94086
January 11, 2000
[Name]
[Title]
Scios Inc.
820 West Maude Avenue
Sunnyvale, California 94086
Dear [Name]:
The Board of Directors of Scios Inc. (the "Company") has determined
that it is in the best interests of the Company and its stockholders to offer
you the following agreement (the "Agreement") which provides you with certain
severance payments and benefits if your employment terminates following a
"Change of Control" (as defined below).
ARTICLE I
DEFINITIONS
1.1 Definitions
Whenever used in this Agreement, the following capitalized terms shall
have the meanings set forth in this Section, certain other capitalized terms
being defined elsewhere in this Agreement:
(a) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 promulgated under the Exchange Act.
(b) "Board of Directors" means the Board of Directors of the
Company.
(c) "Cause" means a termination for any of the following reasons:
(i) engaging in intentional misconduct which would tend to discredit
the Company or your position as an officer of the Company; (ii) being convicted
of a felony; (iii) committing an act of fraud against the Company or the
willful material misappropriation of property belonging to the Company; (iv)
materially breaching any proprietary information agreement between you and the
Company or (v) willfully disregarding your duties despite adequate warnings from
the Board.
(d) "Change of Control" of the Company means and includes any of the
following:
(i) Any Person or "group" (as that term is defined in
Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) is or becomes, on
or prior to December 31, 2001, the Beneficial Owner,
directly or
<PAGE>
indirectly, of securities of the Company representing
fifty percent (50%) or more of the voting power of then
outstanding securities of the Company.
(ii) Any Person or group is or becomes, on or prior to
December 31, 2001, the Beneficial Owner, directly or
indirectly, of securities of the Company representing
twenty percent (20%) or more of the voting power of the
then outstanding securities of the Company, unless such
acquisition was approved in advance by the Company's
Board of Directors.
(iii)The individuals who, as of the date hereof, are members
of the Company's Board of Directors (the "Existing
Directors"), cease, on or prior to December 31, 2001,
for any reason, to constitute more than fifty percent
(50%) of the number of authorized directors of the
Company as determined in the manner prescribed in the
Company's Certificate of Incorporation and Bylaws;
provided, however, that if the appointment, or the
election, or nomination for election, by the Company's
stockholders of any new director, was approved by a
vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an
Existing Director; provided further, however, that no
individual shall be considered an Existing Director if
such individual initially assumed office as a result of
either an actual or threatened election contest (as
described in Rule 14a-11 or, effective January 24,
2000, Rule 14a-12(c) promulgated under the Exchange
Act) or other actual or threatened solicitation of
proxies by or on behalf of anyone other than the Board
of Directors (a "Proxy Contest"), including by reason
of any agreement intended to avoid or settle any
election contest or Proxy Contest.
(iv) The consummation, on or prior to December 31, 2001, of
a merger, consolidation or reorganization to which the
Company is a party, whether or not the Company is the
Person surviving or resulting therefrom, in one
transaction or a series of related transactions, to any
Person(s) other than a Subsidiary, provided, however,
that no such transaction shall constitute a "Change of
Control" under this subparagraph (iv) if the Persons
who were the stockholders of the Company immediately
before the consummation of such transaction are the
Beneficial Owners, immediately following the
consummation of such transaction, of fifty percent
(50%) or more of the combined voting power of the then
outstanding voting securities of the Person surviving
or resulting from any merger, consolidation or
reorganization.
(v) The consummation, on or prior to December 31, 2001, of
a sale, assignment, lease, conveyance or other
disposition of 50% or more of the assets or assets
representing 50% or more of the earning power of the
Company, in one or a series of related transactions to
any Person(s) other than a Subsidiary.
(vi) A complete liquidation of the Company.
(e) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985.
<PAGE>
(f) "Company" means Scios Inc., a Delaware corporation, and any
successor or assignee as provided in Article IV.
(g) "Compensation" means the highest level of your annual base
salary at any time during the 12 months preceding the date on which your
employment is terminated attributable to your employment with the Company
and/or any of its Subsidiaries (including, but not limited to, any amounts
excluded at your election from your gross income for federal income tax
purposes pursuant to Section 125 or Section 401(k) of the Internal Revenue
Code of 1986, as amended, or deferred pursuant to any Company or Subsidiary
plan or program), plus your target bonus for the calendar year during which
your employment is terminated.
(h) "Disability" means a physical or mental infirmity which
substantially impairs your ability to perform your material duties for a
period of at least one hundred eighty (180) consecutive calendar days and,
as a result of such Disability, you have not returned to your full-time regular
employment prior to termination.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Good Reason" means any of the following: (i) relocation of the
Company's executive offices more than forty miles from the current location,
without your concurrence; (ii) any material breach by the Company of any
provision of this Agreement; (iii) the assignment to you by the Company of any
duties inconsistent with your status as an officer of the Company holding the
offices you hold immediately prior to the Change of Control or a substantial
adverse alteration in the nature or status of your responsibilities from those
in effect immediately prior to the Change of Control; or (iv) a reduction in
the amount equal to the sum of (x) your total annual cash salary and (y) your
bonus opportunity, in each case as in effect on the date hereof or as the same
may be increased from time to time.
(l) "Person" shall have the meaning ascribed to such term in Section
3 of the Exchange Act and the rules and regulations promulgated thereunder.
(m) "Severance Payment" means the payment of severance compensation
as provided in Article II.
(n) "Subsidiary" means any corporation or other Person, a majority
of the voting power, equity securities or equity interest of which is owned
directly or indirectly by the Company.
<PAGE>
ARTICLE II
SEVERANCE PAYMENTS
2.1 Right to Severance Payment
You shall be entitled to receive a Severance Payment from the Company
in the amount provided in Section 2.2 if (a) there has been a Change of Control
of the Company, (b) you are an active employee at the time of the Change of
Control, and (c) within three hundred sixty five (365) calendar days from and
including the date of the Change of Control, your employment is involuntarily
terminated for any reason (other than for Cause or your death or Disability), or
you voluntarily terminate your employment for Good Reason. For purposes of
subclause (b) above, you will still be considered to be an active employee if
you are on sick leave, military leave or any other leave of absence approved by
the Company or any of its Subsidiaries.
2.2 Amount of Severance Payment
If you become entitled to a Severance Payment under this Agreement, you
shall receive a lump sum payment equal to 1.5 times your Compensation.
2.3 Excise Tax Limitation
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment or benefit (within the meaning of
Section 28OG(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")), to you or for your benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, your employment with the Company or any of
its Subsidiaries or a Change of Control (a "Payment" or "Payments"), would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then the Payments shall be reduced (but not below zero) but only to the
extent necessary that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code (the "Section 4999 Limit").
(b) If a reduction in Payments is necessary to comply with the
provisions of the preceding paragraph, you shall be entitled to select which
Payments will be reduced and the manner and method of any such reduction of
such Payments. Within ten (10) calendar days after the amount of any required
reduction in Payments is finally determined in accordance with the provisions of
this Section 2.3, you shall notify the Company and the Accounting Firm (as
defined below) in writing regarding which Payments are to be reduced. If you
fail to give such notification, the Company will determine which Payments to
reduce.
(c) All determinations required to be made under this Section
2.3 (each, a "Determination") shall be made, at the Company's expense, by
a nationally recognized accounting firm designated by the Company (other than
the Company's accounting firm or the accounting firm that is regularly engaged
by any party who has effectuated the Change of Control) and reasonably
acceptable to you (the "Accounting Firm"). The Accounting Firm shall provide its
calculations, together with detailed supporting documentation, both to the
Company and to you within ten (10) calendar days after the date on which your
right to a Severance Payment hereunder was triggered (if requested at that time
by the Company or you) or such other
<PAGE>
time as requested by the Company or you (in either case provided that the
Company or you believe in good faith that any of the Payments may be subject to
the Excise Tax); provided, however, that if the Accounting Firm determines that
no Excise Tax is payable by you with respect to a Payment or Payments, it shall
furnish you with written advice to the effect that no Excise Tax should be
imposed with respect to any such Payment or Payments. Within ten (10) calendar
days of the delivery of the Determination to you, you shall have the right to
dispute the Determination (the "Dispute") in accordance with the provisions of
Section 7.11 and Article VI of this Agreement. The existence of any Dispute
shall not in any way affect your right to receive the Payments in accordance
with the Determination. If there is no Dispute, the Determination by the
Accounting Firm shall be final, binding and conclusive upon the Company and you,
subject to the application of Section 2.3(d).
(d) As a result of the uncertainty in the application of Sections
4999 and 28OG of the Code, it is possible that the Payments either will have
been made (or are due) or will not have been made by the Company, in any case
in a manner inconsistent with the limitations provided in Section 2.3(a) (an
"Excess Payment" or "Underpayment", respectively). If it is established pursuant
to (i) a final determination of a court for which all appeals have been taken
and finally resolved or the time for all appeals has expired, or (ii) an
Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved, that an Excess Payment has been made, any Payments
remaining to be paid pursuant to Article II which constitute all or any portion
of the Excess Payment will be eliminated to the extent necessary so that the
Section 4999 Limit is (or would have been) satisfied and then any remaining
Excess Payment shall be deemed for all purposes to be a loan to you made on the
date you received such Excess Payment and you shall repay such Excess Payment to
the Company on demand, together with interest on such Excess Payment at the
applicable federal rate (as defined in Section 1274(d) of the Code) from the
date of your receipt of such Excess Payment until the date of such repayment. If
it is determined (i) by the Accounting Firm, the Company (which shall include
the position taken by the Company, together with its consolidated group, on its
federal income tax return) or the IRS, (ii) by a court, or (iii) by resolution
to your satisfaction of the Dispute, that an Underpayment has occurred, the
Company shall pay an amount equal to the Underpayment to you within ten (10)
calendar days of such determination or resolution, together with interest on
such amount at the applicable federal rate from the date such amount should have
been paid to you pursuant to the terms of this Agreement or otherwise, but for
the operation of this Section 2.3, until the date of payment.
2.4 No Duty of Mitigation
The Company acknowledges that it would be very difficult and generally
impracticable to determine your ability to, or the extent to which you may,
mitigate any damages or injuries you may incur by reason of the Change of
Control. The Company has taken this into account in entering into this Agreement
and, accordingly, the Company acknowledges and agrees that you shall have no
duty to mitigate any such damages and that you shall be entitled to receive your
entire Severance Payment regardless of any income which you may receive from
other sources following the termination of your employment after any Change of
Control.
<PAGE>
2.5 Time of Severance Payment
The Severance Payment to which you are entitled shall be paid to you,
in cash and in full, not later than fifteen (15) calendar days after the
termination of your employment; provided however, that if the release described
in Section 7.13 does not become irrevocable until a later date, then payment
shall be made to you on the date the release becomes irrevocable. If you should
die before all amounts payable to you have been paid, such unpaid amounts shall
be paid to your beneficiary under this Agreement or, if you have not designated
such a beneficiary in writing to the Company, to the personal representative(s)
of your estate.
2.6 Health Care Benefits
If you are entitled to receive a Severance Payment under Section 2.1,
you will also be entitled to receive health care benefits (including any
medical, dental and vision coverage) for you and your dependents under the same
plan or plans under which you were covered immediately prior to the termination
of your employment or substantially similar plan(s) established by the Company
or any of its Subsidiaries thereafter. Such health benefits shall be paid for by
the Company only to the same extent as if you were still employed by the
Company, and you will be required to pay for such health benefits to the same
extent that you would be required to do so if you were still employed by the
Company. This coverage will continue under the Company's plan for a period of
six months following the termination of your employment, and the Company will
thereafter pay for up to an additional 12 months if you elect to continue
benefits under COBRA. Notwithstanding the foregoing, your medical coverage under
this Section 2.6 shall end as of the date you become covered under any other
group health plan not maintained by the Company or any of its Subsidiaries which
provides equal or greater benefits than such plan and which does not exclude any
pre-existing condition that you or your dependents may have at that time.
2.7 Outplacement Services
If you are entitled to receive a Severance Payment under Section 2.1,
you will also be entitled to receive a range of outplacement services by an
organization selected by the Company. These outplacement services will be paid
for by the Company up to a maximum of $10,000.
2.8 Withholding of Taxes
The Company may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes required by applicable law to be
withheld by the Company.
2.9 No Setoff
The Company's obligation to make Severance Payments to you pursuant to
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, but not limited to, any setoff,
counterclaim, recoupment, defense or other right which the Company or any of its
Subsidiaries may have against you or others.
<PAGE>
ARTICLE III
OTHER RIGHTS AND BENEFITS
3.1 Other Rights and Benefits
(a) This Agreement does not provide a pension for you nor shall
any payment hereunder be characterized as deferred compensation.
(b) The benefits that you may be entitled to receive pursuant to the
provisions of Article II are intended to be provided in lieu of and to replace
any similar or duplicative benefits to which you may be entitled from the
Company or any of its Subsidiaries in connection with the termination of your
employment after a Change of Control under any other severance plan, agreement,
policy or program maintained by the Company or any of its Subsidiaries.
Accordingly, if you are entitled to receive a Severance Payment under this
Agreement, you agree to relinquish all other benefits you may be entitled to
receive under any such other severance plan, agreement, policy or program.
(c) Notwithstanding the provisions of paragraph (b) above, this
Agreement shall not act to reduce any amounts otherwise payable, or in any way
diminish your rights, whether existing now or hereafter, under any incentive,
retirement, pension, profit sharing, stock purchase or benefit plan or other
arrangement not related to severance following a Change of Control, and shall
not affect, enlarge or reduce your rights with respect to any stock options,
restricted stock or other equity interests that have been granted or issued to
you by the Company prior to the date hereof or in the future.
3.2 Employment Status.
This Agreement does not constitute a contract of employment or impose
on you any obligation to remain in the employ of the Company, nor does it impose
on the Company or any of its Subsidiaries any obligation to retain you in your
present or any other position, or to change the status of your employment at
will. Nothing in this Agreement shall in any way require the Company or any of
its Subsidiaries to provide you with any severance benefits prior to a Change of
Control, nor shall this Agreement ever be construed in any way as establishing
any policies or requirements of the Company or any of its Subsidiaries for the
termination of your employment or the payment of severance benefits to you if
your employment terminates prior to a Change of Control, nor shall anything in
this Agreement in any way affect the right of the Company or any of its
Subsidiaries in its absolute discretion to change prior to a Change of Control
one or more benefit plans.
ARTICLE IV
SUCCESSOR TO COMPANY
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place. In
such event,
<PAGE>
the term "Company," as used in this Agreement, shall mean (from and
after, but not before, the occurrence of such event) the Company as herein
before defined and any successor or assignee to the business or assets which by
reason hereof becomes bound by the terms and provisions of this Agreement.
ARTICLE V
LEGAL FEES AND EXPENSES
The Company shall pay as they become due all legal fees, costs of
litigation and other expenses incurred in good faith by you as a result of the
Company's refusal or failure to make the Severance Payment to which you become
entitled under this Agreement, as a result of the Company's contesting the
validity, enforceability or interpretation of this Agreement or of your right to
benefits hereunder, or with regard to any Dispute (as provided in Section
2.3(c)). You shall be conclusively presumed to have acted in good faith unless a
court makes a final determination not otherwise subject to appeal to the
contrary.
ARTICLE VI
ARBITRATION
Except as otherwise provided in Section 2.3, and without prejudice to
your rights under Section 7.11 and 7.12, you shall have the right and option
(but not the obligation) to elect (in lieu of litigation) to have any dispute or
controversy arising under or in connection with this Agreement not otherwise
resolved through the claims procedure set forth in Section 7.11, including any
Dispute under Section 2.3, settled by arbitration, conducted by one arbitrator
sitting in a location selected by you within fifty (50) miles from the location
of your job with the Company or any of its Subsidiaries, in accordance with the
rules of the American Arbitration Association then in effect. Judgement may be
entered on the award of the arbitrator in any court having jurisdiction. All
expenses of such arbitration, including the fees and expenses of your counsel,
shall be borne, and paid as incurred, by the Company; provided that the Company
shall only be required to pay your fees and expenses if they are incurred in
good faith. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
ARTICLE VII
MISCELLANEOUS
7.1 Applicable Law
To the extent not preempted by the laws of the United States and in the
interest of interpreting this Agreement in a uniform manner with other similar
agreements being entered into by the Company with other of its and its
Subsidiaries' employees regardless of the jurisdiction in which you are employed
or any other factor, the laws of the State of California shall be the
controlling law in all matters relating to this Agreement, regardless of the
choice-of-law rules of the State of California or any other jurisdiction.
<PAGE>
7.2 Construction
No term or provision of this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement and any present or future
statute, law, ordinance, or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail, but in such event the
affected provision of this Agreement affected shall be curtailed and limited
only to the extent necessary to bring such provision within the requirements of
the law.
7.3 Severability
If a provision of this Agreement shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of this Agreement
and this Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.
7.4 Headings
The Section headings in this Agreement are inserted only as a matter of
convenience, and in no way define, limit, or extend or interpret the scope of
this Agreement or of any particular Section.
7.5 Notice of Termination
Following a Change of Control, any purported termination of your
employment by the Company or any of its Subsidiaries shall be communicated by a
written notice of termination, which notice shall indicate, if it purports to be
based on Cause, the specific reasons, if any, relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment. The failure to provide such notice shall create
a rebuttable presumption that you are entitled to a Severance Payment and the
other benefits provided by this Agreement.
7.6 Assignability
Neither this Agreement nor any right or interest therein shall be
assignable or transferable (whether by pledge, grant of a security interest, or
otherwise) by you, your beneficiaries or legal representatives, except by will
or by the laws of descent and distribution. This Agreement shall be binding upon
and shall inure to the benefit of the Company, its successors and assigns, and
you and shall be enforceable by them and your legal personal representatives.
7.7 Entire Agreement
Except as otherwise expressly provided in Article III, this Agreement
constitutes the entire agreement between the Company and you regarding the
subject matter hereof and supersedes all prior agreements, if any,
understandings and arrangements, written or oral, between the Company and you
with respect to the subject matter hereof.
<PAGE>
7.8 Term
If a Change of Control has not theretofore occurred, this Agreement
shall expire and be of no further force and effect on December 31, 2001;
provided that the Board of Directors of the Company may, at any time prior to
the expiration thereof, extend the term of this Agreement for a term of up to
two years, including changing the dates set forth in the definition of "Change
of Control", without any further action on your part.
If a Change of Control occurs, this Agreement shall continue in full
force and effect, and shall not terminate or expire until the expiration of
three hundred sixty six (366) calendar days from and including the date of the
Change of Control, at which time this Agreement shall terminate except if you
become entitled to Severance Payments hereunder prior to such time. If you
become so entitled to Severance Payments hereunder, this Agreement shall
continue and be effective until you (or the person(s) specified in Section 2.5)
shall have received in full all Severance Payments and other benefits to which
you are entitled under this Agreement, at which time this Agreement shall
terminate for all purposes.
7.9 Amendment
Except as set forth in Section 7.8, no provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and the Company. No waiver by the
Company or you at any time or any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or any prior or subsequent time. No agreement or representations,
written or oral, express or implied, with respect to the subject matter hereof,
have been made by either party which are not expressly set forth in this
Agreement.
7.10 Notices
For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other, provided that all notices to the Company shall be
directed to the attention of the Chairman of the Board of Directors with a copy
to the General Counsel. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the third business day after
the mailing thereof, except that notice of change of address shall be effective
only upon actual receipt. No objection to the method of delivery may be made if
the written notice or other communication is actually received.
7.11 Claims
(a) If you believe you are entitled to a benefit under this
Agreement, you may make a claim for such benefit by filing with the Company a
written statement setting forth the amount and type of benefit so claimed.
The statement shall also set forth the facts supporting the claim. The claim may
be filed by mailing or delivering it to the Secretary of the Company.
<PAGE>
(b) Within fifteen (15) calendar days after receipt of such a claim,
the Company shall notify you in writing of its action on such claim and if such
claim is not allowed in full, shall state the following in a manner
calculated to be understood by you:
(i) The specific reason or reasons for the denial;
(ii) Specific reference to pertinent provisions of this
Agreement on which the denial is based;
(iii)A description of any additional material or information
necessary for you to be entitled to the benefits that
have been denied and an explanation of why such
material or information is necessary; and
(iv) An explanation of this Agreement's claim review
procedure.
(c) Without prejudice to your rights under Article VI, if you
disagree with the action taken by the Company, you or your duly authorized
representative may apply to the Company for a review of such action. Such
application shall be made within ninety (90) calendar days after receipt by you
of the notice of the Company's action on your claim. The application for review
shall be filed in the same manner as the claim for benefits. In connection with
such review, you may inspect any documents or records pertinent to the matter
and may submit issues and comments in writing to the Company. A decision by
the Company shall be communicated to you within thirty (30) calendar days
after receipt of the application. The decision on review shall be in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by you, and specific references to the pertinent
provisions of this Agreement on which the decision is based.
7.12 Escrow.
(a) In the event that the Company denies, in whole or in part, a
claim for a benefit made by you under Section 7.11 hereof, or contests, in whole
or in part, your right to receive benefits under this Agreement, or otherwise
fails to make any cash payments or provide other benefits due under this
Agreement within ten (10) calendar days of the date such payments or benefits
are due, the Company shall within ten (10) calendar days of receipt of your
written demand, deposit the full amount of the benefit which is claimed but
not paid, or the amount contested by the Company, or the amount due, with an
escrow agent reasonably acceptable to you. The escrow agent shall be a
commercial bank or trust company having an aggregate capital and surplus in
excess of $50,000,000.
(b) Any amounts deposited in escrow shall be held by the escrow
agent in an interest bearing account until the issuance of a final,
nonappealable order or decision by a court of competent jurisdiction or an
arbitral award under Article VI with respect to the claim, or amount contested
or not paid. At that time, to the extent that the order or decision is in your
favor, the amount in escrow or any portion thereof owing to you, including all
interest accrued on such amount, shall be paid to you.
<PAGE>
(c) The parties agree that if the Company fails to deposit the
required funds in escrow pursuant to the provisions of paragraph (a) above,
then, in addition to all other remedies provided at law or in equity, you shall
be entitled, without the necessity of posting a bond, to seek equitable relief
to enforce the provisions of this Section 7.12. You shall be entitled to seek
any relief in any court of competent jurisdiction even if you have elected
to pursue arbitration of the dispute under Article VI of this Agreement.
7.13 General Release.
(a) A condition to your receipt of the Severance Payments under
Article II shall be your execution and delivery (and the expiration of any
applicable revocability period afforded by law) of a full and complete release
by you of any and all claims you may have against the Company, any of its past,
present or future stockholders or any of their respective officers, directors,
employees and affiliates (past, present or future), including, but not limited
to, claims you might have relating to your employment and/or cessation of
employment with the Company, including without limitation, tort, contract and
common law claims and claims under Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, or any other similar federal, state or local statute,
rule or regulation; provided that, there shall be excluded from the scope of
such general release the following:
(i) claims that you may have against the Company for reimbursement of
reasonable and necessary business expenses incurred by you during
the course of your employment;
(ii) claims that may be made by you for payment of accrued salary,
stock options, pension benefits or other continuing benefits as
specifically provided in Articles II and III of this Agreement;
and
(iii)claims respecting matters for which you are entitled to be
indemnified under the Company's Certificate of Incorporation or
Bylaws or indemnification agreements, respecting third party
claims asserted or third party litigation pending or threatened
against you.
(b) The release shall be in a form reasonably satisfactory to the
Company and shall also include (i) appropriate provisions as necessary to insure
the release is valid and enforceable under applicable laws, including the
Older Workers Benefit Protection Act, and (ii) a waiver of California Civil
Code Section 1542 (which provides that unless you specifically agree to release
claims you do not know about, they are not released by a general release). Such
payment shall be considered independent consideration made in exchange for such
release.
<PAGE>
If this Agreement is acceptable to you, please sign the enclosed copy
of this Agreement in the space provided below and return it to me.
Sincerely,
Richard B. Brewer
President and CEO
ACCEPTED AND AGREED TO:
______________________________
[Name]
Dated:________________________
<PAGE>
Supplemental Information Regarding
Scios Inc. Officer Change of Control Severance Plan
The Company has entered into agreements identical to your Agreement
with other officers of the Company or its Subsidiaries, other than the Company's
current CEO. These agreements, taken together, constitute a single employee
welfare benefit plan within the meaning of Section 3(1) of ERISA. The name of
the plan is the Scios Inc. Officer Change of Control Severance Plan (the
"Plan"). The Administrator of the Plan, within the meaning of Section 3(16) of
ERISA, and the Named Fiduciary thereof, within the meaning of Section 402 of
ERISA, is the Company. A statement of Plan information and the rules applicable
under ERISA are set forth below:
Claims Procedure. Set forth in Section 7.11 of the Agreement
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
the Agreement and the agreements of the other officers, together with this
supplemental information, also constitutes the summary plan description required
by ERISA. The Plan sponsor is Scios Inc. which bears the costs of all the
benefits under the Plan. The Employer Identification number of Scios is
95-3701481; and the Plan number assigned by Scios is 505. The Plan
Administrator's name, business address, and telephone number are: Scios Inc.,
820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The Plan
Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were
<PAGE>
not sent because of reasons beyond the control of the Plan Administrator. If
you have a claim for benefits which is denied or ignored, in whole or in part,
you may file a suit in a state or federal court. If you are discriminated
against for asserting your rights, you may seek assistance from the U.S.
Department of Labor, or you may file suit in a federal court. The court will
decide who should pay court costs and legal fees. If you are successful
the court may order the person you have sued to pay these costs and fees. If
you lose, the court may order you to pay these costs and fees, for example, if
it finds your claim is frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
EXHIBIT 99.7
SCIOS INC.
820 West Maude Avenue
Sunnyvale, California 94086
January 11, 2000
Mr. Richard B. Brewer
President and
Chief Executive Officer
Scios Inc.
820 West Maude Avenue
Sunnyvale, California 94086
Dear Dick:
The Board of Directors of Scios Inc. (the "Company") has determined
that it is in the best interests of the Company and its stockholders to offer
you the following agreement (the "Agreement") which provides you with certain
severance payments and benefits if your employment terminates following a
"Change of Control" (as defined below).
This Agreement is intended to supplement your existing employment
agreement dated September 8, 1998 (the "Employment Agreement") in the event of
termination following a Change of Control, and is not intended to modify the
Employment Agreement except as set forth in Article III below.
ARTICLE I
DEFINITIONS
1.1 Definitions
Whenever used in this Agreement, the following capitalized terms shall
have the meanings set forth in this Section, certain other capitalized terms
being defined elsewhere in this Agreement:
(a) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 promulgated under the Exchange Act.
(b) "Board of Directors" means the Board of Directors of the
Company.
(c) "Cause" means a termination for any of the following reasons:
(i) engaging in intentional misconduct which would tend to discredit the
Company or your position as President and Chief Executive Officer; (ii) being
convicted of a felony; (iii) committing an act of fraud against the Company
or the willful material misappropriation of property belonging to the Company;
(iv) materially breaching the Employment Agreement or any proprietary
information agreement between you and the Company or (v) willfully disregarding
your duties despite adequate warnings from the Board.
<PAGE>
(d) "Change of Control" of the Company means and includes any of the
following:
(i) Any Person or "group" (as that term is defined in Section
13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) is or becomes, on or prior to
December 31, 2001, the Beneficial Owner, directly or
indirectly, of securities of the Company representing fifty
percent (50%) or more of the voting power of then
outstanding securities of the Company.
(ii) Any Person or group is or becomes, on or prior to December
31, 2001, the Beneficial Owner, directly or indirectly, of
securities of the Company representing twenty percent (20%)
or more of the voting power of the then outstanding
securities of the Company, unless such acquisition was
approved in advance by the Company's Board of Directors.
(iii)The individuals who, as of the date hereof, are members of
the Company's Board of Directors (the "Existing Directors"),
cease, on or prior to December 31, 2001, for any reason, to
constitute more than fifty percent (50%) of the number of
authorized directors of the Company as determined in the
manner prescribed in the Company's Certificate of
Incorporation and Bylaws; provided, however, that if the
appointment, or the election, or nomination for election, by
the Company's stockholders of any new director, was approved
by a vote of at least fifty percent (50%) of the Existing
Directors, such new director shall be considered an Existing
Director; provided further, however, that no individual
shall be considered an Existing Director if such individual
initially assumed office as a result of either an actual or
threatened election contest (as described in Rule 14a-11 or,
effective January 24, 2000, Rule 14a-12(c) promulgated under
the Exchange Act) or other actual or threatened solicitation
of proxies by or on behalf of anyone other than the Board of
Directors (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any election contest
or Proxy Contest.
(iv) The consummation, on or prior to December 31, 2001, of a
merger, consolidation or reorganization to which the Company
is a party, whether or not the Company is the Person
surviving or resulting therefrom, in one transaction or a
series of related transactions, to any Person(s) other than
a Subsidiary, provided, however, that no such transaction
shall constitute a "Change of Control" under this
subparagraph (iv) if the Persons who were the stockholders
of the Company immediately before the consummation of such
transaction are the Beneficial Owners, immediately following
the consummation of such transaction, of fifty percent (50%)
or more of the combined voting power of the then outstanding
voting securities of the Person surviving or resulting from
any merger, consolidation or reorganization.
<PAGE>
(v) The consummation, on or prior to December 31, 2001, of a
sale, assignment, lease, conveyance or other disposition of
50% or more of the assets or assets representing 50% or more
of the earning power of the Company, in one or a series of
related transactions to any Person(s) other than a
Subsidiary.
(vi) A complete liquidation of the Company.
(e) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985.
(f) "Company" means Scios Inc., a Delaware corporation, and any
successor or assignee as provided in Article IV.
(g) "Compensation" means the highest level of your annual base
salary at any time during the 12 months preceding the date on which your
employment is terminated attributable to your employment with the Company
and/or any of its Subsidiaries (including, but not limited to, any amounts
excluded at your election from your gross income for federal income tax
purposes pursuant to Section 125 or Section 401(k) of the Internal Revenue Code
of 1986, as amended, or deferred pursuant to any Company or Subsidiary plan or
program), plus your target bonus for the calendar year during which your
employment is terminated.
(h) "Disability" means a physical or mental infirmity which
substantially impairs your ability to perform your material duties for a period
of at least one hundred eighty (180) consecutive calendar days and, as a
result of such Disability, you have not returned to your full-time regular
employment prior to termination.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Good Reason" means any of the following: (i) relocation of the
Company's executive offices more than forty miles from the current location,
without your concurrence; (ii) any material breach by the Company of any
provision of this Agreement or the Employment Agreement; (iii) a material change
in the principal line of business of the Company, without your concurrence; (iv)
the assignment to you by the Company of any duties inconsistent with your status
as President and Chief Executive Officer or a substantial adverse alteration in
the nature or status of your responsibilities from those in effect immediately
prior to the Change of Control; or (v) a reduction in the amount equal to the
sum of (x) your total annual cash salary and (y) your bonus opportunity, in each
case as in effect on the date hereof or as the same may be increased from time
to time.
(l) "Person" shall have the meaning ascribed to such term in Section
3 of the Exchange Act and the rules and regulations promulgated thereunder.
(m) "Severance Payment" means the payment of severance compensation
as provided in Article II.
<PAGE>
(n) "Subsidiary" means any corporation or other Person, a majority
of the voting power, equity securities or equity interest of which is owned
directly or indirectly by the Company.
ARTICLE II
SEVERANCE PAYMENTS
2.1 Right to Severance Payment
You shall be entitled to receive a Severance Payment from the Company
in the amount provided in Section 2.2 if (a) there has been a Change of Control
of the Company, (b) you are an active employee at the time of the Change of
Control, and (c) within three hundred sixty five (365) calendar days from and
including the date of the Change of Control, your employment is involuntarily
terminated for any reason (other than for Cause or your death or Disability), or
you voluntarily terminate your employment for Good Reason. For purposes of
subclause (b) above, you will still be considered to be an active employee if
you are on sick leave, military leave or any other leave of absence approved by
the Company or any of its Subsidiaries.
2.2 Amount of Severance Payment
If you become entitled to a Severance Payment under this Agreement, you
shall receive a lump sum payment equal to 2.25 times your Compensation.
2.3 Excise Tax Limitation
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment or benefit (within the meaning of
Section 28OG(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")), to you or for your benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, your employment with the Company or any
of its Subsidiaries or a Change of Control (a "Payment" or "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then the Payments shall be reduced (but not below zero) but only to the
extent necessary that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code (the "Section 4999 Limit").
(b) If a reduction in Payments is necessary to comply with the
provisions of the preceding paragraph, you shall be entitled to select which
Payments will be reduced and the manner and method of any such reduction of
such Payments. Within ten (10) calendar days after the amount of any required
reduction in Payments is finally determined in accordance with the provisions
of this Section 2.3, you shall notify the Company and the Accounting Firm (as
defined below) in writing regarding which Payments are to be reduced. If
you fail to give such notification, the Company will determine which
Payments to reduce.
(c) All determinations required to be made under this Section
2.3 (each, a "Determination") shall be made, at the Company's expense,
by a nationally recognized accounting firm designated by the Company (other
than the Company's accounting firm or the accounting firm that is regularly
engaged by any party who has effectuated the Change of
<PAGE>
Control) and reasonably acceptable to you (the "Accounting Firm"). The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and to you within
ten (10) calendar days after the date on which your right to a Severance Payment
hereunder was triggered (if requested at that time by the Company or you) or
such other time as requested by the Company or you (in either case provided that
the Company or you believe in good faith that any of the Payments may be subject
to the Excise Tax); provided, however, that if the Accounting Firm determines
that no Excise Tax is payable by you with respect to a Payment or Payments, it
shall furnish you with written advice to the effect that no Excise Tax should be
imposed with respect to any such Payment or Payments. Within ten (10) calendar
days of the delivery of the Determination to you, you shall have the right to
dispute the Determination (the "Dispute") in accordance with the provisions of
Section 7.11 and Article VI of this Agreement. The existence of any Dispute
shall not in any way affect your right to receive the Payments in accordance
with the Determination. If there is no Dispute, the Determination by the
Accounting Firm shall be final, binding and conclusive upon the Company and you,
subject to the application of Section 2.3(d).
(d) As a result of the uncertainty in the application of Sections
4999 and 28OG of the Code, it is possible that the Payments either will have
been made (or are due) or will not have been made by the Company, in any
case in a manner inconsistent with the limitations provided in Section
2.3(a) (an "Excess Payment" or "Underpayment", respectively). If it is
established pursuant to (i) a final determination of a court for which all
appeals have been taken and finally resolved or the time for all appeals has
expired, or (ii) an Internal Revenue Service (the "IRS") proceeding which has
been finally and conclusively resolved, that an Excess Payment has been made,
any Payments remaining to be paid pursuant to Article II which constitute
all or any portion of the Excess Payment will be eliminated to the extent
necessary so that the Section 4999 Limit is (or would have been) satisfied and
then any remaining Excess Payment shall be deemed for all purposes to be
a loan to you made on the date you received such Excess Payment and you
shall repay such Excess Payment to the Company on demand, together with
interest on such Excess Payment at the applicable federal rate (as defined
in Section 1274(d) of the Code) from the date of your receipt of such Excess
Payment until the date of such repayment. If it is determined (i) by the
Accounting Firm, the Company (which shall include the position taken by the
Company, together with its consolidated group, on its federal income tax return)
or the IRS, (ii) by a court, or (iii) by resolution to your satisfaction of
the Dispute, that an Underpayment has occurred, the Company shall pay an
amount equal to the Underpayment to you within ten (10) calendar days of such
determination or resolution, together with interest on such amount at the
applicable federal rate from the date such amount should have been paid to you
pursuant to the terms of this Agreement or otherwise, but for the operation
of this Section 2.3, until the date of payment.
2.4 No Duty of Mitigation
The Company acknowledges that it would be very difficult and generally
impracticable to determine your ability to, or the extent to which you may,
mitigate any damages or injuries you may incur by reason of the Change of
Control. The Company has taken this into account in entering into this Agreement
and, accordingly, the Company acknowledges and agrees that you shall have no
duty to mitigate any such damages and that you shall be entitled to receive your
<PAGE>
entire Severance Payment regardless of any income which you may receive from
other sources following the termination of your employment after any Change of
Control.
2.5 Time of Severance Payment
The Severance Payment to which you are entitled shall be paid to you,
in cash and in full, not later than fifteen (15) calendar days after the
termination of your employment; provided however, that if the release described
in Section 7.13 does not become irrevocable until a later date, then payment
shall be made to you on the date the release becomes irrevocable. If you should
die before all amounts payable to you have been paid, such unpaid amounts shall
be paid to your beneficiary under this Agreement or, if you have not designated
such a beneficiary in writing to the Company, to the personal representative(s)
of your estate.
2.6 Health Care Benefits
If you are entitled to receive a Severance Payment under Section 2.1,
you will also be entitled to receive health care benefits (including any
medical, dental and vision coverage) for you and your dependents under the same
plan or plans under which you were covered immediately prior to the termination
of your employment or substantially similar plan(s) established by the Company
or any of its Subsidiaries thereafter. Such health benefits shall be paid for by
the Company only to the same extent as if you were still employed by the
Company, and you will be required to pay for such health benefits to the same
extent that you would be required to do so if you were still employed by the
Company. This coverage will continue under the Company's plan for a period of
six months following the termination of your employment, and the Company will
thereafter pay for up to an additional 18 months if you elect to continue
benefits under COBRA. Notwithstanding the foregoing, your medical coverage under
this Section 2.6 shall end as of the date you become covered under any other
group health plan not maintained by the Company or any of its Subsidiaries which
provides equal or greater benefits than such plan and which does not exclude any
pre-existing condition that you or your dependents may have at that time.
2.7 Outplacement Services
If you are entitled to receive a Severance Payment under Section 2.1,
you will also be entitled to receive a range of outplacement services by an
organization selected by the Company. These outplacement services will be paid
for by the Company up to a maximum of $10,000.
2.8 Withholding of Taxes
The Company may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes required by applicable law to be
withheld by the Company.
2.9 No Setoff
The Company's obligation to make Severance Payments to you pursuant to
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any
<PAGE>
circumstances, including, but not limited to, any setoff, counterclaim,
recoupment, defense or other right which the Company or any of its Subsidiaries
may have against you or others.
ARTICLE III
OTHER RIGHTS AND BENEFITS; EMPLOYMENT AGREEMENT
3.1 Other Rights and Benefits
(a) This Agreement does not provide a pension for you nor shall any
payment hereunder be characterized as deferred compensation.
(b) The benefits that you may be entitled to receive pursuant to the
provisions of Article II are intended to be provided in lieu of and to replace
any similar or duplicative benefits to which you may be entitled from the
Company or any of its Subsidiaries in connection with the termination of your
employment after a Change of Control under any other severance plan, agreement,
policy or program maintained by the Company or any of its Subsidiaries.
Accordingly, if you are entitled to receive a Severance Payment under this
Agreement, you agree to relinquish all other benefits you may be entitled
to receive under any such other severance plan, agreement, policy or
program, except as specifically provided below in Section 3.2.
(c) Notwithstanding the provisions of paragraph (b) above, this
Agreement shall not act to reduce any amounts otherwise payable, or in any way
diminish your rights, whether existing now or hereafter, under any incentive,
retirement, pension, profit sharing, stock purchase or benefit plan or other
arrangement not related to severance following a Change of Control, and
shall not affect, enlarge or reduce your rights with respect to any stock
options, restricted stock or other equity interests that have been granted or
issued to you by the Company prior to the date hereof or in the future.
3.2 Employment Agreement
This Agreement is intended to supplement your Employment Agreement only
with respect to Severance Payments in the event of the termination of your
employment following a Change of Control. In the event you become entitled to a
Severance Payment pursuant to Section 2.1 of this Agreement, the provisions of
this Agreement will govern and replace the benefits you may otherwise be
entitled to receive pursuant to Section 8 of the Employment Agreement, except
with respect to the vesting of your stock options and restricted stock, and the
time of exercise of vested stock options which shall be treated as provided in
such Section 8 (and nothing in this Agreement is intended to affect the
definition of "Good Reason" in Section 8 for purposes of such vesting). In
addition, nothing in this Agreement, including your entitlement to a Severance
Payment, shall affect the provisions of Section 7 (including the definition of
"Change in Control" included therein) of the Employment Agreement. This
Agreement does not constitute an employment agreement, and other than as
specifically provided in this Section 3.2, this Agreement does not amend the
Employment Agreement and the Employment Agreement will remain in full force and
effect with respect to the terms and conditions of your employment.
<PAGE>
ARTICLE IV
SUCCESSOR TO COMPANY
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place. In
such event, the term "Company," as used in this Agreement, shall mean (from and
after, but not before, the occurrence of such event) the Company as herein
before defined and any successor or assignee to the business or assets which by
reason hereof becomes bound by the terms and provisions of this Agreement.
ARTICLE V
LEGAL FEES AND EXPENSES
The Company shall pay as they become due all legal fees, costs of
litigation and other expenses incurred in good faith by you as a result of the
Company's refusal or failure to make the Severance Payment to which you become
entitled under this Agreement, as a result of the Company's contesting the
validity, enforceability or interpretation of this Agreement or of your right to
benefits hereunder, or with regard to any Dispute (as provided in Section
2.3(c)). You shall be conclusively presumed to have acted in good faith unless a
court makes a final determination not otherwise subject to appeal to the
contrary.
ARTICLE VI
ARBITRATION
Except as otherwise provided in Section 2.3, and without prejudice to
your rights under Section 7.11 and 7.12, you shall have the right and option
(but not the obligation) to elect (in lieu of litigation) to have any dispute or
controversy arising under or in connection with this Agreement not otherwise
resolved through the claims procedure set forth in Section 7.11, including any
Dispute under Section 2.3, settled by arbitration, conducted by one arbitrator
sitting in a location selected by you within fifty (50) miles from the location
of your job with the Company or any of its Subsidiaries, in accordance with the
rules of the American Arbitration Association then in effect. Judgement may be
entered on the award of the arbitrator in any court having jurisdiction. All
expenses of such arbitration, including the fees and expenses of your counsel,
shall be borne, and paid as incurred, by the Company; provided that the Company
shall only be required to pay your fees and expenses if they are incurred in
good faith. You shall be conclusively presumed to have acted in good faith
unless and until the arbitrator makes a final determination to the contrary.
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 Applicable Law
To the extent not preempted by the laws of the United States and in the
interest of interpreting this Agreement in a uniform manner with other similar
agreements being entered into by the Company with other of its and its
Subsidiaries' employees regardless of the jurisdiction in which you are employed
or any other factor, the laws of the State of California shall be the
controlling law in all matters relating to this Agreement, regardless of the
choice-of-law rules of the State of California or any other jurisdiction.
7.2 Construction
No term or provision of this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement and any present or future
statute, law, ordinance, or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail, but in such event the
affected provision of this Agreement affected shall be curtailed and limited
only to the extent necessary to bring such provision within the requirements of
the law.
7.3 Severability
If a provision of this Agreement shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of this Agreement
and this Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.
7.4 Headings
The Section headings in this Agreement are inserted only as a matter of
convenience, and in no way define, limit, or extend or interpret the scope of
this Agreement or of any particular Section.
7.5 Notice of Termination
Following a Change of Control, any purported termination of your
employment by the Company or any of its Subsidiaries shall be communicated by a
written notice of termination, which notice shall indicate, if it purports to be
based on Cause, the specific reasons, if any, relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment. The failure to provide such notice shall create
a rebuttable presumption that you are entitled to a Severance Payment and the
other benefits provided by this Agreement.
7.6 Assignability
Neither this Agreement nor any right or interest therein shall be
assignable or transferable (whether by pledge, grant of a security interest, or
otherwise) by you, your beneficiaries or legal representatives, except by will
or by the laws of descent and distribution. This Agreement shall
<PAGE>
be binding upon and shall inure to the benefit of the Company, its successors
and assigns, and you and shall be enforceable by them and your legal personal
representatives.
7.7 Entire Agreement
Except as otherwise expressly provided in Article III, this Agreement
constitutes the entire agreement between the Company and you regarding the
subject matter hereof and supersedes all prior agreements, if any,
understandings and arrangements, written or oral, between the Company and you
with respect to the subject matter hereof.
7.8 Term
If a Change of Control has not theretofore occurred, this Agreement
shall expire and be of no further force and effect on December 31, 2001;
provided that the Board of Directors of the Company may, at any time prior to
the expiration thereof, extend the term of this Agreement for a term of up to
two years, including changing the dates set forth in the definition of "Change
of Control", without any further action on your part.
If a Change of Control occurs, this Agreement shall continue in full
force and effect, and shall not terminate or expire until the expiration of
three hundred sixty six (366) calendar days from and including the date of the
Change of Control, at which time this Agreement shall terminate except if you
become entitled to Severance Payments hereunder prior to such time. If you
become so entitled to Severance Payments hereunder, this Agreement shall
continue and be effective until you (or the person(s) specified in Section 2.5)
shall have received in full all Severance Payments and other benefits to which
you are entitled under this Agreement, at which time this Agreement shall
terminate for all purposes.
7.9 Amendment
Except as set forth in Section 7.8, no provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by you and the Company. No waiver by the
Company or you at any time or any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or any prior or subsequent time. No agreement or representations,
written or oral, express or implied, with respect to the subject matter hereof,
have been made by either party which are not expressly set forth in this
Agreement.
7.10 Notices
For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other, provided that all notices to the Company shall be
directed to the attention of the Chairman of the Board of Directors with a copy
to the General Counsel. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the third business day after
the mailing thereof, except that notice of
<PAGE>
change of address shall be effective only upon actual receipt. No objection to
the method of delivery may be made if the written notice or other communication
is actually received.
7.11 Claims
(a) If you believe you are entitled to a benefit under this
Agreement, you may make a claim for such benefit by filing with the Company
a written statement setting forth the amount and type of benefit so claimed.
The statement shall also set forth the facts supporting the claim. The claim
may be filed by mailing or delivering it to the Secretary of the Company.
(b) Within fifteen (15) calendar days after receipt of such a claim,
the Company shall notify you in writing of its action on such claim and if such
claim is not allowed in full, shall state the following in a manner
calculated to be understood by you:
(i) The specific reason or reasons for the denial;
(ii) Specific reference to pertinent provisions of this Agreement
on which the denial is based;
(iii)A description of any additional material or information
necessary for you to be entitled to the benefits that have
been denied and an explanation of why such material or
information is necessary; and
(iv) An explanation of this Agreement's claim review procedure.
(c) Without prejudice to your rights under Article VI, if you
disagree with the action taken by the Company, you or your duly authorized
representative may apply to the Company for a review of such action. Such
application shall be made within ninety (90) calendar days after receipt
by you of the notice of the Company's action on your claim. The application for
review shall be filed in the same manner as the claim for benefits. In
connection with such review, you may inspect any documents or records pertinent
to the matter and may submit issues and comments in writing to the Company. A
decision by the Company shall be communicated to you within thirty (30)
calendar days after receipt of the application. The decision on review
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by you, and specific
references to the pertinent provisions of this Agreement on which the decision
is based.
7.12 Escrow.
(a) In the event that the Company denies, in whole or in part, a
claim for a benefit made by you under Section 7.11 hereof, or contests, in whole
or in part, your right to receive benefits under this Agreement, or otherwise
fails to make any cash payments or provide other benefits due under this
Agreement within ten (10) calendar days of the date such payments or
benefits are due, the Company shall within ten (10) calendar days of receipt of
your written demand, deposit the full amount of the benefit which is claimed
but not paid, or the amount contested by the Company, or the amount due, with
an escrow agent reasonably acceptable to
<PAGE>
you. The escrow agent shall be a commercial bank or trust company having an
aggregate capital and surplus in excess of $50,000,000.
(b) Any amounts deposited in escrow shall be held by the escrow
agent in an interest bearing account until the issuance of a final,
nonappealable order or decision by a court of competent jurisdiction or an
arbitral award under Article VI with respect to the claim, or amount contested
or not paid. At that time, to the extent that the order or decision is in your
favor, the amount in escrow or any portion thereof owing to you, including all
interest accrued on such amount,
shall be paid to you.
(c) The parties agree that if the Company fails to deposit the
required funds in escrow pursuant to the provisions of paragraph (a) above,
then, in addition to all other remedies provided at law or in equity, you shall
be entitled, without the necessity of posting a bond, to seek equitable
relief to enforce the provisions of this Section 7.12. You shall be entitled
to seek any relief in any court of competent jurisdiction even if you have
elected to pursue arbitration of the dispute under Article VI of this Agreement.
7.13 General Release.
(a) A condition to your receipt of the Severance Payments under
Article II shall be your execution and delivery (and the expiration of
any applicable revocability period afforded by law) of a full and complete
release by you of any and all claims you may have against the Company, any of
its past, present or future stockholders or any of their respective officers,
directors, employees and affiliates (past, present or future), including,
but not limited to, claims you might have relating to your employment and/or
cessation of employment with the Company, including without limitation, tort,
contract and common law claims and claims under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, or any other similar federal, state or
local statute, rule or regulation; provided that, there shall be excluded from
the scope of such general release the following:
(i) claims that you may have against the Company for
reimbursement of reasonable and necessary business expenses
incurred by you during the course of your employment;
(ii) claims that may be made by you for payment of accrued
salary, stock options, pension benefits or other continuing
benefits as specifically provided in Articles II and III of
this Agreement; and
(iii)claims respecting matters for which you are entitled to be
indemnified under the Company's Certificate of Incorporation
or Bylaws or indemnification agreements, respecting third
party claims asserted or third party litigation pending or
threatened against you.
(b) The release shall be in a form reasonably satisfactory to the
Company and shall also include (i) appropriate provisions as necessary to insure
the release is valid and enforceable under applicable laws, including the
Older Workers Benefit Protection Act, and (ii) a waiver of
<PAGE>
California Civil Code Section 1542 (which provides that unless you specifically
agree to release claims you do not know about, they are not released by a
general release). Such payment shall be considered independent consideration
made in exchange for such release.
If this Agreement is acceptable to you, please sign the enclosed copy
of this Agreement in the space provided below and return it to me.
Sincerely,
/s/
Donald B. Rice, Ph.D.
Chairman of the Board
ACCEPTED AND AGREED TO:
/s/
_______________________________
Richard B. Brewer
Dated: January 13, 2000
<PAGE>
Supplemental Information Regarding
Scios Inc. CEO Change of Control Severance Plan
The Agreement constitutes a single employee welfare benefit plan within
the meaning of Section 3(1) of ERISA. The name of the plan is the Scios Inc. CEO
Change of Control Severance Plan (the "Plan"). The Administrator of the Plan,
within the meaning of Section 3(16) of ERISA, and the Named Fiduciary thereof,
within the meaning of Section 402 of ERISA, is the Company. A statement of Plan
information and the rules applicable under ERISA are set forth below:
Claims Procedure. Set forth in Section 7.11 of the Agreement
Information provided under ERISA. This Plan is an unfunded severance
plan, maintained on a calendar year basis. In addition to constituting the Plan,
the Agreement, together with this supplemental information, also constitutes the
summary plan description required by ERISA. The Plan sponsor is Scios Inc. which
bears the costs of all the benefits under the Plan. The Employer Identification
number of Scios is 95-3701481; and the Plan number assigned by Scios is 506. The
Plan Administrator's name, business address, and telephone number are: Scios
Inc., 820 West Maude Avenue, Sunnyvale, California 94086, (408) 616-8200. The
Plan Administrator is the agent for service of legal process.
Statement of ERISA Rights. A participant in this Plan is entitled to
certain rights and protections under a federal law known as "ERISA." ERISA
provides that all Plan participants shall be entitled to examine, without
charge, at the Plan Administrator's office, all Plan documents and the Plan's
annual report. Copies of these documents and other Plan information may also be
obtained upon written request to the Plan Administrator. A reasonable charge may
be made for copies.
In addition to creating rights for the Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of this Plan. The
people who operate this Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining benefits or
exercising your rights under ERISA. If your claim benefits is denied in whole or
in part, you must receive a written explanation of the reason for this denial.
You have the right to have the Plan Administrator review and reconsider your
claim, as described elsewhere in this summary plan description.
Under ERISA, there are steps you can take to enforce the above rights,
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
a suit in a state or federal court. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will decide who
<PAGE>
should pay court costs and legal fees. If you are successful the court may
order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees, for example, if it finds
your claim is frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
