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<SEC-DOCUMENT>0000950157-03-000323.txt : 20030429
<SEC-HEADER>0000950157-03-000323.hdr.sgml : 20030429
<ACCEPTANCE-DATETIME>20030429165640
ACCESSION NUMBER:		0000950157-03-000323
CONFORMED SUBMISSION TYPE:	S-3
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20030429

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			JOHNSON & JOHNSON
		CENTRAL INDEX KEY:			0000200406
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				221024240
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			0103

	FILING VALUES:
		FORM TYPE:		S-3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-104821
		FILM NUMBER:		03670107

	BUSINESS ADDRESS:	
		STREET 1:		ONE JOHNSON & JOHNSON PLZ
		CITY:			NEW BRUNSWICK
		STATE:			NJ
		ZIP:			08933
		BUSINESS PHONE:		7325242454
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>s-3.txt
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>

<TABLE>
<CAPTION>
<S><C>

                              AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
                                                                                                             REGISTRATION NO. 333-
                                                                                                        REGISTRATION NO. 333-99641
===================================================================================================================================
                                                 SECURITIES AND EXCHANGE COMMISSION
                                                       WASHINGTON, D.C. 20549

                   ----------------------------------------------------------------------------------------------
                                                              FORM S-3
                                      REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1
                                                                UNDER
                                                     THE SECURITIES ACT OF 1933

                   ----------------------------------------------------------------------------------------------
                       JOHNSON & JOHNSON                                                       SCIOS INC.
     (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)              (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                           NEW JERSEY                                                           DELAWARE
 (STATE OF OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)      (STATE OF OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
                           22-1024240                                                          95-3701481
              (I.R.S. EMPLOYER IDENTIFICATION NO.)                                (I.R.S. EMPLOYER IDENTIFICATION NO.)
                  ONE JOHNSON & JOHNSON PLAZA                                             820 WEST MAUDE AVENUE
                 NEW BRUNSWICK, NEW JERSEY 08933                                       SUNNYVALE, CALIFORNIA 94085
                         (732) 524-0400                                                      (408) 616-8200
 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING       (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
     AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)             AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                   ----------------------------------------------------------------------------------------------
                                                         JOHN T. CRISAN, ESQ.
                                                          JOHNSON & JOHNSON
                                                     ONE JOHNSON & JOHNSON PLAZA
                                                   NEW BRUNSWICK, NEW JERSEY 08933
                                                      TELEPHONE: (732) 524-0400
                (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                   ----------------------------------------------------------------------------------------------

                                                             COPIES TO:
                                                    ROBERT I. TOWNSEND, III, ESQ.
                                                     CRAVATH, SWAINE & MOORE LLP
                                                           WORLDWIDE PLAZA
                                                          825 EIGHTH AVENUE
                                                      NEW YORK, NEW YORK 10019
                                                           (212) 474-1000

                   ----------------------------------------------------------------------------------------------

     Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes
effective.
     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans,
check the following box. |X|
     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ________
     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ] ________
     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

                                                  CALCULATION OF REGISTRATION FEE
===================================================================================================================================
                                                                                                       PROPOSED
                                                                 AMOUNT        PROPOSED MAXIMUM        MAXIMUM          AMOUNT OF
            TITLE OF EACH CLASS OF SECURITIES                    TO BE          OFFERING PRICE        AGGREGATE       REGISTRATION
                     TO BE REGISTERED                          REGISTERED          PER UNIT         OFFERING PRICE         FEE
- -----------------------------------------------------------------------------------------------------------------------------------
5.5% Convertible Subordinated Notes Due 2009
of Scios Inc......................................                N/A                 N/A                N/A             N/A(1)
Guarantees by Johnson & Johnson...................                N/A                 N/A                N/A             N/A(2)
===================================================================================================================================

(1) A registration fee of $13,800.00 was paid in connection with the original filing by Scios Inc. of the Registration Statement on
Form S-3 (Registration No. 333-99641) filed on September 17, 2002.

(2) In connection with the merger of Saturn Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Johnson &
Johnson, with and into Scios Inc., a Delaware corporation, Scios, Johnson & Johnson and Wells Fargo Bank, National Association, as
trustee, under the Indenture dated as of August 5, 2002 pursuant to which Scios's 5.50% Convertible Subordinated Notes Due 2009
(the "notes") were issued, entered into a supplemental indenture pursuant to which, among other things, each $1,000 principal
amount of the notes became convertible only into the right to receive $1,145.04 in cash, without interest, and Johnson & Johnson
unconditionally and irrevocably guaranteed, on a subordinated basis, the notes. No consideration was received by Johnson & Johnson
from holders of the notes or otherwise in connection with Johnson & Johnson's issuance of its subordinated guarantees of the notes
(which guarantees are embodied in the supplemental indenture).

                  ----------------------------------------------------------------------------------------------

     Pursuant to Rule 429 under the Securities Act, the prospectus included in this registration statement is a combined
prospectus and relates to this registration statement and Registration No. 333-99641, pursuant to which the notes with an
aggregate principal amount of $150,000,000 were registered. This registration statement also constitutes Post-Effective Amendment
No. 1 to the notes registration statement.

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

===================================================================================================================================
</TABLE>


<PAGE>


                             EXPLANATORY STATEMENT

          This registration statement is being filed under the Securities Act
of 1933 jointly by Johnson & Johnson, a New Jersey corporation, referred to in
this registration statement as Johnson & Johnson, and Scios Inc., a Delaware
corporation, referred to in this registration statement as Scios. On September
17, 2002, Scios filed a registration statement, Registration No. 333-99641,
referred to in this registration statement as the notes registration
statement, registering $150,000,000 principal amount of its 5.50% convertible
subordinated notes due 2009, referred to in this registration statement as the
notes, and common stock of Scios then issuable upon conversion of the notes.
The notes registration statement became effective on January 10, 2003.

          On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes. This registration statement
registers the resale of the guarantee by Johnson & Johnson of the obligations
of Scios pursuant to the notes. This post-effective amendment No. 1 to the
notes registration statement revises the notes registration statement to
reflect that the notes are guaranteed on a subordinated basis by Johnson &
Johnson, are convertible only into the right to receive $1,145.04 in cash
without interest and to explain other changes to the notes related to the
merger.


<PAGE>


PROSPECTUS                                                SUBJECT TO COMPLETION
                                                           DATED APRIL 29, 2003



                                 $150,000,000
                                  SCIOS INC.
                 5.50% CONVERTIBLE SUBORDINATED NOTES DUE 2009

                               JOHNSON & JOHNSON
                                  GUARANTEES



          In August 2002, Scios issued and sold $150,000,000 aggregate
principal amount of its 5.50% convertible subordinated notes due 2009 in a
private offering.

          On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes.

          This prospectus relates to the resale of the notes and the
associated Johnson & Johnson guarantees. The notes may be sold from time to
time by or on behalf of the selling securityholders named in this prospectus
or in supplements to this prospectus. The Johnson & Johnson guarantees are
embodied in the first supplemental indenture to the indenture governing the
notes and may be sold together with the associated notes from time to time by
or on behalf of the selling securityholders named in this prospectus or in
supplements to this prospectus.

          Scios will pay interest on the notes each February 15 and August 15
to the holders of record on each February 1 and August 1. The first interest
payment was made on February 15, 2003. Scios may redeem some or all of the
notes on or after August 19, 2005 at the redemption prices listed in this
prospectus, plus accrued interest.

          Scios has pledged a portfolio of U.S. government securities as
security for the first six scheduled interest payments due on the notes.

          The notes are not listed on any national securities exchange.

          Neither Johnson & Johnson nor Scios will receive any proceeds from
the sale by the selling securityholders of the notes or associated Johnson &
Johnson guarantees offered by this prospectus or in any prospectus supplement.
Other than selling commissions and fees and transfer taxes, Scios and Johnson
& Johnson will pay all expenses of the registration and sale of the notes and
the associated guarantees.

          Investing in the notes and associated Johnson & Johnson guarantees
involves risk.  See "Risk Factors" beginning on page 5 of this prospectus.

          NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

          The date of this prospectus is            , 2003.


<PAGE>


                               TABLE OF CONTENTS

                                                                           Page

Additional Information......................................................i
Special Note Regarding Forward-Looking Statements...........................1
Johnson & Johnson...........................................................2
Risk Factors................................................................5
Ratio of Earnings to Fixed Charges..........................................6
Use of Proceeds.............................................................7
Description of Notes........................................................8
Description of Johnson & Johnson Guarantees.................................20
Selling Securityholders.....................................................20
Plan of Distribution........................................................21
Material United States Federal Income Tax Consequences......................24
Legal Matters...............................................................28
Experts.....................................................................28
Where You Can Find More Information.........................................28


                      ----------------------------------


                            ADDITIONAL INFORMATION

          This prospectus incorporates important business and financial
information about Johnson & Johnson and Scios that is not included in or
delivered with this prospectus. This information is available to you without
charge upon your written or oral request. You can obtain documents
incorporated by reference in this prospectus by requesting them in writing or
by telephone from Johnson & Johnson at the following address and telephone
number:

                               JOHNSON & JOHNSON
                          One Johnson & Johnson Plaza
                            New Brunswick, NJ 08933
                    Attention: Corporate Secretary's Office
                           Telephone: (732) 524-2455

Scios and Johnson & Johnson have not authorized anyone to provide you with
different information. You should not assume that the information contained or
incorporated by reference in this prospectus is accurate as of any date other
than the date of this prospectus. Scios and Johnson & Johnson are not making
an offer of securities in any state where the offer is not permitted.

         See "Where You Can Find More Information" on page 28.

                                      i


<PAGE>


               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus contains forward-looking statements. These
statements relate to future events or future financial performance. When used
in this prospectus, any prospectus supplement and the documents incorporated
in this prospectus by reference, words such as "anticipate," "believe," "can,"
"continue," "could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "should," or "will" or the negative of these terms or
other comparable terminology are intended to identify forward-looking
statements. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks and
uncertainties outlined under "Risk Factors," that may cause Johnson &
Johnson's or Scios's or their respective industries' actual results, levels of
activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Johnson & Johnson and Scios
assume no obligation to update these forward-looking statements.

          Although Johnson & Johnson and Scios believe that the expectations
reflected in these statements are reasonable, they cannot guarantee future
results, levels of activity, performance or achievements.

                                      1


<PAGE>


                               JOHNSON & JOHNSON

          Johnson & Johnson, with approximately 108,300 employees, is one of
the world's largest manufacturers of health care products, as well as a
provider of related services, for the consumer, pharmaceutical and medical
devices and diagnostics markets. Johnson & Johnson has more than 200 operating
companies in 54 countries around the world, selling products in more than 175
countries.

          Johnson & Johnson's worldwide business is divided into three
segments: consumer, pharmaceutical and medical devices and diagnostics. The
consumer segment's principal products are personal care and hygienic products,
including nonprescription drugs, adult skin and hair care products, baby care
products, oral care products, first aid products and sanitary protection
products. These products are marketed principally to the general public and
distributed both to wholesalers and directly to independent and chain retail
outlets.

          The pharmaceutical segment's principal worldwide franchises are in
the antifungal, anti-infective, cardiovascular, dermatology, gastrointestinal,
hematology, immunology, neurology, oncology, pain management, psychotropic,
urology and women's health fields. These products are distributed both
directly and through wholesalers for use by health care professionals and the
general public.

          The medical devices and diagnostics segment includes a broad range
of products used by or under the direction of health care professionals,
including, suture and mechanical wound closure products, surgical equipment
and devices, wound management and infection prevention products,
interventional and diagnostic cardiology products, diagnostic equipment and
supplies, joint replacements and disposable contact lenses. These products are
used principally in the professional fields by physicians, nurses, therapists,
hospitals, diagnostic laboratories and clinics. Distribution to these markets
is done both directly and through surgical supply and other dealers.

          Johnson & Johnson was organized in the State of New Jersey in 1887.
The address of its principal executive offices is One Johnson & Johnson Plaza,
New Brunswick, New Jersey 08933, and the telephone number at that address is
(732) 524-0400.

RECENT DEVELOPMENTS

          On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes.

                                      2


<PAGE>




                                   THE NOTES

ISSUER                   Scios Inc.

SECURITIES OFFERED       $150,000,000 aggregate principal amount of 5.50%
                         convertible subordinated notes due 2009.

INTEREST                 5.50% per annum on the principal amount, payable
                         semiannually in arrears in cash on February 15 and
                         August 15 of each year, commencing February 15, 2003.

MATURITY DATE            August 15, 2009.

GUARANTEE                Johnson & Johnson has unconditionally and irrevocably
                         guaranteed the notes on a subordinated basis. See
                         "Description of Johnson & Johnson Guarantees."

CONVERSION RIGHTS        The notes are convertible at the option of the
                         holder at any time prior to redemption or maturity
                         only into $1,145.04 in cash without interest per
                         $1,000 in principal amount of notes. See "Description
                         of Notes--Conversion of the Notes."

SECURITY                 Scios has purchased and pledged to the trustee under
                         the indenture, as security for the benefit of the
                         trustee under the indenture and the ratable benefit
                         of the holders of the notes, approximately $24.0
                         million of U.S. government securities, which will be
                         sufficient upon receipt of scheduled principal and
                         interest payments thereon, to provide for the payment
                         in full of the first six scheduled interest payments
                         due on the notes. The notes are not otherwise
                         secured. See "Description of Notes--Security."

RANKING                  The notes (other than with respect to payments made
                         toward the first six scheduled interest payments due
                         on the notes, as described above under "Security")
                         are subordinated in right of payment to all existing
                         and future senior indebtedness of Scios Inc. and are
                         structurally subordinated to any indebtedness and
                         other liabilities (including trade and other
                         payables) of Scios's subsidiaries. As of December 31,
                         2002, Scios had approximately $35.2 million of
                         indebtedness that constituted senior indebtedness, no
                         indebtedness that ranked equal in right of payment to
                         the notes and no indebtedness of subsidiaries that
                         would have been structurally senior to the notes. The
                         indenture governing the notes does not limit the
                         amount of indebtedness, including senior
                         indebtedness, that Scios or its subsidiaries may
                         incur. See "Description of Notes--Subordination of
                         the notes."

OPTIONAL REDEMPTION      At any time on or after August 19, 2005, Scios may
                         redeem some or all of the notes at the declining
                         redemption prices listed herein, plus accrued
                         interest. See "Description of Notes--Optional
                         redemption

                                      3


<PAGE>


                         by Scios."

SINKING FUND             None.

USE                      Neither Johnson & Johnson nor Scios will receive any
OF PROCEEDS              proceeds from any sale of securities under this
                         prospectus.

TRADING                  The notes and the associated Johnson & Johnson
                         guarantees are not listed on any national securities
                         exchange.

                                      4


<PAGE>


                                 RISK FACTORS

You should consider the risk factors below as well as the other information
set forth or incorporated by reference in this prospectus. See "Where You Can
Find More Information" on page 28. If any of the following risks actually
occur, Johnson & Johnson's or Scios's business, financial condition or results
of operations could be materially and adversely affected. In such case,
Johnson & Johnson's or Scios's ability to make payments on the notes or the
associated Johnson & Johnson guarantees could be impaired, the trading prices
of the notes could decline, and you could lose all or part of your investment.
Please read "Special Note Regarding Forward-Looking Statements."

RISKS RELATED TO JOHNSON & JOHNSON AND SCIOS

          In addition to the risk factors set forth below, you should consider
carefully the various factors, risks, uncertainties and assumptions that could
materially affect the actual results of Johnson & Johnson and Scios contained
in:

o    Exhibit 99(b) to Johnson & Johnson's Annual Report on Form 10-K for the
     fiscal year ended December 29, 2002, and

o    the "Risk Factors" section in Scios's Annual Report on Form 10-K for the
     fiscal year ended December 31, 2002.

RISKS RELATED TO THIS OFFERING

          The notes and guarantees are subordinated, and holders of any senior
indebtedness will be paid before holders of the notes are paid.

          Except as described below in the section entitled "Description of
Notes--Security," the notes are unsecured and subordinated in right of payment
to any existing and future senior indebtedness. As of December 31, 2002, Scios
had approximately $35.2 million of indebtedness that constituted senior
indebtedness. In addition, Scios may incur new indebtedness, which may be
senior to the indebtedness represented by the notes. Scios is not prohibited
from incurring debt, including indebtedness secured by its assets, under the
indenture governing the notes. In the event of Scios's bankruptcy, liquidation
or reorganization or upon acceleration of the notes due to an event of default
under the indenture and in certain other events, Scios's assets, other than
the U.S. government securities pledged to secure the first six interest
payments on the notes, will be available to pay obligations on the notes only
after all of the secured indebtedness of Scios and other senior indebtedness
of Scios has been paid. As a result, there may not be sufficient assets
remaining to pay amounts due on any or all of the outstanding notes. For a
description of the subordination provisions of the notes, see the "Description
of Notes--Subordination of the notes" section of this prospectus. The Johnson
& Johnson guarantees are subordinated in right of payment to all of its
existing and future senior indebtedness. As of April 28, 2003, Johnson &
Johnson's aggregate outstanding senior indebtedness was approxiamtely $5,118
million.

          You cannot be sure that a public market will develop for the notes.

          On August 5, 2002, Scios issued the notes to the initial purchasers
in a private placement. The notes are eligible to trade in PORTAL, the Private
Offering, Resale and Trading through Automated Linkages Market of the National
Association of Securities Dealers, Inc., a screen-based automated market for
trading securities for qualified institutional buyers. However, the notes
resold pursuant to this prospectus will no longer trade on the PORTAL market.
As a result, there may be a limited market for the notes. Scios does not
intend to list the notes on any national securities exchange or on the Nasdaq
National Market.

                                      5


<PAGE>


          A public market may not develop for the notes. Although the initial
purchasers of the notes have advised Scios that they intend to make a market
in the notes, they are not obligated to do so and may discontinue such market
making at any time without notice. In addition, such market making activity
will be subject to the limits imposed by the Securities Act and the Exchange
Act. Accordingly, Scios cannot assure you that any market for the notes will
develop or, if one does develop, that it will be maintained. If a public
market for the notes fails to develop or be sustained, the trading price of
the notes could be materially adversely affected.

         The notes are not protected by restrictive covenants.

         The indenture governing the notes does not contain any financial or
operating covenants or restrictions on the payment of dividends, the
incurrence of indebtedness or the issuance or repurchase of securities by
Scios or any of its subsidiaries. The indenture contains no covenants or other
provisions to afford protection to holders of notes in the event of a change
in control involving Scios.



                      RATIO OF EARNINGS TO FIXED CHARGES

          The ratio of earnings to fixed charges for Johnson & Johnson
represents its historical ratio and is calculated on a total enterprise basis.
This ratio is computed by dividing the sum of earnings before provision for
taxes and fixed charges (excluding capitalized interest) by fixed charges.
Fixed charges represent interest (including capitalized interest) and
amortization of debt discount and expense and the interest factor of all
rentals, consisting of an appropriate interest factor on operating leases.

<TABLE>
<CAPTION>
- ------------------------------------- --------------------------------------------------------------------------------
                                                                     Fiscal Year Ended
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
                                       December 29,      December 30,     December 31,      January 2,     January 3,
                                           2002              2001             2000             2000           1999
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
<S>                                    <C>               <C>              <C>               <C>            <C>
Ratio of Earnings to
     Fixed Charges...........              26.75            23.95             18.41           14.76          13.46
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
</TABLE>

          The ratio of earnings to fixed charges for Scios is computed by
dividing earnings by fixed charges. For purposes of computing this ratio of
earnings to fixed charges, earnings consist of pretax loss from continuing
operations adjusted by adding fixed charges. Fixed charges consist of interest
expense, amortization of financing costs and estimated interest component of
rental expense on operating leases.
<TABLE>
<CAPTION>

- ------------------------------------- --------------------------------------------------------------------------------
                                                              Fiscal Year Ended December 31,
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
                                           2002              2001             2000             1999          1998
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
<S>                                    <C>               <C>              <C>               <C>            <C>
Ratio of Earnings to
     Fixed Charges...........               n/a              n/a               n/a             n/a            0.7
- ------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
</TABLE>

Earnings of Scios were insufficient to cover fixed charges by $869,000,
$20,050,000, $42,519,000, $62,170,000 and $87,916,000 for the fiscal years
ended December 31, 1998, 1999, 2000, 2001 and 2002, respectively.

                                      6


<PAGE>


                                USE OF PROCEEDS

          The selling securityholders will receive all of the proceeds of the
sale of the notes and the associated Johnson & Johnson guarantees offered by
this prospectus. Neither Johnson & Johnson nor Scios will receive any of the
proceeds from the sale of the notes and the associated Johnson & Johnson
guarantees offered by this prospectus.

                                      7


<PAGE>


                             DESCRIPTION OF NOTES

          The notes were issued under an indenture dated as of August 5, 2002
between Scios and Wells Fargo Bank, National Association, as trustee. Scios,
Johnson & Johnson and Wells Fargo Bank, National Association subsequently
entered into a first supplemental indenture dated as of April 29, 2003. The
following summarizes some, but not all, of the provisions of the notes and the
indenture, as amended and supplemented by the first supplemental indenture.
You should read the indenture and the notes in their entirety because they,
and not this description, define your rights as a holder of the notes. A copy
of the form of indenture, the first supplemental indenture and the form of
certificate evidencing the notes are exhibits to the registration statement of
which this prospectus forms a part and will be made available to you upon
request.

GENERAL

          The notes are unsecured (except to the extent described under
"--Security") general obligations of Scios and are subordinate in right of
payment as described under "--Subordination of the notes." However, payment
from the money or the proceeds from the U.S. government securities pledged by
Scios to Wells Fargo Bank, National Association, as collateral agent, as
security for the notes and for the benefit of the trustee and the ratable
benefit of the holders of the notes, as described under "--Security," is not
subordinated to any senior indebtedness of Scios or subject to the
subordination provisions described under "--Security". The notes are
convertible into cash as described under "--Conversion of the notes." The
notes are $150,000,000 aggregate principal amount. The notes may be issued
only in denominations of $1,000 or in integral multiples of $1,000.

          The notes bear interest at the annual rate of 5.50% from August 5,
2002, or from the most recent payment date to which interest has been paid or
duly provided for. Interest is payable semi-annually in arrears on February 15
and August 15, which commenced on February 15, 2003, to holders of record at
the close of business on the preceding February 1 and August 1, respectively,
except:


     o    that the interest payable upon redemption, unless the date of
          redemption is an interest payment date, will be payable to the
          person to whom principal is payable; and

     o    as set forth in the next succeeding paragraph.

     o    Interest will be paid, at Scios' option, either:

     o    by check mailed to the address of the person entitled to the
          interest as it appears in the note register; provided that a holder
          of notes with an aggregate principal amount in excess of $2 million
          will, at the written election of the holder, be paid by wire
          transfer in immediately available funds; or

     o    by transfer to an account maintained by that person located in the
          United States.

          Payments to The Depository Trust Company, New York, New York, or
DTC, will be made by wire transfer of immediately available funds to the
account of DTC or its nominee. Interest will be computed on the basis of a
360-day year composed of twelve 30-day months.

          The notes will mature on August 15, 2009 unless earlier converted or
redeemed as described below. The indenture does not contain any financial
covenants or restrictions on the payment of dividends, the incurrence of
indebtedness or the issuance or repurchase of securities by Scios or any of
its

                                      8


<PAGE>


subsidiaries. The indenture contains no covenants or other provisions to
protect holders of the notes in the event of a highly leveraged transaction or
a change in control of Scios.

          In the first supplemental indenture, the indenture governing the notes
was amended to eliminate the obligation of Scios to repurchase the notes at the
option of the holders after the occurrence of a change in control of Scios. This
provision was eliminated because the price at which the notes would have been
required to be repurchased after a change in control (100% of the principal
amount plus accrued and unpaid interest) was less than the cash amount payable
upon conversion of the notes after the effectiveness of the merger ($1,145.04
per $1,000 in principal amount).

CONVERSION OF THE NOTES

          Any registered holder of notes may, at any time prior to close of
business on the business day prior to the date of redemption or final maturity
of the notes, as appropriate, convert the principal amount of any notes or
portions thereof, in denominations of $1,000 or integral multiples of $1,000,
into $1,145.04 in cash without interest per $1,000 in principal amount of
notes.

          Except as described below, no payment or adjustment will be made on
conversion of any notes for interest accrued thereon. If any notes are
converted between a record date and the next interest payment date, those
notes must be accompanied by funds from the holder equal to the interest
payable on the next interest payment date on the principal amount so
converted. The foregoing sentence does not apply in the case of such notes or
portions of such notes called for redemption. In the case of notes called for
redemption, conversion rights will expire at the close of business on the
business day preceding the day fixed for redemption unless Scios defaults in
the payment of the redemption price.

SECURITY

          On August 5, 2002, Scios used approximately $24.0 million of
existing funds to purchase U.S. government securities which were pledged to
the collateral agent as security for the notes and for the benefit of the
trustee and the ratable benefit of the holders of the notes (and not for the
benefit of Scios's other creditors). These securities, as held and invested by
the collateral agent in accordance with the terms of the pledge agreement that
Scios entered into with the trustee and the collateral agent, are sufficient
upon receipt of scheduled interest and principal payments of such securities
to provide for payment in full of the first six scheduled interest payments on
the notes when due.

          The U.S. government securities were pledged by Scios to the
collateral agent for the benefit of the trustee and the ratable benefit of the
holders of the notes and are being held by the collateral agent in a pledge
account. Immediately prior to an interest payment date, the collateral agent
will release from the pledge account proceeds sufficient to pay interest then
due on the notes. Scios may also make additional payments to the collateral
agent to ensure that sufficient funds are available to pay interest then due
on the notes if necessary. A failure to pay interest on the notes when due
through the first six scheduled interest payment dates will constitute an
event of default (as defined below) under the indenture.

         The pledged U.S. government securities and the pledge account also
secure the repayment of the principal amount on the notes. If prior to the
date on which the sixth scheduled interest payment on the notes is due:

     o    an event of default under the notes or the indenture governing the
          notes occurs and is continuing; and

     o    the trustee or the holders of 25% in aggregate principal amount of
          the notes accelerate the notes by declaring the principal amount of
          the notes to be immediately due and payable (by written

                                      9


<PAGE>


          consent, at a meeting of note holders or otherwise), except for the
          occurrence of an event of default relating to the bankruptcy,
          insolvency or reorganization of Scios or that of any of Scios's
          significant subsidiaries, upon which the notes will be accelerated
          automatically,

then the proceeds from the pledged U.S. government securities will be promptly
released for payment to the note holders, subject to the automatic stay
provisions of bankruptcy law, if applicable.

          Distributions from the pledge account will be applied:

     o    first, to any accrued and unpaid interest on the notes; and

     o    second, to the extent available, to the repayment of a portion of
          the principal amount of the notes.

          If any event of default is waived prior to the acceleration of the
notes by the trustee or holders of the notes referred to above, the trustee
and the holders of the notes will not be able to accelerate the notes as a
result of that event of default.

          For example, if the first two interest payments were made when due
but the third interest payment was not made when due and the note holders
promptly exercised their right to declare the principal amount of the notes to
be immediately due and payable, then, assuming the automatic stay provisions
of bankruptcy law are inapplicable and the proceeds of the pledged U.S.
government securities are promptly distributed from the pledge account,

     o    an amount equal to the interest payment due on the third interest
          payment plus any additional interest o accrued on the missed third
          interest payment would be distributed from the pledge account as
          accrued interest; and

     o    the balance of the proceeds of the pledge account would be
          distributed as a portion of the principal amount of the notes.

          In addition, note holders would have an unsecured claim against
Scios for the remainder of the principal amount of their notes.

          Once Scios makes the first six scheduled interest payments on the
notes, all of the remaining pledged U.S. government securities and cash, if
any, will be released to Scios from the pledge account and thereafter the
notes will be unsecured.

OPTIONAL REDEMPTION BY SCIOS

          The notes are not entitled to any sinking fund.

          At any time on or after August 19, 2005, Scios may redeem the notes
on at least 30 days' and not more than 60 days' notice as a whole or, from
time to time, in part at the following prices, expressed as a percentage of
the principal amount, together with accrued interest to, but excluding, the
date fixed for redemption:

                                                                 REDEMPTION
                           PERIOD                                   PRICE

- -----------------------------------------------------------    --------------

Beginning August 19, 2005 and ending on August 14, 2006           103.143%

Beginning August 15, 2006 and ending on August 14, 2007           102.357%

                                      10


<PAGE>



Beginning August 15, 2007 and ending on August 14, 2008           101.571%

Beginning August 15, 2008 and ending on August 14, 2009           100.786%

- ------------------------------------------------------------------------------
         Any accrued interest becoming due on the date fixed for redemption
will be payable to the holders of record on the relevant record date of the
notes being redeemed.

          If less than all of the outstanding notes are to be redeemed, the
trustee will select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate. If a portion of a holder's notes is selected
for partial redemption and that holder converts a portion of that holder's
notes, the converted portion will be deemed to be of the portion selected for
redemption.

SUBORDINATION OF THE NOTES

          The indebtedness evidenced by the notes (other than with respect to
payments on the notes derived from U.S. government securities pledged by Scios
to the collateral agent for the benefit of the trustee and the ratable benefit
of the holders of the notes (hereafter referred to as "permitted payments"))
is subordinated to the extent provided in the indenture to the prior payment
in full, in cash or other payment satisfactory to holders of senior
indebtedness, of all of the existing and future senior indebtedness of Scios.
Upon any distribution of Scios's assets upon any dissolution, winding-up,
liquidation or reorganization, or in bankruptcy, insolvency, receivership or
similar proceedings, payment of the principal of, premium, if any, interest
and all other obligations in respect of the notes, including by way of
redemption, acquisition or other purchase thereof, on the notes, except for
permitted payments and payments Scios may choose to make comprised solely in
permitted junior securities acceptable to the holders, is subordinated in
right of payment to the prior payment in full, in cash or other payment
satisfactory to holders of senior indebtedness, of all of Scios's existing and
future senior indebtedness. In addition, the notes are effectively
subordinated to any indebtedness and other liabilities, including trade
payables and lease obligations and preferred stock, of Scios's subsidiaries.

          In the event of any acceleration of the notes because of an event of
default, the holders of any senior indebtedness then outstanding would be
entitled to payment in full, in cash or other payment satisfactory to holders
of senior indebtedness of Scios, of all obligations in respect to such senior
indebtedness before the holders of notes are entitled to receive any payment
or other distribution, except for permitted payments and payments Scios
chooses to make comprised solely in permitted junior securities acceptable to
the holders. Scios will be required to promptly notify holders of senior
indebtedness of Scios if payment of the notes is accelerated because of an
event of default.

          Scios also may not make any payment upon or redemption of or
purchase or otherwise acquire the notes, except for permitted payments and
payments it may choose to make comprised solely in permitted junior securities
acceptable to the holders, if:

     o    a default in the payment of principal, premium, if any, interest or
          other obligations in respect of o designated senior indebtedness of
          Scios occurs and is continuing beyond any applicable period of grace
          (a "payment default"); or

     o    any other default occurs and is continuing with respect to
          designated senior indebtedness of Scios that permits holders of the
          designated senior indebtedness of Scios to which such default
          relates to accelerate its maturity and the trustee receives a notice
          of such default, referred to as a payment blockage notice, from
          Scios or any other person permitted to give this notice under the
          indenture.

                                      11


<PAGE>


          Unless the holders of any senior indebtedness of Scios have
accelerated its maturity, Scios may and shall resume making such payments on
the notes:

     o    in the case of a payment default, when the default is cured or
          waived or ceases to exist; and

     o    in the case of a nonpayment default, the earlier of when such
          nonpayment default is cured or waived or ceases to exist or 179 days
          after receipt of the payment blockage notice.

          No new period of payment blockage may be commenced pursuant to a
payment blockage notice unless and until 360 days have elapsed since the
initial effectiveness of the prior payment blockage notice.

          No default that existed or was continuing on the date of delivery of
any payment blockage notice to the trustee shall be the basis for a subsequent
payment blockage notice, unless the default has been cured or waived for a
period of not less than 90 consecutive days.

          In the event of the bankruptcy, dissolution or reorganization of
Scios, holders of senior indebtedness may receive more, ratably, and holders
of the notes may receive less, ratably, than Scios's other creditors. Such
subordination will not prevent the occurrence of any event of default under
the indenture.

          While Scios currently has no subsidiaries with significant
operations, all or a portion of its operations in the future may be conducted
through subsidiaries. Any subsidiaries of Scios would be separate and distinct
legal entities. None of Scios's subsidiaries would have any obligation to pay
any amounts due on the notes or to provide Scios with funds for its payment
obligations, whether by dividends, distributions, loans or other payments. In
addition, any payment of dividends, distributions, loans or advances by
Scios's subsidiaries to Scios could be subject to statutory or contractual
restrictions. Payments to Scios by its subsidiaries will also be contingent
upon Scios's subsidiaries' earnings and business consideration. There can be
no assurance that Scios will receive adequate funds from its subsidiaries to
pay interest due on the notes or to repay the notes when redeemed or upon
maturity. Scios's right to receive any assets of any of its subsidiaries upon
their liquidation or reorganization, and therefore the right of the holders of
the notes to participate in those assets, will be effectively subordinated to
the claims of that subsidiary's creditors, including its trade creditors. In
addition, even if Scios was a creditor of any of its subsidiaries, Scios's
rights as a creditor would be subordinate to any security interest in the
assets of its subsidiaries and any indebtedness of its subsidiaries senior to
that held by Scios.

          As of December 31, 2002, Scios had approximately $35.2 million of
indebtedness that constituted senior indebtedness, no indebtedness that ranked
equal in right of payment to the notes and no indebtedness at Scios's
subsidiaries that would have been structurally senior to the notes.

          Neither Scios nor its subsidiaries are limited in or prohibited from
incurring senior indebtedness or any other indebtedness or liabilities under
the indenture.

CERTAIN DEFINITIONS

          "designated senior indebtedness" means any particular senior
indebtedness of Scios in which the instrument creating or evidencing the
senior indebtedness or the assumption of guarantee thereof (or related
documents or agreements to which Scios is a party) expressly provides that
such indebtedness shall be "designated senior indebtedness" of Scios (provided
that such instrument may place limitations and conditions on the right of such
senior indebtedness to exercise the rights of designated senior indebtedness).

                                      12


<PAGE>


          "indebtedness" means:

          (1) all of the indebtedness, obligations and other liabilities of
Scios, contingent or otherwise, for borrowed money, including obligations:

     o    in respect of overdrafts, foreign exchange contracts, currency
          exchange agreements, interest rate protection agreements and any
          loans or advances from banks, whether or not evidenced by notes or
          similar instruments; or

     o    evidenced by bonds, debentures, notes or similar instruments,
          whether or not the recourse of the lender is to all of Scios's
          assets or to only a portion thereof, other than any account payable
          or other accrued current liability or obligation incurred in the
          ordinary course of business in connection with the obtaining of
          materials or services;

          (2) all of Scios's reimbursement obligations and other liabilities,
contingent or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;

          (3) all of Scios's obligations and liabilities, contingent or
otherwise, in respect of leases required, in conformity with generally
accepted accounting principles, to be accounted for as capitalized lease
obligations on Scios's balance sheet or under other leases for facilities
equipment or related assets, whether or not capitalized, entered into or
leased for financing purposes, as determined by Scios;

          (4) all of Scios's obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a purchase
agreement, in connection with the lease of real property or improvements
thereon (or any personal property included as part of any such lease) which
provides that Scios is contractually obligated to purchase or cause a third
party to purchase the leased property and thereby guarantee a residual value
of leased property to the lessor and all of Scios's obligations under such
lease or related documents to purchase the leased property (whether or not
such lease transaction is characterized as an operating lease or a capitalized
lease in accordance with generally accepted accounting principles);

          (5) all of Scios's obligations, contingent or otherwise, with
respect to an interest rate, currency or other swap, cap, floor or collar
agreement, hedge agreement, forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument
or agreement;

          (6) all of Scios's direct or indirect guarantees or similar
agreements to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of indebtedness, obligations or liabilities of another
person of the kind described in clauses (1) through (5) above;

          (7) any indebtedness or other obligations of Scios described in
clauses (1) through (6) above secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by Scios, regardless
of whether the indebtedness or other obligation secured thereby has been
assumed by Scios; and

          (8) any and all deferrals, renewals, extensions and refundings of,
or amendments, modifications or supplements to, any indebtedness, obligation
or liability of Scios of the kind described in clauses (1) through (7) above.

          "permitted junior securities" means (a) shares of stock of any class
of Scios or (b) securities of Scios that are subordinated in right in payment
to all senior indebtedness of Scios that may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as,
or greater extent than, the notes are so subordinated pursuant to the terms of
the indenture.

                                      13


<PAGE>


          "senior indebtedness" means all obligations with respect to
indebtedness of Scios whether outstanding on the date of the indenture or
thereafter created, incurred, assumed, guaranteed, or in effect guaranteed, by
Scios, including, without limitation, all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing,
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the notes or
expressly provides that such indebtedness ranks equally in right of payment or
junior to the notes. Senior indebtedness does not include the indebtedness
evidenced by the notes, any indebtedness of Scios to any subsidiary of Scios,
any obligation for federal, state or local or other taxes or any trade or
accounts payable arising in the ordinary course of business.

          Scios is obligated to pay compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by it in connection with its duties relating to the notes. The trustee's
claims for such payments will generally be senior to those of the holders of
the notes in respect to all funds collected and held by the trustee.

DEFEASANCE

         The notes will not be subject to defeasance.

EXCHANGE AND TRANSFER

          Notes may be transferred or exchanged at the office of the security
registrar in accordance with the indenture. Scios will not impose a service
charge for any transfer or exchange, but Scios may require holders to pay any
tax or other governmental charges associated with any transfer or exchange. In
the event of any potential redemption of the notes, Scios will not be required
to:

     o    issue, authenticate or register the transfer of or exchange any note
          during a period beginning at the opening of business 10 business
          days before the mailing of a notice of redemption and ending at the
          close of business on the day of the mailing; or

     o   register the transfer of or exchange any note selected for
         redemption, in whole or in part, except the unredeemed portion of
         notes being redeemed in part.

         Scios has initially appointed the trustee as the security registrar,
paying agent and conversion agent. Scios may designate additional registrars,
paying or conversion agents or change registrars, paying or conversion agents.
However, Scios will be required to maintain a paying agent in the place of
payment for the notes.

CONSOLIDATION, MERGER AND SALE OF ASSETS

         Scios may not consolidate with or merge into any other person, in a
transaction in which Scios is not the surviving corporation, or convey,
transfer or lease its properties and assets substantially as an entirety to,
any person, unless:

     o    the successor, if any, is a corporation organized under the laws of
          the United States or any state thereof or the District of Columbia;

     o    the successor assumes Scios's obligations under the notes and the
          indenture;

     o    immediately after giving effect to the transaction, no default or
          event of default shall have occurred and be continuing; and


                                      14


<PAGE>


     o    certain other conditions are met as set forth in the indenture.

          The foregoing shall not prohibit any of Scios's subsidiaries from
merging with or into Scios or a merger effected solely for the purposes of
reincorporating Scios in another jurisdiction.

          Under any consolidation, merger or any conveyance, transfer or lease
of Scios's properties and assets described in the preceding paragraph, the
successor company will be Scios's successor and shall succeed to, and be
substituted for, and may exercise every right and power of, Scios under the
indenture. Except in the case of a lease, if the predecessor is still in
existence after the transaction, it will be released from its obligations and
covenants under the indenture and the notes.

EVENTS OF DEFAULT

          The indenture defines an event of default with respect to the notes
as one or more of the following events:

          (1) Scios's failure to pay principal of or any premium on the notes
when due (whether or not prohibited by the subordination provisions of the
indenture);

          (2) Scios's failure to pay any interest on the notes when due, if
such failure continues for 30 days (whether or not prohibited by the
subordination provisions of the indenture); provided that a failure to make
any of the first six scheduled interest payments on the notes within three
business days after the applicable interest payment dates will constitute an
event of default with no additional grace or cure period;

          (3) Scios's failure to perform any other covenant in the indenture,
if such failure continues for 60 days after the notice required in the
indenture;

          (4) any indebtedness for money borrowed by Scios or one of Scios's
significant subsidiaries in an outstanding principal amount in excess of $20
million is not paid at final maturity or upon acceleration and such
indebtedness is not discharged, or such default on payment or acceleration is
not cured, waived or rescinded within 30 days after written notice as provided
in the indenture;

          (5) certain events of bankruptcy, insolvency or reorganization of
Scios or that of any of Scios's significant subsidiaries; and

          (6) the pledge agreement, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time, shall cease to
be in full force and effect or enforceable in accordance with its terms.

          If an event of default, other than an event of default described in
clause (5) above, occurs and continues, either the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding notes may
declare the principal amount including any accrued and unpaid interest on the
notes to be due and payable. If an event of default described in clause (5)
above occurs, the principal amount of all the notes will automatically become
immediately due and payable. Any payment by Scios on the notes following any
acceleration will be subject to the subordination provisions described above
under "--Subordination of the notes."

         After acceleration but before a judgment or decree of the money due
in respect of the notes has been obtained, the holders of a majority in
aggregate principal amount of the outstanding notes may

                                      15


<PAGE>


rescind such acceleration and its consequences if all events of default, other
than the nonpayment of accelerated principal, or other specified amount, have
been cured or waived.

          Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders offer the trustee
reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee.

          A holder will have the right to begin a proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture only if:

          (1) the holder gives to the trustee written notice of a continuing
event of default;

          (2) holders of at least 25% in aggregate principal amount of notes
then outstanding made a written request to the trustee to pursue the remedy;

          (3) such holder or holders offer to the trustee indemnity reasonably
satisfactory to the trustee against any loss, liability or expense;

          (4) the trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and

          (5) during such 60-day period the holders of a majority in aggregate
principal amount of the notes then outstanding do not give the trustee a
direction inconsistent with the request.

          Holders may, however, sue to enforce the payment of principal,
premium or interest on or after the due date or their right to convert without
following the procedures listed in (1) through (5) above.

          Scios will furnish the trustee an annual statement by its officers
as to whether or not, to the officer's knowledge, Scios is in default in the
performance of the indenture and, if so, specifying all known defaults.

MODIFICATION AND WAIVER

          Scios may make modifications and amendments to the indenture with
the consent of the holders of a majority in aggregate principal amount of the
outstanding notes affected by the modification or amendment. However, Scios
may not make any modification or amendment without the consent of the holder
of each outstanding note affected by the modification or amendment if such
modification or amendment would:

     o    change the stated maturity or the maturity date of the notes;

     o    reduce the principal, premium, if any, or interest on the notes;

     o    change the place of payment from New York, New York or the currency
          in which the notes are payable;

     o    impair the right to sue for any payment after the stated maturity,
          the maturity date or redemption date;

     o    modify the subordination provisions in an adverse manner to the
          holders;

                                      16


<PAGE>


     o    adversely affect the right to convert the notes other than as
          provided in or under the indenture;

     o    change the provisions in the indenture that relate to modifying or
          amending the indenture; or

     o    reduce the percentage in principal amount of the outstanding notes
          necessary for waiver of compliance with certain provisions of the
          indenture or for waiver of certain defaults.

          Without the consent of the holders of the notes, Scios and the
trustee may enter into one or more supplemental indentures for any of the
following purposes:

     o    to cure any ambiguity, omission, defect or inconsistency;

     o    to provide for uncertificated notes in addition to or in place of
          certificated notes;

     o    to provide for the assumption of Scios's obligations to holders of
          the notes in the case of a merger or consolidation or sale of all or
          substantially all of Scios's assets;

     o    to reduce the conversion price;

     o    to make any change that would provide any additional rights or
          benefits to the holder of the notes or that does not adversely
          affect the legal rights under the indenture of any such holder; or

     o    to comply with the requirements of the SEC in order to maintain the
          qualification of the indenture under the Trust Indenture Act or
          1939, as amended.

          Holders of a majority in aggregate principal amount of the
outstanding notes may waive, on behalf of the holders of all of the notes,
compliance by Scios with respect to certain restrictive provisions of the
indenture.

          Generally, the holders of not less than a majority of the aggregate
principal amount of the outstanding notes may, on behalf of all holders of the
notes, waive any past default or event of default unless:

     o    Scios fails to pay principal, premium or interest on any note when
          due;

     o    Scios fails to convert any note; or

     o    Scios fails to comply with any of the provisions of the indenture
          that would require the consent of the holder of each outstanding
          note affected.

          An amendment may not effect any change that adversely affects the
rights of any holder of senior indebtedness of Scios then outstanding under
the subordination provisions unless such holder of such senior indebtedness,
or a representative for such holder, consents to such change.

          Any notes held by Scios or by any persons directly or indirectly
controlling or controlled by or under direct or indirect common control with
Scios shall be disregarded (from both the numerator and denominator) for
purposes of determining whether the holders of a majority in principal amount
of the outstanding notes have consented to a modification, amendment or waiver
of the terms of the indenture.

                                      17


<PAGE>


NOTICES

          Notices to holders will be given by mail to the addresses of the
holders in the security register.

GOVERNING LAW

          The indenture and the notes are governed by, and construed under,
the law of the State of New York, without regard to conflicts of laws
principles.

REGARDING THE TRUSTEE

          Wells Fargo Bank, National Association is the trustee under the
indenture. The trustee is permitted to deal with Scios and any of its
affiliate with the same rights as if it were not trustee. However, under the
Trust Indenture Act of 1939, as amended, if the trustee acquires any
conflicting interest and there exists a default with respect to the notes, the
trustee must eliminate such conflicts or resign.

          The holders of a majority in principal amount of all outstanding
notes have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee.
However, any such direction may not conflict with any law or the indenture,
may not be unduly prejudicial to the rights of another holder or the trustee
and may not involve the trustee in personal liability.

BOOK-ENTRY SYSTEM

          Scios initially issued the notes in the form of a global security.
Upon the issuance of a global security, DTC (referred to as the depository) or
its nominee credited the accounts of persons holding through it with the
respective principal amounts of the notes represented by such global security.
Such accounts are designated by the initial purchasers with respect to notes
placed by the initial purchasers for Scios. Ownership of beneficial interests
in a global security is limited to persons that have accounts with the
depository ("participants") or persons that hold interests through
participants. Ownership of beneficial interests by participants in a global
security is shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depository for such global
security. Ownership of beneficial interests in such global security held
through participants is shown on, and the transfer of that ownership interests
through such participant will be effected only through, records maintained by
such participant. The foregoing may impair the ability to transfer beneficial
interests in a global security.

         Scios will make payment of principal, premium, if any, and interest
on notes represented by any such global security to the paying agent for the
benefit of the depository or its nominee, as the case may be, as the sole
holder of the notes represented thereby for all purposes under the indenture.
None of Scios, the trustee, any agent of Scios, or the trustee or the initial
purchasers have any responsibility or liability for any aspect of the
depository's records relating to or payments made on account of beneficial
ownership interests in the global security representing any notes or for
maintaining, supervising or reviewing any of the depository's records relating
to such beneficial ownership interests. Scios has been advised by the
depository that, upon receipt of any payment of principal, premium, if any, or
interest on any global security, the depository will immediately credit, on
its book-entry registration and transfer system, the accounts of participants
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such global security as shown on the
records of the depository. Payments by participants to owners of beneficial
interests in a global security held through such participants will be governed
by standing instructions and customary practices as is now the case with
securities held for customer accounts registered in "street name," and will be
the sole responsibility of such participants.

                                      18


<PAGE>


          A global security may not be transferred except as a whole by the
depository for such global security to a nominee of such depository or by a
nominee of such depository to such depository or another nominee of such
depository or by such depository or any such nominee to a successor of such
depository or a nominee of such successor. If (i) the depository notifies us
that it is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by us or the depository within 90 days,
or (ii) an event of default has occurred and is continuing and the registrar
has received a written request from the depository to issue physical
securities, Scios will issue notes in definitive form in exchange for the
global security. In either instance, an owner of a beneficial interest in the
global security will be entitled to have notes equal in principal amount to
such beneficial interest registered in its name and will be entitled to
physical delivery of such notes in definitive form. Notes so issued in
definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
Scios will pay principal, premium, if any, and interest on the notes and the
notes may be presented for registration of transfer or exchange, at the
offices of the trustee.

          So long as the depository for a global security, or its nominee, is
the registered owner of such global security, such depository or such nominee,
as the case may be, will be considered the sole holder of the notes
represented by such global security for the purposes of receiving payment on
the notes, receiving notices and for all other purposes under the indenture
and the notes. Beneficial interests in notes will be evidenced only by, and
transfers thereof will be effected only through, records maintained by the
depository and its participants. The depository has nominated Cede & Co. as
its nominee. Except as provided above, owners of beneficial interests in a
global security will not be entitled to have the notes represented by the
global security registered in their name, will not be entitled to receive
physical delivery of certificated notes and will not be considered the holders
thereof for any purposes under the indenture. Accordingly any such person
owning a beneficial interest in such a global security must rely on the
procedures of the depository, and, if any such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the indenture. The indenture provides
that the depository may grant proxies and otherwise authorize participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
indenture. Scios understands that under existing industry practices, in the
event that a holder of the notes requests any action or that an owner of a
beneficial interest in such a global security desires to give or take any
action which a holder is entitled to give or take under the indenture, the
depository would authorize the participants holding the relevant beneficial
interest to give or take such action and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning
through them.

          The depository has advised Scios that the depository is a
limited-purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The depository was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
depository's participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
the depository. Access to the depository's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies, that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.

                                      19


<PAGE>

                  DESCRIPTION OF JOHNSON & JOHNSON GUARANTEES

          The following summary of the Johnson & Johnson guarantees is subject
in all respects to the first supplemental indenture dated as of April 29,
2003, among Scios, Johnson & Johnson and Wells Fargo Bank, National
Association, as trustee, to the indenture governing the notes. See "Where You
Can Find More Information".

          Johnson & Johnson has unconditionally and irrevocably guaranteed:

     o    the full and punctual payment of principal of, premium, if any, and
          interest on the notes when due, whether at maturity, by
          acceleration, by redemption or otherwise, and all other monetary
          obligations of Scios under the indenture and the notes; and

     o    the full and punctual performance within applicable grace periods of
          all other obligations of Scios under the indenture and the notes.

The Johnson & Johnson guarantees constitute a guarantee of payment,
performance and compliance when due and not a guarantee of collection.

          Johnson & Johnson's obligations under the Johnson & Johnson guarantees
are subordinated in right of payment to all of its senior indebtedness that is
currently outstanding or that it may incur in the future. As of April 28, 2003,
Johnson & Johnson's aggregate outstanding senior indebtedness was approximately
$5,118 million. The terms of the indenture, the first supplemental indenture and
the notes do not limit Johnson & Johnson's or any of its subsidiaries' ability,
including Scios's, to incur additional senior indebtedness.

          The Johnson & Johnson guarantees are in uncertificated form and are
embodied in the first supplemental indenture.

                            SELLING SECURITYHOLDERS

          The notes originally were issued by Scios and sold by the initial
purchasers of the notes on August 5, 2002 in a transaction exempt from the
registration requirements of the Securities Act of 1933 to persons reasonably
believed by the initial purchasers to be qualified institutional buyers in
reliance on Rule 144A under the Securities Act of 1933. Selling
securityholders, including their transferees, pledges or donees or their
successors, may from time to time offer and sell pursuant to this prospectus
any or all of the notes and the associated Johnson & Johnson guarantees.

          On January 10, 2003, a registration statement on Form S-3 filed by
Scios to register resales of the notes and Scios common stock then issuable
upon conversion of the notes was declared effective by the Securities and
Exchange Commission. On April 29, 2003, Scios became a wholly owned subsidiary
of Johnson & Johnson through the merger of a wholly owned subsidiary of
Johnson & Johnson with and into Scios, and each outstanding share of Scios
common stock was converted into the right to receive $45.00 in cash. In
connection with the merger, each $1,000 principal amount of the notes became
convertible only into the right to receive $1,145.04 in cash without interest,
and Johnson & Johnson issued its subordinated guarantee of the notes.

          The following table sets forth as of April 29, 2003 (1) the
principal amount of notes held by the selling securityholders, (2) the
percentage of the aggregate principal amount of notes outstanding, (3) the
principal amount of notes that may be offered and sold pursuant to this
prospectus, (4) the principal amount of the Johnson & Johnson guarantees
associated with the notes held by the selling securityholders, (5) the
percentage of the aggregate principal amount of Johnson & Johnson guarantees

                                      20


<PAGE>


outstanding, represented by that principal amount of Johnson & Johnson
guarantees and (6) the principal amount of the Johnson & Johnson guarantees
that may be offered and sold pursuant to this prospectus.


<PAGE>


<TABLE>
<CAPTION>
                                          Notes                      Guarantees
                                ---------------------------  ---------------------------
                                Principal      Percentage    Principal     Percentage      Principal Amount
                                amount of         of         amount of         of            of notes and
                                notes bene-    outstanding   guarantees    outstanding        associated
                                ficially       notes bene-   beneficially  guarantees         guarantees
                                owned and      ficially      owned and     beneficially    beneficially owned
                                offered        owned prior   offered       owned prior     after completion
Name of Selling Securityholder  hereby ($)     to offering   hereby ($)    to offering     of the offering(1)
- ------------------------------  -------------  ------------  ------------  --------------  ------------------
<S>                             <C>            <C>           <C>           <C>             <C>







</TABLE>

- -----------------

* Represents beneficial ownership of less than 1% of the aggregate principal
amount of notes and Johnson & Johnson guarantees outstanding as of          ,
2003.

(1) Assumes that all of the notes and the associated Johnson & Johnson
guarantees have been sold by the selling securityholders.  Based upon this
assumption, no selling securityholder will beneficially own greater than one
percent of the notes and the associated Johnson & Johnson guarantees after
completion of the offering.

          None of the selling securityholders has, or within the past three
years has had, any position, office or other material relationship with
Johnson & Johnson or Scios or any of their predecessors or affiliates.

          The initial purchasers purchased all of the notes from Scios in a
private transaction on August 5, 2002. All of the notes were "restricted
securities" under the Securities Act prior to this registration. The selling
securityholders have represented to Scios that they purchased the notes for
their own account for investment only and not with a view toward selling or
distributing them, except pursuant to sales registered under the Securities
Act or exempt from such registration.

          Information concerning other selling securityholders will be set
forth in prospectus supplements from time to time, if required. Information
concerning the securityholders may change from time to time and any changed
information will be set forth in supplements to this prospectus if and when
necessary. In addition, the selling securityholders identified above may have
sold, transferred or otherwise disposed of all or some portion of the notes
and the associated Johnson & Johnson guarantees held by the selling
securityholders since the date on which they provided the information
regarding such notes and guarantees, in transactions exempt from the
registration requirements of the Securities Act of 1933.

                             PLAN OF DISTRIBUTION

          The selling securityholders and their successors, which term
includes their transferees, pledges or donees or their successors may sell the
notes and the associated Johnson & Johnson guarantees directly to purchasers
or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders of the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.

          The notes and the associated Johnson & Johnson guarantees may be
sold in one or more transactions at:

                                      21


<PAGE>



     o    fixed prices,

     o    prevailing market prices at the time of sale,

     o    prices related to the prevailing market prices,

     o    varying prices determined at the time of sale, or

     o    negotiated prices.

          These sales may be effected in transactions:


     o    on any national securities exchange or quotation service on which
          the notes and the associated Johnson & Johnson guarantees may be
          listed or quoted at the time of sale,

     o    in the over-the-counter market,

     o    otherwise than on such exchanges or services or in the
          over-the-counter market,

     o    through the writing of options, whether the options are listed on an
          options exchange or otherwise, or

     o    through the settlement of short sales.

These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as agent on both sides of the
trade.

          In connection with the sale of the notes and the associated Johnson
& Johnson guarantees or otherwise, the selling securityholders may enter into
hedging transactions with broker-dealers or other financial institutions. The
selling securityholders may also sell the notes and the associated Johnson &
Johnson guarantees short and deliver these securities to close out such short
positions, or loan or pledge the notes and the associated Johnson & Johnson
guarantees to broker-dealers that in turn may sell these securities.

          The aggregate proceeds to the selling securityholders from the sale
of the notes and the associated Johnson & Johnson guarantees offered by them
hereby will be the purchase price thereof less discounts and commissions, if
any. Neither Scios nor Johnson & Johnson will receive any of the proceeds from
this offering.

          Scios and Johnson & Johnson do not intend to list the notes and the
associated Johnson & Johnson guarantees for trading on any national securities
exchange or on the Nasdaq National Market and cannot assure you that any
trading market for the notes the associated Johnson & Johnson guarantees will
develop.

          In order to comply with the securities laws of some states, if
applicable, the notes and the associated Johnson & Johnson guarantees may be
sold in these jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the notes and the associated Johnson &
Johnson guarantees may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.

                                      22


<PAGE>


          The selling securityholders and any broker-dealers or agents that
participate in the sale of the notes and the associated Johnson & Johnson
guarantees may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act. Profits on the sale of the notes and the
associated Johnson & Johnson guarantees by selling securityholders and any
discounts, commissions or concessions received by any broker-dealers or agents
might be deemed to be underwriting discounts and commissions under the
Securities Act. Selling securityholders who are deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to
the prospectus delivery requirements of the Securities Act. To the extent the
selling securityholders may be deemed to be "underwriters," they may be
subject to statutory liabilities, including, but not limited to, Sections 11,
12 and 17 of the Securities Act.

          The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may
limit the timing of purchases and sales of any of the securities by the
selling securityholders and any other person. In addition, Regulation M may
restrict the ability of any person engaged in the distribution of the
securities to engage in market-making activities with respect to the
particular securities being distributed for a period of up to five business
days before the distribution. The selling securityholders have acknowledged
that they understand their obligations to comply with the provisions of the
Exchange Act and the rules thereunder relating to stock manipulation,
particularly Regulation M, and have agreed that they will not engage in any
transaction in violation of such provisions.

          A selling securityholder may decide not to sell any notes and the
associated Johnson & Johnson guarantees described in this prospectus. Scios
and Johnson & Johnson cannot assure you that any selling securityholder will
use this prospectus to sell any or all of the notes and the associated Johnson
& Johnson guarantees. Any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. In
addition, a selling securityholder may transfer, devise or gift the notes and
the associated Johnson & Johnson guarantees by other means not described in
this prospectus.

          With respect to a particular offering of the notes and the
associated Johnson & Johnson guarantees, to the extent required, an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part
will be prepared and will set forth the following information:


     o    the specific notes and the associated Johnson & Johnson guarantees
          to be offered and sold,

     o    the names of the selling securityholders,

     o    the respective purchase prices and public offering prices and other
          material terms of the offering,

     o    the names of any participating agents, broker-dealers or
          underwriters, and

     o    any applicable commissions, discounts, concessions and other items
          constituting, compensation from the selling securityholders.

          Scios entered into the registration rights agreement for the benefit
of holders of the notes to register their notes and the underlying common
stock the notes were then convertible into under applicable federal and state
securities laws under certain circumstances and at certain times. The
registration rights agreement provides that the selling securityholders and
Scios will indemnify each other and their respective directors, officers and
controlling persons against specific liabilities in connection

                                      23


<PAGE>


with the offer and sale of the notes and the underlying common stock the notes
were then convertible into, including liabilities under the Securities Act, or
will be entitled to contribution in connection with those liabilities. Scios
and Johnson & Johnson will pay all of their expenses and specified expenses
incurred by the selling securityholders incidental to the registration,
offering and sale of the notes and the associated Johnson & Johnson guarantees
to the public, but each selling securityholder will be responsible for payment
of commissions, concessions, fees and discounts of underwriters,
broker-dealers and agents.

            MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

          The following is a discussion of the material U.S. Federal income
tax consequences relevant to the purchase, ownership, and disposition of the
notes. This discussion applies only to persons who hold the notes as capital
assets (generally, property held for investment within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code"), as amended). This
discussion is based upon the Code, U.S. Treasury Regulations promulgated
thereunder ("Treasury Regulations"), Internal Revenue Service (the "IRS")
rulings and pronouncements, and judicial decisions now in effect, all of which
are subject to change at any time by legislative, administrative, or judicial
action, possibly with retroactive effect. This discussion does not discuss
every aspect of U.S. Federal income taxation that may be relevant to a
particular taxpayer in light of their personal circumstances or to persons who
are otherwise subject to special tax treatment (including, without limitation,
banks, broker-dealers, insurance companies, pension and other employee benefit
plans, tax exempt organizations and entities, investors in pass-through
entities, persons who acquire notes in connection with the performance of
services, certain U.S. expatriates, persons holding notes as a part of a
hedging or conversion transaction or a straddle, certain hybrid entities and
owners of interest therein, U.S. persons whose functional currency is not the
U.S. dollar and, except to the limited extent described below, persons who are
not U.S. Holders (as defined below)) and it does not discuss the effect of any
applicable U.S. state and local or non-U.S. tax laws or estate or gift tax
laws (other than estate tax consequences to the extent described below under
"Non-U.S. Holders") or tax laws other than U.S. Federal income tax law. Scios
has not sought and will not seek any rulings from the IRS concerning the tax
consequences of the purchase, ownership or disposition of the notes and,
accordingly, there can be no assurance that the IRS will not successfully
challenge the tax consequences described below.

          If a partnership holds notes acquired upon conversion of the notes,
the tax treatment of a partner in the partnership will generally depend upon
the status of the partner and the activities of the partnership. If you are a
partner of a partnership holding the notes, you should consult your tax
advisor regarding the tax consequences of the ownership and disposition of the
notes.

          EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT SUCH PURCHASER'S OWN
TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF
HOLDING AND DISPOSING OF NOTES, AS WELL AS ANY TAX CONSEQUENCES APPLICABLE
UNDER THE LAWS OF ANY U.S. STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION.

 U.S. HOLDERS

          As used herein, the term "U.S. Holder" refers to a person that is
classified for U.S. Federal income tax purposes as a U.S. person. For this
purpose, a U.S. person includes (i) a citizen or resident of the United
States, (ii) a corporation created or organized in the United States or under
the laws of the United States or of any state or political subdivision
thereof, (iii) an estate the income of which is subject to U.S. Federal income
taxation regardless of its source, or (iv) a trust whose administration is
subject to the primary supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent

                                      24


<PAGE>


provided in Treasury Regulations, certain trusts in existence on August 20,
1996, and treated as U.S. persons prior to such date that elect to continue to
be treated as U.S. persons, shall also be considered U.S. Holders.

          Interest. Interest paid or accrued on the notes will be taxable to a
U.S. Holder as ordinary income at the time it is accrued or received in
accordance with the holder's method of accounting for U.S. Federal income tax
purposes.

          Conversion, sale, retirement, redemption or other taxable
disposition of notes. Except as set forth under "Market discount," upon the
conversion, sale, retirement, redemption or other taxable disposition of a
note (including a repurchase of a note by a third party), a U.S. Holder will
recognize gain or loss to the extent of the difference between the sum of the
cash and the fair market value of any property received in exchange therefor
(except to the extent attributable to the payment of accrued and unpaid
interest on the notes, which generally will be taxed as ordinary income to the
extent that the holder has not previously recognized this income), and the
U.S. Holder's adjusted tax basis in the notes. A U.S. Holder's tax basis in a
note will initially equal the cost of the note and will subsequently be
increased by market discount previously included in income in respect thereof
and will be reduced by any premium that the U.S. Holder has taken into
account. Generally, any such gain or loss recognized by a U.S. Holder upon the
sale, retirement, redemption or other taxable disposition of a note will be
capital gain or loss. In the case of a non-corporate U.S. Holder, such capital
gain will be subject to tax at a reduced rate if the note is held for more
than one year. The deductibility of capital losses is subject to limitation.

          Market discount. If a U.S. Holder acquires a note at a cost that is
less than the stated redemption price at maturity of the note, the amount of
such difference is treated as market discount for federal income tax purposes,
unless such difference is less than .0025 multiplied by the stated redemption
price at maturity multiplied by the number of complete years to maturity (from
the date of acquisition). The market discount provisions of the Code require a
U.S. Holder who acquires a note at a market discount to treat as ordinary
income any gain recognized on the disposition of that note to the extent of
the accrued market discount on that note at the time of maturity or
disposition that such holder has not previously included in income. In
addition, a U.S. Holder that disposes of a note with market discount in
certain otherwise nontaxable transactions must include accrued market discount
as ordinary income as if such holder had sold the note at its then fair market
value.

          A U.S. Holder may elect to include market discount in income over
the life of the note. Once made, this election applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. In general,
market discount will be treated as accruing on a straight-line basis over the
remaining term of the note at the time of acquisition, or, at the election of
the U.S. Holder, under a constant yield method. If an election is made, it
will apply only to the note with respect to which it is made, and may not be
revoked. A U.S. Holder who acquires a note at a market discount and who does
not elect to include accrued market discount in income over the life of the
note may be required to defer the deduction of a portion of the interest on
any indebtedness incurred or maintained to purchase or carry the note until
maturity or until the note is disposed of in a taxable transaction.

          Amortizable premium. A U.S. Holder who purchases a note at a premium
over the sum of all amounts payable on the note after the acquisition date
(other than stated interest payments) generally may elect to amortize that
premium (referred to as Section 171 premium) from the purchase date to the
note's maturity date under a constant-yield method that reflects semiannual
compounding based on the note's payment period. The notes are subject to call
provisions at Scios's option at various times, as described under the heading
"Description of Notes--Optional redemption by Scios." A U.S. Holder will
calculate the amount of Section 171 premium based on the amount payable at the
applicable call date, but only if

                                      25


<PAGE>


the use of the call date (in lieu of the stated maturity date) results in a
smaller amortizable bond premium for the period ending on the call date.
Amortizable premium will not include any amount attributable to a note's
conversion feature. The amount attributable to the conversion feature may be
determined under any reasonable method, including by comparing the note's
purchase price to the market price of a similar note that does not have a
conversion feature. Amortized Section 171 premium is treated as an offset to
interest income on a note and not as a separate deduction. The election to
amortize premium on a constant yield method, once made, applies to all debt
obligations held or subsequently acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS.

          Information reporting; backup withholding. Scios is required to
furnish to the record holders of the notes, other than corporations and other
exempt holders, and to the IRS, information with respect to interest paid on
the notes.

          A U.S. Holder may be subject to backup withholding with respect to
interest paid on the notes or with respect to proceeds received from a
disposition of the notes. Certain holders (including, among others,
corporations and certain tax-exempt organizations) are generally not subject
to backup withholding. A U.S. Holder will be subject to backup withholding if
such holder is not otherwise exempt and such holder (i) fails to furnish its
taxpayer identification number ("TIN"), which, for an individual is ordinarily
his or her social security number; (ii) furnishes an incorrect TIN; (iii) is
notified by the IRS that it has failed to properly report payments of
interest; or (iv) fails to certify, under penalties of perjury, that it has
furnished a correct TIN and that the IRS has not notified the U.S. Holder that
it is subject to backup withholding. Backup withholding is not an additional
tax but, rather, is a method of tax collection. U.S. Holders will be entitled
to credit any amounts withheld under the backup withholding rules against
their actual tax liabilities provided the required information is furnished to
the IRS.

 NON-U.S. HOLDERS

          As used herein, the term "Non-U.S. Holder" refers to a person that
is classified for U.S. Federal income tax purposes as (i) a non-resident alien
individual, (ii) a foreign corporation, or (iii) a nonresident alien fiduciary
of a foreign estate or trust.

          Interest. In general, a Non-U.S. Holder will not be subject to U.S.
Federal withholding tax with respect to interest received on the notes so long
as (a) the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all Johnson & Johnson's classes of stock
entitled to vote, (b) the Non-U.S. Holder is not a controlled foreign
corporation that is related to us actually or constructively through stock
ownership, and (c) the Non-U.S. Holder provides its name and address, and
certifies, under penalties of perjury, that it is not a U.S. person (which
certification may be made on an IRS Form W-8BEN (or successor form)) or the
Non-U.S. Holder holds its notes through certain foreign intermediaries, and
the Non-U.S. Holder and the foreign intermediary satisfy the certification
requirements of applicable Treasury Regulations.

          If a Non-U.S. Holder cannot satisfy the requirements described
above, payments of interest to such holder will be subject to the 30% U.S.
Federal withholding tax, unless the holder provides us with a properly
executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or
reduction in withholding under the benefit of an applicable tax treaty or (2)
IRS Form W-8ECI (or successor form) stating that interest paid on the note is
not subject to withholding tax because it is effectively connected with the
conduct of a U.S. trade or business. If a Non-U.S. Holder is engaged in a
trade or business in the United States and interest on a note is effectively
connected with the conduct of that trade or business, the holder will be
subject to U.S. Federal income tax on that interest on a net income basis
(although the holder will be exempt from the 30% withholding tax, provided the
certification requirements described

                                      26


<PAGE>


above are satisfied) in the same manner as if the Non-U.S. Holder was a U.S.
person as defined under the Code. In addition, if the Non-U.S. Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30%
(or lower applicable treaty rate) of its earnings and profits for the taxable
year, subject to adjustments, that are effectively connected with its conduct
of a trade or business in the United States.

          Gain on disposition of notes. Non-U.S. Holders generally will not be
subject to U.S. Federal income taxation, including by way of withholding, on
gain recognized on a disposition of notes so long as (i) the gain is not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States (or if a tax treaty applies, the gain is not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States and attributable to a U.S. permanent
establishment maintained by such Non-U.S. Holder) and (ii) in the case of a
Non-U.S. Holder who is an individual, such Non-U.S. Holder is not present in
the United States for 183 days or more in the taxable year of disposition and
certain other requirements are met.

          A Non-U.S. Holder whose gain is effectively connected with the
conduct of a trade or business within the United States generally will be
subject to U.S. Federal income tax on the net gain derived from the sale. Any
such effectively connected gain received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
branch profits tax at a 30% rate or such lower rate as may be applicable under
an income tax treaty. An individual Non-U.S. Holder who is present in the
United States for 183 days or more in the taxable year of disposition and
meets certain other conditions will be subject to a 30% U.S. Federal income
tax on the gain derived from the sale.

          United States Federal estate tax. A note held by an individual who
at the time of death is not a citizen or resident of the United States, as
specifically defined for United States Federal estate tax purposes, will not
be subject to United States Federal estate tax if the individual did not
actually or constructively own 10% or more of the total combined voting power
of all classes of Johnson & Johnson's stock and, at the time of the
individual's death, payments with respect to that note would not have been
effectively connected with the conduct by that individual of a trade or
business in the United States.

          Information reporting; backup withholding. Generally, payments of
interest or principal on the notes to Non-U.S. Holders will not be subject to
information reporting or backup withholding if the Non-U.S. Holder certifies,
under penalties of perjury, as to its foreign status or otherwise establishes
an exemption.

          Information reporting requirements and backup withholding generally
will not apply to any payments of the proceeds of the disposition of notes
effected outside the U.S. by a foreign office or a foreign broker (as defined
in applicable Treasury regulations). However, unless such broker has
documentary evidence in its records that the beneficial owner is a Non-U.S.
Holder and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption, information reporting (but not backup withholding)
will apply to any such payments effected outside the U.S. by such a broker if
it:

          1.   derives 50% or more of its gross income for certain periods
               from the conduct of a trade or business in the U.S.;

          2.   is a controlled foreign corporation for U.S. Federal income tax
               purposes; or

          3.   is a foreign partnership that, at any time during its taxable
               year, has 50% or more of its income or capital interests owned
               by U.S. persons or is engaged in the conduct of a U.S. trade or
               business.

                                      27


<PAGE>



          Payments of the proceeds of a disposition of notes effected by the
U.S. office of a broker will be subject to information reporting requirements
and backup withholding tax unless the Non-U.S. Holder properly certifies under
penalties of perjury as to its foreign status and certain other conditions are
met or it otherwise establishes an exemption.

          Any amount withheld under the backup withholding rules may be
credited against the Non-U.S. Holder's U.S. Federal income tax liability and
any excess may be refundable if the proper information is provided to the IRS.

                                 LEGAL MATTERS

          Certain legal matters in connection with the notes offered hereby
have been passed upon for Scios by Latham & Watkins LLP, San Francisco,
California.

          The enforceability of the Johnson & Johnson guarantees offered hereby
have been passed upon by John T. Crisan, Esq., Assistant General Counsel and
Assistant Secretary of Johnson & Johnson. Mr. Crisan is paid a salary by Johnson
& Johnson, is a participant in various employee benefit plans offered to
employees of Johnson & Johnson generally and owns and has options to purchase
shares of Johnson & Johnson common stock.

                                    EXPERTS

          The consolidated financial statements and financial statement
schedule of Johnson & Johnson and its subsidiaries as of December 29, 2002 and
December 30, 2001 and for each of the three fiscal years in the period ended
December 29, 2002 incorporated in this prospectus by reference to the Johnson
& Johnson Annual Report on Form 10-K for the year ended December 29, 2002,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts
in auditing and accounting.

          The consolidated financial statements of Scios incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 2002 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

                      WHERE YOU CAN FIND MORE INFORMATION

          Johnson & Johnson and Scios have filed registration statements on
Form S-3 with the Securities and Exchange Commission to register resales of
the notes and the associated Johnson & Johnson guarantees held by certain
selling securityholders. This prospectus forms a part of those registration
statements. As allowed by Securities and Exchange Commission rules, this
prospectus does not contain all the information contained in the registration
statements or in the exhibits to the registration statements.

         Johnson & Johnson is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission. Prior to its acquisition by Johnson &
Johnson, Scios filed annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may
read and copy those reports, statements or other information at the Securities
and Exchange Commission's public reference room:

                                      28


<PAGE>


                             Public Reference Room
                            450 Fifth Street, N.W.
                                   Room 1024
                            Washington, D.C. 20549


          Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference room. These Securities and
Exchange Commission filings are also available to the public from commercial
document retrieval services and at the Internet world wide web site maintained
by the Securities and Exchange Commission at "http://www.sec.gov." Reports,
proxy statements and other information concerning Johnson & Johnson may also
be inspected at the offices of the New York Stock Exchange at 20 Broad Street,
New York, New York 10005.

          The Securities and Exchange Commission allows certain important
information to be "incorporated by reference" into this prospectus, which
means that such information can be disclosed to you by referring you to other
documents filed separately with the Securities and Exchange Commission. The
information incorporated by reference is considered to be part of this
prospectus, except for any information superseded by information contained
directly in this prospectus or in later filed documents incorporated by
reference in this prospectus.

          This prospectus incorporates by reference the documents set forth
below that Johnson & Johnson and Scios have previously filed with the
Securities and Exchange Commission. These documents contain important business
and financial information about Johnson & Johnson and Scios that is not
included in or delivered with this prospectus.

JOHNSON & JOHNSON FILINGS
(FILE NO. 001-03215)                        PERIOD OR DATE FILED
- ----------------------------------------    ------------------------------------
Annual Report on Form 10-K..............    Fiscal Year ended December 29, 2002
                                            filed on Form 10-K on March 18, 2003

Current Report on Form 8-K..............    Filed on April 29, 2003

SCIOS INC. FILINGS
(FILE NO. 000-11749)                        PERIOD OR DATE FILED
- ----------------------------------------    ------------------------------------
Annual Report on Form 10-K..............    Fiscal Year ended December 31, 2002
                                            filed on Form 10-K on March 17, 2003

- --------------------------------------------------------------------------------

         Johnson & Johnson is also incorporating by reference additional
documents that it will file before the termination of this offering. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.

          You can request a free copy of any or all of these documents, other
than the exhibits to those documents, unless those exhibits are specifically
incorporated by reference into these documents, by writing to or calling the
following address or telephone number:

                               Johnson & Johnson
                          One Johnson & Johnson Plaza
                            New Brunswick, NJ 08933
                   Attention: Office of Corporate Secretary
                           Telephone: (732) 524-2455

                                      29


<PAGE>


          You should rely only on the information contained or incorporated by
reference in this prospectus before deciding to purchase the notes and the
associated Johnson & Johnson guarantees being offered by this prospectus.
Johnson & Johnson and Scios have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated , 2003. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date
unless the information specifically indicates that another date applies. If
you are in a jurisdiction where it is unlawful to offer to convert or sell or
to ask for offers to convert or buy the securities offered by this prospectus,
or if you are a person to whom it is unlawful to direct those activities, then
the offer presented in this prospectus does not extend to you.

                                      30


<PAGE>



                                    PART II
                    INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

          The following table sets forth the various expenses to be paid by
Johnson & Johnson and Scios in connection with the sale and distribution of
the securities being offered by the prospectus forming a part of this
Registration Statement. All amounts shown are estimates except for amounts of
filing and listing fees.


<TABLE>
<CAPTION>

                                                          Prior costs and expenses of
                                                           Scios pursuant to the note
                                                             registration statement     Anticipated costs and
                                                          (Registration Statement No.   expenses of Johnson &
                                                                   333-99641)             Johnson and Scios
<S>                                                       <C>                           <C>
Securities and Exchange Commission registration
fee.....................................................  $13,800                       $0
Legal fees and expenses.................................  100,000                       10,000
Accounting fees and expenses............................  20,000                        5,000
Printing, EDGAR formatting and mailing expenses.........  20,000                        1,000
Miscellaneous...........................................  15,000                        5,500
                                                          ----------------------------  -----------------------
     Total..............................................  $168,800                      $21,500
                                                          ============================  =======================
</TABLE>

         ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

JOHNSON & JOHNSON

          The New Jersey Business Corporation Act (the "NJBCA") provides that
a New Jersey corporation has the power to indemnify a director or officer
against his or her expenses and liabilities in connection with any proceeding
involving the director or officer by reason of his or her being or having been
such a director or officer, other than a proceeding by or in the right of the
corporation, if such director or officer acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation; and with respect to any criminal proceeding, such director or
officer had no reasonable cause to believe his or her conduct was unlawful.

          The indemnification and advancement of expenses shall not exclude
any other rights, including the right to be indemnified against liabilities
and expenses incurred in proceedings by or in the right of the corporation, to
which a director or officer may be entitled under a certificate of
incorporation, by-law, agreement, vote of shareholders, or otherwise;
provided, that no indemnification shall be made to or on behalf of a director
or officer if a judgment or other final adjudication adverse to the director
or officer establishes that his or her acts or omissions (a) were in breach of
his or her duty of loyalty to the corporation or its shareholders, (b) were
not in good faith or involved a knowing violation of law or (c) resulted in
receipt by the director or officer of an improper personal benefit.

         Johnson & Johnson's Restated Certificate of Incorporation provides
that, to the full extent that the laws of the State of New Jersey permit the
limitation or elimination of the liability of directors and

                                     II-1


<PAGE>


officers, no director or officer of Johnson & Johnson shall be personally
liable to the Johnson & Johnson or its stockholders for damages for breach of
any duty owed to Johnson & Johnson or its stockholders.

          The By-laws of Johnson & Johnson provide that to the full extent
permitted by the laws of the State of New Jersey, Johnson & Johnson shall
indemnify any person (an "Indemnitee") who was or is involved in any manner
(including, without limitation, as a party or witness) in any threatened,
pending or completed investigation, claim, action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, legislative or investigative
(including, without limitation, any action, suit or proceeding by or in the
right of Johnson & Johnson to procure a judgment in its favor) (a
"Proceeding"), or who is threatened with being so involved, by reason of the
fact that he or she is or was a director or officer of Johnson & Johnson or,
while serving as a director or officer of Johnson & Johnson, is or was at the
request of Johnson & Johnson also serving as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan), against
all expenses (including attorneys' fees), judgments, fines, penalties, excise
taxes and amounts paid in settlement actually and reasonably incurred by the
Indemnitee in connection with such Proceeding; provided, that there shall be
no indemnification under the By-laws with respect to any settlement or other
nonadjudicated disposition of any threatened or pending Proceeding unless
Johnson & Johnson has given its prior consent to such settlement or
disposition. The right of indemnification created by the By-laws shall be a
contract right enforceable by an Indemnitee against Johnson & Johnson, and it
shall not be exclusive of any other rights to which an Indemnitee may
otherwise be entitled. The indemnification provisions of the By-laws shall
inure to the benefit of the heirs and legal representatives of an Indemnitee
and shall be applicable to Proceedings commenced or continuing after the
adoption of the By-laws, whether arising from acts or omissions occurring
before or after such adoption. No amendment, alteration, change, addition or
repeal of or to the By-laws shall deprive any Indemnitee of any rights under
the By-laws with respect to any act or omission of such Indemnitee occurring
prior to such amendment, alteration, change, addition or repeal.

          Johnson & Johnson enters into indemnification agreements with its
directors and officers and enters into insurance agreements on its own behalf.
The indemnification agreements provide that Johnson & Johnson agrees to hold
harmless and indemnify its directors and officers to the fullest extent
authorized or permitted by the NJBCA, or any other applicable law, or by any
amendment thereof or other statutory provisions authorizing or permitting such
indemnification that is adopted after the date hereof. Without limiting the
generality of the foregoing, Johnson & Johnson agrees to hold harmless and
indemnify its directors and officers to the fullest extent permitted by
applicable law against any and all expenses, judgments, fines, and amounts
paid in settlement actually and reasonably incurred by its directors and
officers in connection with the defense of any present or future threatened,
pending, or completed claim, action, suit, or proceeding by reason of the fact
that they were, are, shall be, or shall have been a director or officer of
Johnson & Johnson, or are or were serving, shall serve, or shall have served,
at the request of Johnson & Johnson, as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise.

SCIOS INC.

          Scios' Restated Certificate of Incorporation provides that to the
fullest extent permitted by the Delaware General Corporation Law ("DGCL"), a
director or officer of Scios shall not be liable to Scios or its stockholders
for monetary damages for breach of fiduciary duty as a director or officer.
The effect of the provision of the Scios Restated Certificate of Incorporation
is to eliminate the rights of Scios and its stockholders (through
stockholders' derivative suits on behalf of Scios) to recover monetary damages
against a director or officer for breach of the fiduciary duty of care as a
director or officer (including breaches resulting from negligent or grossly
negligent behavior) except in certain situations set forth in Section
102(b)(7) of the DGCL. This provision does not limit or eliminate the rights
of Scios or any

                                     II-2


<PAGE>


stockholder to seek nonmonetary relief such as an injunction
or rescission in the event of a breach of a director's or officer's duty of
care.

          Under Section 145 of the DGCL, a corporation may indemnify its
directors, officers, employees and agents and its former directors, officers,
employees and agents and those who serve, at the corporation's request, in
such capacities with another enterprise, against expenses (including
attorney's fees), as well as judgments, fines and settlements in nonderivative
lawsuits, actually and reasonably incurred in connection with the defense of
any action, suit or proceeding in which they or any of them were or are made
parties or are threatened to be made parties by reason of their serving or
having served in such capacity. The DGCL provides, however, that such person
must have acted in good faith and in a manner he or she reasonably believed to
be in (or not opposed to) the best interests of the corporation and, in the
case of a criminal action, such person must have had no reasonable cause to
believe his or her conduct was unlawful. In addition, the DGCL does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and
only to the extent that, a court determines that such person fairly and
reasonably is entitled to indemnity for costs the court deems proper in light
of liability adjudication. Indemnity is mandatory to the extent a claim, issue
or matter has been successfully defended.

          Scios' Restated Certificate of Incorporation contains a provision
permitted by the DGCL that provides that directors, officers and other agents
will be indemnified by Scios to the fullest extent not prohibited by the DGCL.
In addition, Scios has entered into indemnification agreements with certain
officers of Scios pursuant to which Scios has agreed to indemnify such officer
from claims, liabilities, damages, expenses, losses, costs, penalties or
amounts paid in settlement incurred by such officer and arising out of his or
her capacity as an officer, employee and/or agent of the corporation of which
he or she is an officer to the maximum extent provided by applicable law. In
addition, the directors and officers of Scios will be entitled to an advance
of expenses to the maximum extent authorized or permitted by law to meet the
obligations indemnified against. Scios also maintains insurance for the
benefit and on behalf of its directors and officers insuring against all
liabilities that may be incurred by such director or officer in or arising out
of his or her capacity as a director, officer, employee and/or agent of Scios.

ITEM 16. EXHIBITS.

         See the index to exhibits, which is incorporated herein by reference.
The Registrants agree to furnish supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange Commission upon request.

ITEM 17. UNDERTAKINGS.

     (a) The undersigned Registrants hereby undertake:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this Registration Statement:

               (i) To include any prospectus required by Section 10(a)(3) of
          the Securities Act of 1933;

               (ii) To reflect in the prospectus any facts or events arising
          after the effective date of the Registration Statement (or the most
          recent post-effective amendment thereof) which, individually or in
          the aggregate, represent a fundamental change in the information set
          forth in the Registration Statement. Notwithstanding the foregoing,
          any increase or decrease in the volume of securities offered (if the
          total dollar value of securities offered would not exceed that which
          was registered) and any deviation from the low or high end of the
          estimated maximum offering range may be reflected in the form of a
          prospectus filed with the Commission pursuant to Rule 424(b)

                                     II-3


<PAGE>


          if, in the aggregate, the changes in volume and price represent no
          more than a 20 percent change in the maximum aggregate offering set
          forth in the "Calculation of Registration Fee" table in the
          effective Registration Statement;

               (iii) To include any material information with respect to the
          plan of distribution not previously disclosed in the Registration
          Statement or any material change to such information in the
          Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be
     deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall
     be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective
     amendment any of the securities being registered which remain unsold at
     the termination of the offering.

     (b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Securities registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

     (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by such Registrant of expenses incurred or paid by a director, officer
or controlling person of such Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
such Registrant will, unless in the opinion of such Registrant's counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

                                     II-4


<PAGE>


                                  SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, Johnson
& Johnson certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New Brunswick, State of New Jersey
on this 29th day of April, 2003.

                                        JOHNSON & JOHNSON
                                        By  /s/ Christine A. Poon
                                            ----------------------------------
                                            Name:  Christine A. Poon
                                            Title: Worldwide Chairman,
                                                   Pharmaceuticals Group and
                                                   Member, Executive Committee


                               POWER OF ATTORNEY

          Each person whose signature appears below hereby constitutes and
appoints M. H. Ullmann and J. T. Crisan, and each of them, as his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including pre-effective
and post-effective amendments) to this Registration Statement and all
documents relating thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
necessary or advisable to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.


        SIGNATURE                         TITLE                        DATE
        ---------                         -----                        ----


/s/ W.C. Weldon
- ---------------------       Chairman, Board of Directors and      April 29, 2003
W. C. Weldon              Chief Executive Officer and Director
                              (Principal Executive Officer)

/s/ R.J. Darretta
- ---------------------       Executive Vice President; Chief      April 29, 2003
R. J. Darretta               Financial Officer and Director
                             (Principal Financial Officer)

/s/ S. J. Cosgrove
- ---------------------                  Controller                 April 29, 2003
S. J. Cosgrove               (Principal Accounting Officer)

                                     II-5


<PAGE>


        SIGNATURE                         TITLE                        DATE
        ---------                         -----                        ----


/s/ G. N. Burrow
- ---------------------                   Director                  April 29, 2003
G. N. Burrow


/s/ J. G. Cullen
- ---------------------                   Director                  April 29, 2003
J. G. Cullen


/s/ M. J. Folkman
- ---------------------                   Director                  April 29, 2003
M. J. Folkman


/s/ A. D. Jordan
- ---------------------                   Director                  April 29, 2003
A. D. Jordan


/s/ A. G. Langbo
- ---------------------                   Director                  April 29, 2003
A. G. Langbo


/s/ J. T. Lenehan
- ---------------------       Vice Chairman, Board of Directors    April 29, 2003
J. T. Lenehan                         and Director


/s/ L. F. Mullin
- ---------------------                   Director                  April 29, 2003
L. F. Mullin


/s/ D. Satcher
- ---------------------                   Director                  April 29, 2003
D. Satcher


/s/ H. B. Schacht
- ---------------------                   Director                  April 29, 2003
H. B. Schacht

                                     II-6


<PAGE>


                                  SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing this Post-Effective Amendment
No. 1 to Form S-3 and has duly caused this Post-Effective Amendment No. 1 to
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Sunnyvale, State of California, on the 29th day of
April, 2003.

                                          SCIOS INC.
                                          By
                                                /s/ Christine A. Poon
                                               -------------------------------
                                                Name:  Christine A. Poon
                                                Title: Director

          Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 has been signed below by the following persons in the capacities and
on the dates indicated.


        SIGNATURE                         TITLE                        DATE
        ---------                         -----                        ----


/s/ Richard B. Brewer           President and Chief              April 29, 2003
- ----------------------           Executive Officer
Richard B. Brewer           (Principal Executive Officer)



/s/ David W. Gryska        Senior Vice President, Finance        April 29, 2003
- ----------------------      and Chief Financial Officer
 David W. Gryska            (Principal Financial and
                                Accounting Officer)


/s/ Christine A. Poon                Director                    April 29, 2003
- ----------------------
Christine A. Poon


/s/ Joseph Scodari                   Director                    April 29, 2003
- ----------------------
Joseph Scodari


                                     II-7


<PAGE>


                                 EXHIBIT INDEX

   EXHIBIT
   NUMBER                                               DESCRIPTION


2.1            Agreement and Plan of Merger dated as of February 10, 2003,
               among Johnson & Johnson, Saturn Merger Sub, Inc. and Scios Inc.

4.1*           Indenture, dated as of August 5, 2002, between Scios Inc. and
               Wells Fargo Bank, National Association, as trustee, filed as an
               exhibit to Scios Inc.'s Report on Form 8-K dated August 5,
               2002.

4.2*           Form of $150,000,000 aggregate principal amount 5.50%
               Convertible Subordinated Note due 2009, filed as an exhibit to
               Scios Inc.'s Report on Form 8-K dated August 5, 2002.

4.3*           Registration Rights Agreement dated as of August 5, 2002, by
               and among Scios Inc., J.P. Morgan Securities, Inc., Lehman
               Brothers Inc., SG Cowen Securities Corporation, Needham &
               Company, Inc., Adams, Harkness & Hill, Inc. and Prudential
               Securities Incorporated, filed as an exhibit to Scios Inc.'s
               Report on Form 8-K dated August 5, 2002.


4.4*           Pledge Agreement dated as of August 5, 2002, among the Scios
               Inc., Wells Fargo Bank, National Association, as trustee, and
               Wells Fargo Bank, National Association, as collateral agent,
               filed as an exhibit to Scios Inc.'s Report on Form 8-K dated
               August 5, 2002.

4.5*           Control Agreement, dated as of August 5, 2002, by and among
               Scios Inc, Wells Fargo Bank, National Association, as trustee,
               Wells Fargo Bank, National Association, as collateral agent,
               and Wells Fargo Bank, National Association, in its capacity as
               securities intermediary and depository bank, filed as an
               exhibit to Scios Inc.'s Report on Form 8-K dated August 5,
               2002.

4.7            First Supplemental Indenture dated as of April 29, 2003, among
               Scios Inc., Johnson & Johnson and Wells Fargo Bank, National
               Association, as trustee.

5.1*           Opinion of Latham & Watkins LLP.

5.2            Opinion of John T. Crisan, Esq., Assistant General Counsel and
               Assistant Secretary of Johnson & Johnson, regarding the
               enforceability of the guarantees.

12.1           Statement of Computation of Ratio of Earnings to Fixed Charges
               of Johnson & Johnson (incorporated by reference to Exhibit 12
               to Johnson & Johnson's Annual Report on Form 10-K for the
               fiscal year ended December 29, 2002).

12.2           Statement of Computation of Ratio of Earnings to Fixed Charges
               of Scios Inc.

23.1           Consent of PricewaterhouseCoopers LLP, independent accountants
               to Johnson & Johnson.

23.2           Consent of PricewaterhouseCoopers LLP, independent accountants
               to Scios Inc.

23.3*          Consent of Latham & Watkins LLP (included in Exhibit 5.1).

23.4           Consent of John T. Crisan, Esq., Assistant General Counsel and
               Assistant Secretary of Johnson & Johnson (included in Exhibit
               5.2).


<PAGE>


24.1           Power of Attorney (included on the signature page of this
               Registration Statement).

25.1*          Statement of Eligibility under the Trust Indenture Act of 1939
               of a Corporation Designated to Act as Trustee of Wells Fargo
               Bank, National Association (Form T-1).

- -----------------

*Previously Filed


<PAGE>


                                                                   Exhibit 5.1

                        [Johnson & Johnson Letterhead]


April 29, 2003


Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933


Ladies and Gentlemen:

          I am Assistant General Counsel and Assistant Secretary of Johnson &
Johnson, a New Jersey corporation (the "Company"), and I am familiar with the
Registration Statement on Form S-3 (the "Registration Statement") being filed
by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to the proposed registration of
resales by certain selling securityholders of the Company's guarantees (the
"Guarantees") of up to $150,000,000 aggregate principal amount of the 5.50%
Convertible Subordinated Notes Due 2009 (the "Notes") of Scios Inc., a
Delaware corporation and a wholly owned subsidiary of the Company ("Scios").
The Notes were originally issued pursuant to the Indenture dated as of August
5, 2002, between Scios and Wells Fargo Bank, National Association, as trustee
(the "Trustee"), as supplemented and amended by the First Supplemental
Indenture thereto dated as of April 29, 2003 (the "First Supplemental
Indenture"), among Scios, the Company and the Trustee. The Guarantees were
issued by the Company under the First Supplemental Indenture.

          I have reviewed the Company's Restated Certificate of Incorporation
and By-laws and such other corporate records and documents of the Company,
including, without limitation, the Indenture and the First Supplemental
Indenture, and documents and certificates of public officials and others as I
have deemed necessary as a basis for the opinion hereinafter expressed.

          Based on the foregoing and having regard for such legal
considerations as I deem relevant, I am of the opinion that, assuming that the
First Supplemental Indenture has been duly authorized, executed and delivered
by Scios and the Trustee, the Guarantees constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including, without limitation, good faith and fair dealing regardless
of whether in a proceeding in equity or at law).

          I hereby consent to the use of my name under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
Exhibit to the Registration Statement.

                                         Very truly yours,

                                            /s/ John T. Crisan
                                         ---------------------------
                                         Name:  John T. Crisan
                                         Title: Assistant General Counsel and
                                                Assistant Secretary


<PAGE>


                                                                  Exhibit 12.1

                      JOHNSON & JOHNSON AND SUBSIDIARIES

       STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
                             (DOLLARS IN MILLIONS)


 <TABLE>
<CAPTION>

                                                             FISCAL YEAR ENDED
                                 -------------------------------------------------------------------------
                                  DECEMBER 29,   DECEMBER 30,   DECEMBER 31,     JANUARY 2,     JANUARY 3,
                                      2002            2001          2000            2000            1999
                                 -------------  -------------  -------------  -------------  -------------
<S>                               <C>            <C>            <C>            <C>            <C>

Determination of Earnings:
Earnings Before Provision for      $    9,291     $    7,898     $    6,868      $   5,877     $    4,333
     Taxes on Income..........
Fixed Charges.................            259            245            292            337            269
                                 -------------  -------------  -------------  -------------  -------------
   Total Earnings as Defined..     $    9,550     $    8,143     $    7,160      $   6,214     $    4,602
                                 =============  =============  =============  =============  =============
Fixed Charges and Other:
   Rents......................             99             92             88             82             83
   Interests..................            160            153            204            255            186
                                 -------------  -------------  -------------  -------------  -------------
     Fixed Charges............            259            245            292            337            269
   Capitalized Interest.......             98             95             97             84             73
                                 -------------  -------------  -------------  -------------  -------------
     Total Fixed Charges......     $      357     $      340     $      389      $     421     $      342
                                 =============  =============  =============  =============  =============
Ratio of Earnings to Fixed              26.75          23.95          18.41          14.76          13.46
     Charges..................   =============  =============  =============  =============  =============

</TABLE>

- ----------------------------------

(1)      The ratio of earnings to fixed charges represents the historical
         ratio of Johnson & Johnson and is calculated on a total enterprise
         basis. The ratio is computed by dividing the sum of earnings before
         provision for taxes and fixed charges (excluding capitalized
         interest) by fixed charges. Fixed charges represent interest
         (including capitalized interest) and amortization of debt discount
         and expense and the interest factor of all rentals, consisting of an
         appropriate interest factor on operating leases.




<PAGE>


                                                                  Exhibit 12.2
<TABLE>
<CAPTION>

                          SCIOS INC AND SUBSIDIARIES

       STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
                             (DOLLARS IN MILLIONS)

                                                                    FISCAL YEAR ENDED
                                     --------------------------------------------------------------------------------
                                     DECEMBER 31,     DECEMBER 31,    DECEMBER 31,     DECEMBER 31,     DECEMBER 31,
                                         2002             2001             2000            1999             1998
                                     --------------------------------------------------------------------------------
<S>                                      <C>              <C>               <C>             <C>             <C>

Pre-tax loss before adjustment
  for minority interests and
  equity in net loss of affiliate       $(87,916)      $(62,170)       $ (42,519)       $ (20,050)        $  (869)
  Interest expense                        13,897          2,818            3,796            2,793           2,685
Amortization of interest expense
  related to warrants issued               2,468           ----             ----             ----             ---
Lease rental expense
  representative of interest(1)            1,146            637              534              723             321
Pre-tax loss before adjustment
  for minority interests and
  equity in net loss of affiliate
  plus fixed charges                     (70,405)       (58,715)         (38,189)         (16,534)           2,137
Less:  fixed charges
  Interest expense                        13,897          2,818            3,796            2,793           2,685
  Amortization of interest
  expense related to warrants
  issued                                   2,468           ----             ----             ----             ---
  Lease rental expense
  representative of interest(1)            1,146            637              534              723             321

TOTAL FIXED CHARGES                       17,511          3,455            4,330            3,516           3,006
                                        =========      =========        =========        =========        ========
PRE-TAX LOSS BEFORE ADJUSTMENT
  FOR MINORITY INTERESTS AND
  EQUITY IN NET LOSS OF AFFILIATE       $(87,916)      $(62,170)        $(42,519)        $(20,050)          $(869)
                                        =========      =========        =========        =========          ======

RATIO OF EARNINGS FIXED CHARGES              N/A             N/A              N/A              N/A             0.7
DEFICIENCY IN EARNINGS                  $(87,916)       $(62,170)        $(42,519)        $(20,050)          $(869)

- ------------------

</TABLE>

(1) Calculated as one-third of rentals, which is a reasonable approximation of
the interest factor.



<PAGE>


                                                                  Exhibit 23.1



                      CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Johnson & Johnson of our report dated January 20,
2003, except for Note 22 for which the date is February 10, 2003 relating to
the financial statements of Johnson & Johnson, which appears in the Johnson &
Johnson 2002 Annual Report to Shareholders, which is incorporated by reference
in its Annual Report on Form 10-K for the fiscal year ended December 29, 2002.
We also consent to the incorporation by reference of our report dated January
20, 2003 relating to the financial statement schedule, which appears in such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.



/s/ PricewaterhouseCoopers LLP


New York, New York
April 25, 2003



<PAGE>


                                                                  Exhibit 23.2



                      CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to the Registration Statement on Form S-3 (Registration No.
333-99641) of Scios Inc. of our report dated February 7, 2003, except as to
Note 20, which is as of February 10, 2003, relating to the consolidated
financial statements, which appears in the Scios Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2002. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.



/s/ PricewaterhouseCoopers LLP


San Jose, California
April 28, 2003



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>3
<FILENAME>ex2_1.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>
                                                                   EXHIBIT 2.1
                                                                EXECUTION COPY

=============================================================================









                         AGREEMENT AND PLAN OF MERGER



                         Dated as of February 10, 2003



                                     Among


                              JOHNSON & JOHNSON,


                            SATURN MERGER SUB, INC.


                                      And


                                  SCIOS INC.










=============================================================================


<PAGE>




                               TABLE OF CONTENTS
                                                                          Page

                                   ARTICLE I

                                  THE MERGER

   SECTION 1.01.   The Merger.............................................1
   SECTION 1.02.   Closing................................................2
   SECTION 1.03.   Effective Time.........................................2
   SECTION 1.04.   Effects of the Merger..................................2
   SECTION 1.05.   Certificate of Incorporation and
                     By-laws..............................................2
   SECTION 1.06.   Directors..............................................3
   SECTION 1.07.   Officers...............................................3


                                  ARTICLE II

               EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
              CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

   SECTION 2.01.   Effect on Capital Stock................................3
   SECTION 2.02.   Exchange of Certificates...............................5


                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

   SECTION 3.01.   Representations and Warranties of the Company..........8
   SECTION 3.02.   Representations and Warranties of
                     Parent and Sub......................................45


                                  ARTICLE IV

                   COVENANTS RELATING TO CONDUCT OF BUSINESS

   SECTION 4.01.   Conduct of Business...................................48
   SECTION 4.02.   No Solicitation.......................................56


                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

   SECTION 5.01.   Preparation of the Proxy Statement;
                     Stockholders' Meeting...............................60
   SECTION 5.02.   Access to Information; Confidentiality................61


<PAGE>


   SECTION 5.03.   Commercially Reasonable Efforts.......................62
   SECTION 5.04.   Company Stock Options; ESPP...........................63
   SECTION 5.05.   Indemnification, Advancement of
                     Expenses, Exculpation and Insurance.................66
   SECTION 5.06.   Fees and Expenses.....................................67
   SECTION 5.07.   Public Announcements..................................68
   SECTION 5.08.   Stockholder Litigation................................69
   SECTION 5.09.   Employee Matters......................................69
   SECTION 5.10.   Company Notes and Company Preferred Stock.............70
   SECTION 5.11.   Consents and Other Action.............................70


                                  ARTICLE VI

                             CONDITIONS PRECEDENT

   SECTION 6.01.   Conditions to Each Party's Obligation to
                     Effect the Merger...................................71
   SECTION 6.02.   Conditions to Obligations of Parent and Sub...........71
   SECTION 6.03.   Conditions to Obligation of the Company...............73
   SECTION 6.04.   Frustration of Closing Conditions.....................73


                                  ARTICLE VII

                       TERMINATION, AMENDMENT AND WAIVER

   SECTION 7.01.   Termination...........................................73
   SECTION 7.02.   Effect of Termination.................................75
   SECTION 7.03.   Amendment.............................................75
   SECTION 7.04.   Extension; Waiver.....................................75
   SECTION 7.05.   Procedure for Termination or Amendment................76


                                 ARTICLE VIII

                              GENERAL PROVISIONS

   SECTION 8.01.   Nonsurvival of Representations and Warranties.........76
   SECTION 8.02.   Notices...............................................76
   SECTION 8.03.   Definitions...........................................77
   SECTION 8.04.   Interpretation........................................79
   SECTION 8.05.   Consents and Approvals................................79
   SECTION 8.06.   Counterparts..........................................79
   SECTION 8.07.   Entire Agreement; No Third-Party Beneficiaries........80


<PAGE>


   SECTION 8.08.   GOVERNING LAW.........................................80
   SECTION 8.09.   Assignment............................................80
   SECTION 8.10.   Specific Enforcement; Consent to Jurisdiction.........80
   SECTION 8.11.   Severability..........................................81
   SECTION 8.12.   Performance by Sub....................................81

Annex I    Index of Defined Terms
Exhibit A  Restated Certificate of Incorporation of the
             Surviving Corporation




<PAGE>


                         82 AGREEMENT AND PLAN OF MERGER (this "Agreement")
                    dated as of February 10, 2003, among JOHNSON & JOHNSON, a
                    New Jersey corporation ("Parent"), SATURN MERGER SUB,
                    INC., a Delaware corporation and a wholly owned Subsidiary
                    of Parent ("Sub"), and SCIOS INC., a Delaware corporation
                    (the "Company").


          WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby (a) each issued and outstanding share of common stock, par
value $.001 per share, of the Company ("Company Common Stock"), other than the
Appraisal Shares and shares of Company Common Stock directly owned by Parent,
Sub or the Company, will be converted into the right to receive $45.00 in cash
and (b) each issued and outstanding share of Series B preferred stock, par
value $.001 per share, of the Company ("Company Preferred Stock"), other than
the Appraisal Shares and shares of Company Preferred Stock directly owned by
Parent, Sub or the Company, will be converted into the right to receive
$4,500.00 in cash; and

          WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.

          NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:


                                   ARTICLE I

                                  The Merger

          SECTION 1.01.  THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State


<PAGE>


of Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate corporate existence
of Sub shall cease and the Company shall continue as the surviving corporation
in the Merger (the "Surviving Corporation") and shall succeed to and assume
all the rights and obligations of Sub in accordance with the DGCL.

          SECTION 1.02.  CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or (to the
extent permitted by law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by law)
waiver of those conditions), at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019, unless another
time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall
not have been satisfied or (to the extent permitted by law) waived on such
second business day, then the Closing shall take place on the first business
day on which all such conditions shall have been satisfied or (to the extent
permitted by law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".

          SECTION 1.03.  EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "Certificate of Merger") executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, or at such other time as Parent and the Company shall agree and
shall specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").

          SECTION 1.04.  EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.


<PAGE>


          SECTION 1.05.  CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Restated Certificate of Incorporation of the Company (the "Company
Certificate") shall be amended at the Effective Time to be in the form of
Exhibit A and, as so amended, such Company Certificate shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.

          (b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.

          SECTION 1.06.  DIRECTORS. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.

          SECTION 1.07.  OFFICERS. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.


                                  ARTICLE II

               EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
              CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

          SECTION 2.01.  EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or Company Preferred Stock or any shares of
capital stock of Parent or Sub:

          (a)  CAPITAL STOCK OF SUB. Each issued and outstanding share of
               capital stock of Sub shall be converted into and become one
               validly issued, fully paid and nonassessable share of common
               stock, par value $0.01 per share, of the Surviving Corporation.

          (b)  CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
               share of Company Common Stock and Company Preferred Stock that
               is directly owned by the Company, Parent or Sub immediately
               prior to the


<PAGE>


     Effective Time shall automatically be canceled and shall cease to exist,
     and no consideration shall be delivered in exchange therefor.

          (c)  CONVERSION OF COMPANY COMMON STOCK AND COMPANY PREFERRED STOCK.
               Each share of Company Common Stock issued and outstanding
               immediately prior to the Effective Time (other than shares to
               be canceled in accordance with Section 2.01(b) and the
               Appraisal Shares) shall be converted into the right to receive
               $45.00 in cash, without interest (the "Common Stock Merger
               Consideration"). Each share of Company Preferred Stock issued
               and outstanding immediately prior to the Effective Time (other
               than shares to be canceled in accordance with Section 2.01(b)
               and the Appraisal Shares) shall be converted into the right to
               receive $4,500.00 in cash, without interest, which is
               equivalent to the Common Stock Merger Consideration on an as
               converted basis (the "Preferred Stock Merger Consideration"
               and, together with the Common Stock Merger Consideration, the
               "Merger Consideration"). At the Effective Time, all such shares
               of Company Common Stock and Company Preferred Stock shall no
               longer be outstanding and shall automatically be canceled and
               shall cease to exist, and each holder of a certificate which
               immediately prior to the Effective Time represented any such
               shares of Company Common Stock or Company Preferred Stock
               (each, a "Certificate") shall cease to have any rights with
               respect thereto, except the right to receive the Common Stock
               Merger Consideration or the Preferred Stock Merger
               Consideration, respectively. The right of any holder of a
               Certificate to receive the applicable Merger Consideration
               shall be subject to and reduced by the amount of any
               withholding that is required under applicable tax law.

          (d)  APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
               the contrary, shares (the "Appraisal Shares") of Company Common
               Stock or Company Preferred Stock issued and outstanding
               immediately prior to the Effective Time that are held by any
               holder who is entitled to demand and properly demands appraisal
               of such Appraisal Shares pursuant to, and who complies in all
               respects with, the provisions of Section 262 of the DGCL
               ("Section 262") shall not be converted into the right to
               receive the Merger Consideration as provided in Section
               2.01(c), but


<PAGE>


               instead such holder shall be entitled to payment of the fair
               value of such Appraisal Shares in accordance with the
               provisions of Section 262. At the Effective Time, all Appraisal
               Shares shall no longer be outstanding, shall automatically be
               canceled and shall cease to exist, and each holder of Appraisal
               Shares shall cease to have any rights with respect thereto,
               except the right to receive the fair value of such Appraisal
               Shares in accordance with the provisions of Section 262.
               Notwithstanding the foregoing, if any such holder shall fail to
               perfect or otherwise shall waive, withdraw or lose the right to
               appraisal under Section 262, or a court of competent
               jurisdiction shall determine that such holder is not entitled
               to the relief provided by Section 262, then the right of such
               holder to be paid the fair value of such holder's Appraisal
               Shares under Section 262 shall cease and such Appraisal Shares
               shall be deemed to have been converted at the Effective Time
               into, and shall have become, the right to receive the Merger
               Consideration as provided in Section 2.01(c). The Company shall
               serve prompt notice to Parent of any demands for appraisal of
               any shares of Company Common Stock or Company Preferred Stock,
               and Parent shall have the right to participate in and direct
               all negotiations and proceedings with respect to such demands.
               Prior to the Effective Time, the Company shall not, without the
               prior written consent of Parent, voluntarily make any payment
               with respect to, or settle or offer to settle, any such
               demands, or agree to do any of the foregoing.

          SECTION 2.02.  EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior
to the Effective Time, Parent shall appoint JPMorgan Chase or another
comparable bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration. At the Effective Time, Parent
shall deposit, or cause the Surviving Corporation to deposit, with the Paying
Agent, for the benefit of the holders of Certificates, cash in an amount
sufficient to pay the aggregate Merger Consideration required to be paid
pursuant to Section 2.01(c) (such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Fund shall not be used for any other purpose.

          (b) EXCHANGE PROCEDURES. As soon as practicable (but not later than
five (5) business days) after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of a Certificate (i) a form of


<PAGE>


letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and which shall be in
customary form) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Each holder of
record of a Certificate shall, upon surrender to the Paying Agent of such
Certificate, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, be entitled
to receive in exchange therefor the amount of cash which the number of shares
of Company Common Stock or Company Preferred Stock previously represented by
such Certificate shall have been converted into the right to receive pursuant
to Section 2.01(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock or
Company Preferred Stock which is not registered in the transfer records of the
Company, payment of the Merger Consideration may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of such Certificate or establish to
the reasonable satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which
the holder thereof has the right to receive in respect of such Certificate
pursuant to this Article II. No interest shall be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.

          (c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK AND COMPANY
PREFERRED STOCK. All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock or Company Preferred Stock formerly represented by such Certificates. At
the close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock


<PAGE>


transfer books of the Surviving Corporation of the shares of Company Common
Stock and Company Preferred Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any Certificate is presented
to the Surviving Corporation for transfer, it shall be canceled against
delivery of cash to the holder thereof as provided in this Article II.

          (d) TERMINATION OF THE EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration.

          (e) NO LIABILITY. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered immediately prior to the date on
which any Merger Consideration would otherwise escheat to or become the
property of any Governmental Entity, any such Merger Consideration shall, to
the extent permitted by applicable law, become the property of Parent, free
and clear of all claims or interest of any person previously entitled thereto.

          (f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest the
cash in the Exchange Fund as directed by Parent. Any interest and other income
resulting from such investments shall be paid to and be income of Parent.

          (g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.


<PAGE>


          (h) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock or Company Preferred Stock such amounts as Parent, the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld and paid over to the
appropriate taxing authority by Parent, the Surviving Corporation or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock or Company Preferred Stock in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.


                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

          SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in the disclosure schedule (with specific
reference to the particular Section or subsection of this Agreement to which
the information set forth in such disclosure schedule relates; provided,
however, that any information set forth in one section of the Company
Disclosure Schedule shall be deemed to apply to each other Section or
subsection thereof or hereof to which its relevance is apparent on its face)
delivered by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule"), the Company represents and warrants to
Parent and Sub as follows:

          (a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company
     and its Subsidiaries has been duly organized, and is validly existing and
     in good standing under the laws of the jurisdiction of its incorporation
     or formation, as the case may be, and has all requisite power and
     authority and possesses all governmental licenses, permits,
     authorizations and approvals necessary to enable it to use its corporate
     or other name and to own, lease or otherwise hold and operate


<PAGE>


     its properties and other assets and to carry on its business as presently
     conducted, except where the failure to have such government licenses,
     permits, authorizations or approvals individually or in the aggregate has
     not had and would not reasonably be expected to have a Material Adverse
     Effect. Each of the Company and its Subsidiaries is duly qualified or
     licensed to do business and is in good standing in each jurisdiction in
     which the nature of its business or the ownership, leasing or operation
     of its properties makes such qualification or licensing necessary, other
     than in such jurisdictions where the failure to be so qualified or
     licensed individually or in the aggregate has not had and would not
     reasonably be expected to have a Material Adverse Effect. The Company has
     made available to Parent, prior to the execution of this Agreement,
     complete and accurate copies of the Company Certificate and its By-laws
     (the "Company By-laws"), and the comparable organizational documents of
     each of its Subsidiaries, in each case as amended to the date hereof. The
     Company has made available to Parent complete and accurate copies of the
     minutes (or, in the case of minutes that have not yet been finalized,
     drafts thereof (if available)) of all meetings of the stockholders of the
     Company and each of its Subsidiaries, the Board of Directors of the
     Company and each of its Subsidiaries and the committees of each of such
     Board of Directors, in each case held since January 1, 2001 and prior to
     the date hereof.

          (b) SUBSIDIARIES. Section 3.01(b) of the Company Disclosure Schedule
     lists each of the Subsidiaries of the Company and, for each such
     Subsidiary, the state of incorporation or formation and, as of the date
     hereof, each jurisdiction in which such Subsidiary is qualified or
     licensed to do business. All the issued and outstanding shares of capital
     stock of, or other equity interests in, each such Subsidiary have been
     validly issued and are fully paid and nonassessable and are owned
     directly or indirectly by the Company free and clear of all pledges,
     liens, charges, encumbrances or security interests of any kind or nature
     whatsoever (collectively, "Liens"), and free of any restriction on the
     right to vote, sell or otherwise dispose of such capital stock or other
     equity interests. Except for the capital stock of, or voting securities
     or equity interests in, its Subsidiaries, the Company does not own,
     directly or indirectly, any capital stock of, or


<PAGE>


     other voting securities or equity interests in, any corporation,
     partnership, joint venture, association or other entity.

          (c) CAPITAL STRUCTURE. The authorized capital stock of the Company
     consists of 150,000,000 shares of Company Common Stock and 20,000,000
     shares of preferred stock, par value $.001 per share (of which 50,000
     shares have been designated as Company Preferred Stock). At the close of
     business on January 31, 2003, (i) 47,042,335 shares of Company Common
     Stock were issued and outstanding, (ii) 261,800 shares of Company Common
     Stock were held by the Company in its treasury, (iii) 3,093,355 shares of
     Company Common Stock were reserved and available for issuance pursuant to
     the Company's 1996 Non-Officer Stock Option Plan, as amended, 1992 Equity
     Incentive Plan, as amended, and 2001 Employee Stock Purchase Plan (the
     "ESPP") (such plans, collectively, the "Company Stock Plans"), and
     7,749,446 shares of Company Common Stock were subject to outstanding
     Company Stock Options (other than rights under the ESPP), and no shares
     of Company Common Stock were subject to vesting and restrictions on
     transfer (collectively, "Company Restricted Stock"), (iv) 499,100 shares
     of Company Common Stock were reserved for issuance and issuable upon
     conversion of the Company Preferred Stock, (v) 3,816,793 shares of
     Company Common Stock were reserved for issuance and issuable upon
     conversion of the 5.50% Convertible Subordinated Notes due 2009 of the
     Company (the "Company Notes"), (vi) 4,991 shares of Company Preferred
     Stock were issued or outstanding, (vii) no other shares of preferred
     stock of the Company were issued or outstanding or were held by the
     Company as treasury shares and (viii) warrants to acquire 700,000 shares
     of Company Common Stock from the Company pursuant to the warrant
     agreements set forth on Section 3.01(c) of the Company Disclosure
     Schedule and previously delivered in complete and correct form to Parent
     (the "Warrants") were issued and outstanding. Except as set forth above
     in this Section 3.01(c), at the close of business on January 31, 2003, no
     shares of capital stock or other voting securities or equity interests of
     the Company were issued, reserved for issuance or outstanding. There are
     no outstanding stock appreciation rights, "phantom" stock rights,
     performance units, rights to receive shares of Company Common Stock on a
     deferred basis or other rights (other



<PAGE>

     than Company Preferred Stock, Company Notes, Company Stock Options and
     Warrants) that are linked to the value of Company Common Stock
     (collectively, "Company Stock-Based Awards"). Section 3.01(c) of the
     Company Disclosure Schedule sets forth a complete and accurate list, as
     of February 6, 2003, of all outstanding options to purchase shares of
     Company Common Stock (collectively, "Company Stock Options") and all
     outstanding Company Stock-Based Awards, granted under the Company Stock
     Plans or otherwise (other than rights under the ESPP), and all
     outstanding Warrants, the number of shares of Company Common Stock (or
     other stock) subject thereto, the grant dates, expiration dates, exercise
     or base prices (if applicable) and vesting schedules thereof and the
     names of the holders thereof. All outstanding Company Stock Options
     (other than rights under the ESPP) and shares of Company Restricted Stock
     are evidenced by stock option agreements, restricted stock purchase
     agreements or other award agreements, in each case in the forms set forth
     in Section 3.01(c) of the Company Disclosure Schedule, and no stock
     option agreement, restricted stock purchase agreement or other award
     agreement contains terms that are inconsistent with such forms. Each
     Company Stock Option intended to qualify as an "incentive stock option"
     under Section 422 of the Code so qualifies and the exercise price of each
     other Company Stock Option is no less than the fair market value of a
     share of Company Common Stock as determined on the date of grant of such
     Company Stock Option. As of the close of business on January 31, 2003,
     there were outstanding Company Stock Options (other than rights under the
     ESPP) to purchase 7,749,446 shares of Company Common Stock with exercise
     prices on a per share basis lower than the Common Stock Merger
     Consideration, and the weighted average exercise price of such Company
     Stock Options was equal to $18.46. The maximum number of shares of
     Company Common Stock that could be purchased with accumulated payroll
     deductions under the ESPP at the close of business of May 30, 2003 and
     November 28, 2003 (assuming the fair market value of a share of Company
     Common Stock on such dates is equal to the Common Stock Merger
     Consideration and payroll deductions continue at the current rate) is
     112,792 and 70,190, respectively. As of the close of business on January
     31, 2003, there were outstanding Warrants to purchase 700,000 shares of
     Company Common Stock with exercise prices on a per share basis lower


<PAGE>


     than the Common Stock Merger Consideration. All outstanding shares of
     capital stock of the Company are, and all shares which may be issued
     pursuant to the Company Preferred Stock, Company Notes, Company Stock
     Options, Company Stock-Based Awards or the Warrants will be, when issued
     in accordance with the terms thereof, duly authorized, validly issued,
     fully paid and nonassessable and not subject to preemptive rights. Except
     for the Company Notes, there are no bonds, debentures, notes or other
     indebtedness of the Company having the right to vote (or convertible
     into, or exchangeable for, securities having the right to vote) on any
     matters on which stockholders of the Company may vote. Except as set
     forth above in this Section 3.01(c), (x) there are not issued, reserved
     for issuance or outstanding (A) any shares of capital stock or other
     voting securities or equity interests of the Company, (B) any securities
     of the Company convertible into or exchangeable or exercisable for shares
     of capital stock or other voting securities or equity interests of the
     Company or (C) any warrants, calls, options or other rights to acquire
     from the Company or any of its Subsidiaries, and no obligation of the
     Company or any of its Subsidiaries to issue, any capital stock, voting
     securities, equity interests or securities convertible into or
     exchangeable or exercisable for capital stock or voting securities of the
     Company and (y) there are not any outstanding obligations of the Company
     or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
     such securities or to issue, deliver or sell, or cause to be issued,
     delivered or sold, any such securities. Neither the Company nor any of
     its Subsidiaries is a party to any voting agreement with respect to the
     voting of any such securities. Except as set forth above in this Section
     3.01(c), there are no outstanding (1) securities of the Company or any of
     its Subsidiaries convertible into or exchangeable or exercisable for
     shares of capital stock or voting securities or equity interests of any
     Subsidiary of the Company, (2) warrants, calls, options or other rights
     to acquire from the Company or any of its Subsidiaries, and no obligation
     of the Company or any of its Subsidiaries to issue, any capital stock,
     voting securities, equity interests or securities convertible into or
     exchangeable or exercisable for capital stock or voting securities of any
     Subsidiary of the Company or (3) obligations of the Company or any of its


<PAGE>


     Subsidiaries to repurchase, redeem or otherwise acquire any such
     outstanding securities or to issue, deliver or sell, or cause to be
     issued, delivered or sold, any such securities.

          (d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
     corporate power and authority to execute and deliver this Agreement and,
     subject to receipt of the Stockholder Approval, to consummate the
     transactions contemplated by this Agreement. The execution and delivery
     of this Agreement by the Company and the consummation by the Company of
     the transactions contemplated by this Agreement have been duly authorized
     by all necessary corporate action on the part of the Company and no other
     corporate proceedings on the part of the Company are necessary to
     authorize this Agreement or to consummate the transactions contemplated
     hereby, subject, in the case of the consummation of the Merger, to the
     obtaining of the Stockholder Approval. This Agreement has been duly
     executed and delivered by the Company and, assuming the due
     authorization, execution and delivery by each of the other parties
     hereto, constitutes a legal, valid and binding obligation of the Company,
     enforceable against the Company in accordance with its terms, subject to
     bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization
     or similar laws affecting the rights of creditors generally and the
     availability of equitable remedies (regardless of whether such
     enforceability is considered in a proceeding in equity or at law). The
     Board of Directors of the Company, at a meeting duly called and held at
     which all directors of the Company were present, duly and unanimously
     adopted resolutions (i) approving and declaring advisable this Agreement,
     the Merger and the other transactions contemplated by this Agreement,
     (ii) declaring that it is in the best interests of the stockholders of
     the Company that the Company enter into this Agreement and consummate the
     Merger and the other transactions contemplated by this Agreement on the
     terms and subject to the conditions set forth in this Agreement, (iii)
     directing that the adoption of this Agreement be submitted as promptly as
     practicable to a vote at a meeting of the stockholders of the Company and
     (iv) recommending that the stockholders of the Company adopt this
     Agreement, which resolutions, as of the date of this Agreement, have not
     been subsequently rescinded, modified or withdrawn in any way. The



<PAGE>


     execution and delivery of this Agreement do not, and the consummation of
     the Merger and the other transactions contemplated by this Agreement and
     compliance by the Company and its Subsidiaries with the provisions of
     this Agreement will not, (x) conflict with, or result in any violation or
     breach of, or default (with or without notice or lapse of time, or both)
     under, the Company Certificate or the Company By-laws or the comparable
     organizational documents of any of its Subsidiaries, (y) conflict with,
     or result in any violation or breach of, or default (with or without
     notice or lapse of time, or both) under, or give rise to a right of
     termination, cancellation or acceleration of any obligation or to the
     loss of a benefit under, or result in the creation of any Lien in or upon
     any of the properties or other assets of the Company or any of its
     Subsidiaries under, any loan or credit agreement, bond, debenture, note,
     mortgage, indenture, lease, supply agreement, license agreement,
     development agreement or other contract, agreement, obligation,
     commitment, instrument, franchise or license, whether oral or written
     (each, including all amendments thereto, a "Contract"), to which the
     Company or any of its Subsidiaries is a party or any of their respective
     properties or other assets is subject or (z) subject to the governmental
     filings, the obtaining of the Stockholder Approval and the other matters
     referred to in the following sentence, conflict with, or result in any
     violation or breach of, or default (with or without notice or lapse of
     time, or both) under, any (A) statute, law, ordinance, rule or regulation
     applicable to the Company or any of its Subsidiaries or their respective
     properties or other assets or (B) order, writ, injunction, decree,
     judgment or stipulation, in each case applicable to the Company or any of
     its Subsidiaries or their respective properties or other assets, other
     than, in the case of clauses (y) and (z), any such conflicts, violations,
     breaches, defaults, rights, losses or Liens that individually or in the
     aggregate have not had and would not reasonably be expected to have a
     Material Adverse Effect. No consent, approval, order or authorization of,
     action by or in respect of, or registration, declaration or filing with,
     any Federal, state, local or foreign government, any court,
     administrative, regulatory or other governmental agency, commission or
     authority or any non-governmental self-regulatory agency, commission or
     authority (each, a "Governmental Entity") is required by or with respect
     to the Company or any of its Subsidiaries in connection with the
     execution and delivery of this Agreement by the Company or the
     consummation of the Merger or the other transactions contemplated by this
     Agreement, except for (1) the filing of a premerger notification and
     report form by the Company under the Hart-Scott-Rodino Antitrust
     Improvements Act of 1976, as amended, and the rules and regulations
     thereunder (the "HSR Act"), and the receipt, termination or expiration,
     as applicable, of approvals or waiting periods required under the HSR Act
     or any other applicable competition, merger control, antitrust or similar
     law or regulation, (2) the filing with the Securities and Exchange
     Commission (the "SEC") of (A) a proxy statement relating to the adoption
     by the stockholders of the Company of this Agreement (as amended or
     supplemented from time to time, the "Proxy Statement") and (B) such
     reports under the Securities Exchange Act of 1934, as amended (the
     "Exchange Act"), as may be required in connection with this Agreement and
     the transactions contemplated by this Agreement, (3) the filing of the
     Certificate of Merger with the Secretary of State of the State of
     Delaware and appropriate documents with the relevant authorities of other
     states in which the Company or any of its Subsidiaries is qualified to do
     business, (4) any filings required under the rules and regulations of the
     Nasdaq National Market and (5) such other consents, approvals, orders,
     authorizations, actions, registrations, declarations and filings the
     failure of which to be obtained or made individually or in the aggregate
     has not had and would not reasonably be expected to have a Material
     Adverse Effect.

          (e) COMPANY SEC DOCUMENTS. The Company has filed all reports,
     schedules, forms, statements and other documents (including exhibits and
     other information incorporated therein) with the SEC required to be filed
     by the Company since January 1, 2001 (the "Company SEC Documents"). As of
     their respective filing dates, the Company SEC Documents complied in all
     material respects with the requirements of the Securities Act of 1933, as
     amended (the "Securities Act"), or the Exchange Act, as the case may be,
     and the rules and regulations of the SEC promulgated thereunder
     applicable to such Company SEC Documents, and none of the Company SEC
     Documents contained any untrue statement of a material fact or omitted to
     state a material fact required to be stated


<PAGE>

     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they were made, not misleading. Except to
     the extent that information contained in any Company SEC Document has
     been revised, amended, supplemented or superseded by a later-filed
     Company SEC Document, none of the Company SEC Documents contains any
     untrue statement of a material fact or omits to state any material fact
     required to be stated therein or necessary in order to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading. The financial statements (including the related
     notes) of the Company included in the Company SEC Documents complied at
     the time they were filed as to form in all material respects with
     applicable accounting requirements and the published rules and
     regulations of the SEC with respect thereto, have been prepared in
     accordance with generally accepted accounting principles in the United
     States ("GAAP") (except, in the case of unaudited statements, as
     permitted by the rules and regulations of the SEC) applied on a
     consistent basis during the periods involved (except as may be indicated
     in the notes thereto) and each fairly presented in all material respects
     the consolidated financial position of the Company and its consolidated
     Subsidiaries as of the dates thereof and the consolidated results of
     their operations and cash flows for the periods then ended (subject, in
     the case of unaudited statements, to normal year-end audit adjustments).
     Neither the Company nor any of its Subsidiaries has any liabilities or
     obligations of any nature (whether accrued, absolute, contingent or
     otherwise) which individually or in the aggregate have had or would
     reasonably be expected to have a Material Adverse Effect. None of the
     Subsidiaries of the Company are, or have at any time since January 1,
     2001 been, subject to the reporting requirements of Sections 13(a) and
     15(d) of the Exchange Act.

          (f) INFORMATION SUPPLIED. None of the information supplied or to be
     supplied by the Company specifically for inclusion or incorporation by
     reference in the Proxy Statement will, at the date it is first mailed to
     the stockholders of the Company and at the time of the Stockholders'
     Meeting, contain any untrue statement of a material fact or omit to state
     any material fact required to be stated therein or necessary in order to
     make the statements therein, in


<PAGE>


     light of the circumstances under which they are made, not misleading,
     except that no representation or warranty is made by the Company with
     respect to statements made or incorporated by reference therein based on
     information supplied by or on behalf of Parent or Sub for inclusion or
     incorporation by reference in the Proxy Statement. The Proxy Statement
     will comply as to form in all material respects with the requirements of
     the Exchange Act and the rules and regulations thereunder.

          (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
     incurred in connection with this Agreement or as expressly permitted
     pursuant to Section 4.01(a)(i) through (xvi), since the date of the most
     recent financial statements included in the Filed Company SEC Documents,
     the Company and its Subsidiaries have conducted their respective
     businesses only in the ordinary course consistent with past practice, and
     there has not been any Material Adverse Change, and from such date until
     the date hereof there has not been (i) any declaration, setting aside or
     payment of any dividend or other distribution (whether in cash, stock or
     property) with respect to any capital stock of the Company or any of its
     Subsidiaries, other than dividends or distributions by a direct or
     indirect wholly owned Subsidiary of the Company to its shareholders, (ii)
     any purchase, redemption or other acquisition by the Company or any of
     its Subsidiaries of any shares of capital stock or any other securities
     of the Company or any of its Subsidiaries or any options, warrants, calls
     or rights to acquire such shares or other securities, (iii) any split,
     combination or reclassification of any capital stock of the Company or
     any of its Subsidiaries or any issuance or the authorization of any
     issuance of any other securities in respect of, in lieu of or in
     substitution for shares of their respective capital stock, (iv) (A) any
     granting by the Company or any of its Subsidiaries to any current or
     former director, officer, employee or consultant of the Company or its
     Subsidiaries of any increase in compensation, bonus or fringe or other
     benefits or any granting of any type of compensation or benefits to any
     current or former director, officer, employee or consultant not
     previously receiving or entitled to receive such type of compensation or
     benefit, except for normal increases in cash compensation (including cash
     bonuses) in the


<PAGE>

     ordinary course of business consistent with past practice or as was
     required under any Company Benefit Agreement or Company Benefit Plan in
     effect as of the date of the most recent financial statements included in
     the Filed Company SEC Documents, (B) any granting by the Company or any
     of its Subsidiaries to any current or former director, officer, employee
     or consultant of the Company or any of its Subsidiaries of any right to
     receive any increase in severance or termination pay, or (C) any entry by
     the Company or any of its Subsidiaries into, or any amendments of, (1)
     any employment, deferred compensation, consulting, severance, change of
     control, termination or indemnification agreement or any other agreement
     with or involving any current or former director, officer, employee or
     consultant of the Company or any of its Subsidiaries or (2) any agreement
     with any current or former director, officer, employee or consultant of
     the Company or any of its Subsidiaries the benefits of which are
     contingent, or the terms of which are materially altered, upon the
     occurrence of a transaction involving the Company of a nature
     contemplated by this Agreement (all such agreements under this clause
     (C), collectively, "Company Benefit Agreements"), (D) any adoption of,
     any amendment to or any termination of any Company Benefit Plan, or (E)
     any payment of any benefit under, or the grant of any award under, or any
     amendment to, or termination of, any bonus, incentive, performance or
     other compensation plan or arrangement, Company Benefit Agreement or
     Company Benefit Plan (including in respect of stock options, "phantom"
     stock, stock appreciation rights, restricted stock, "phantom" stock
     rights, restricted stock units, deferred stock units, performance stock
     units or other stock-based or stock-related awards or the removal or
     modification of any restrictions in any Company Benefit Agreement or
     Company Benefit Plan or awards made thereunder) except as required to
     comply with applicable law or any Company Benefit Agreement or Company
     Benefit Plan in effect as of the date of the most recent financial
     statements included in the Filed Company SEC Documents, provided, that
     this clause (iv) shall not apply with respect to any consultant of the
     Company who, as of the date of this Agreement, had not been paid more
     than $20,000 in one fiscal year by the Company, (v) any damage,
     destruction or loss, whether or not covered by insurance, that
     individually or in the aggregate has had or would reasonably be expected


<PAGE>

     to have a Material Adverse Effect, (vi) any change in accounting methods,
     principles or practices by the Company materially affecting its assets,
     liabilities or businesses, except insofar as may have been required by a
     change in GAAP or (vii) any change in any material tax election or any
     settlement or compromise of any material income tax liability.

          (h) LITIGATION. There is no suit, action or proceeding pending or,
     to the Knowledge of the Company, threatened against or affecting the
     Company or any of its Subsidiaries or any of their respective assets that
     individually or in the aggregate has had or would reasonably be expected
     to have a Material Adverse Effect, nor is there any judgment, decree,
     injunction, rule or order of any Governmental Entity or arbitrator
     outstanding against, or, to the Knowledge of the Company, investigation
     by any Governmental Entity involving, the Company or any of its
     Subsidiaries or any of their respective assets that individually or in
     the aggregate has had or would reasonably be expected to have a Material
     Adverse Effect.

          (i) CONTRACTS. Except with respect to licenses and other agreements
     relating to intellectual property, which are the subject of Section
     3.01(p), as of the date hereof, neither the Company nor any of its
     Subsidiaries is a party to, and none of their respective properties or
     other assets is subject to, any contract or agreement that is of a nature
     required to be filed as an exhibit to a report or filing under the
     Securities Act or the Exchange Act and the rules and regulations
     promulgated thereunder. None of the Company, any of its Subsidiaries or,
     to the Knowledge of the Company, any other party thereto is in material
     violation of or in default under (in each case with or without notice or
     lapse of time, or both) any of the Contracts set forth in Section
     3.01(i)-(A) of the Company Disclosure Schedule. None of the Company, any
     of its Subsidiaries or, to the Knowledge of the Company, any other party
     thereto is in violation of or in default under (in each case with or
     without notice or lapse of time, or both) any Contract (other than the
     Contracts listed in Section 3.01(i)-(A) of the Company Disclosure
     Schedule), to which it is a party or by which it or any of its properties
     or other assets is bound, except for violations or defaults that
     individually or in the aggregate have not had and would


<PAGE>


     not reasonably be expected to have a Material Adverse Effect. Neither the
     Company nor any of its Subsidiaries has entered into any Contract with
     any Affiliate of the Company that is currently in effect other than
     agreements that are disclosed in the Filed Company SEC Documents. Neither
     the Company nor any of its Subsidiaries is a party to or otherwise bound
     by any agreement or covenant restricting the Company's or any of its
     Subsidiaries' ability to compete.

          (j) COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) Except with
     respect to Environmental Laws, the Employee Retirement Income Security
     Act of 1974, as amended ("ERISA") and taxes, which are the subjects of
     Sections 3.01(j)(ii), 3.01(l) and 3.01(n), respectively, each of the
     Company and its Subsidiaries is in compliance with all statutes, laws,
     ordinances, rules, regulations, judgments, orders and decrees of any
     Governmental Entity applicable to it, its properties or other assets or
     its business or operations (collectively, "Legal Provisions"), except for
     failures to be in compliance that individually or in the aggregate have
     not had and would not reasonably be expected to have a Material Adverse
     Effect. Each of the Company and its Subsidiaries has in effect all
     approvals, authorizations, certificates, filings, franchises, licenses,
     notices and permits of or with all Governmental Entities (collectively,
     "Permits"), including all Permits under the Federal Food, Drug and
     Cosmetic Act of 1938, as amended (the "FDCA"), and the regulations of the
     Federal Food and Drug Administration (the "FDA") promulgated thereunder,
     necessary for it to own, lease or operate its properties and other assets
     and to carry on its business and operations as presently conducted,
     except where the failure to have such Permits individually or in the
     aggregate has not had and would not reasonably be expected to have a
     Material Adverse Effect. There has occurred no default under, or
     violation of, any such Permit, except for any such default or violation
     that individually or in the aggregate has not had and would not
     reasonably be expected to have a Material Adverse Effect. The
     consummation of the Merger, in and of itself, would not cause the
     revocation or cancellation of any such Permit that individually or in the
     aggregate would reasonably be expected to have a Material Adverse Effect.
     No action, demand, requirement or investigation by any Governmental
     Entity and no suit, action or proceeding


<PAGE>

     by any other person, in each case with respect to the Company or any of
     its Subsidiaries or any of their respective properties or other assets
     under any Legal Provision, is pending or, to the Knowledge of the
     Company, threatened, other than, in each case, those the outcome of which
     individually or in the aggregate have not had and would not reasonably be
     expected to have a Material Adverse Effect.

          (ii) Except for those matters that individually or in the aggregate
     have not had and would not reasonably be expected to have a Material
     Adverse Effect: (A) each of the Company and its Subsidiaries is, and has
     been, in compliance with all applicable Environmental Laws and has
     obtained and complied with all Permits required under any Environmental
     Laws to own, lease or operate its properties or other assets and to carry
     on its business and operations as presently conducted; (B) there have
     been no Releases or threatened Releases of Hazardous Materials in, on,
     under or affecting any properties currently or formerly owned, leased or
     operated by the Company or any of its Subsidiaries; (C) there is no
     investigation, suit, claim, action or proceeding pending, or to the
     Knowledge of the Company, threatened against or affecting the Company or
     any of its Subsidiaries relating to or arising under Environmental Laws,
     and neither the Company nor any of its Subsidiaries has received any
     written notice of any such investigation, suit, claim, action or
     proceeding; (D) neither the Company nor any of its Subsidiaries has
     entered into or assumed by contract or operation of law or otherwise, any
     obligation, liability, order, settlement, judgment, injunction or decree
     relating to or arising under Environmental Laws; and (E) to the Knowledge
     of the Company, there are no facts, circumstances or conditions that
     would reasonably be expected to form the basis for any investigation,
     suit, claim, action, proceeding or liability against or affecting the
     Company or any of its Subsidiaries relating to or arising under
     Environmental Laws. The term "Environmental Laws" means all Federal,
     state, local and foreign laws (including the common law), statutes,
     rules, regulations, codes, ordinances, orders, decrees, judgments,
     injunctions, notices, Permits, treaties or binding agreements issued,
     promulgated or entered into by any Governmental Entity, relating in any
     way to the environment, preservation or reclamation of natural


<PAGE>


     resources or endangered species, the presence, management, Release or
     threat of Release of, or exposure to, Hazardous Materials, or to human
     health and safety. The term "Hazardous Materials" means (1) petroleum
     products and by-products, asbestos and asbestos-containing materials,
     urea formaldehyde foam insulation, medical or infectious wastes,
     polychlorinated biphenyls, radon gas, radioactive substances,
     chlorofluorocarbons and all other ozone-depleting substances or (2) any
     chemical, material, substance, waste, pollutant or contaminant that is
     prohibited, limited or regulated by or pursuant to any Environmental Law.
     The term "Release" means any spilling, leaking, pumping, pouring,
     emitting, emptying, discharging, injecting, escaping, leaching, dumping,
     disposing or migrating into or through the environment or any natural or
     man-made structure.

          (k) ABSENCE OF CHANGES IN COMPANY BENEFIT PLANS; LABOR RELATIONS.
     Except as expressly permitted pursuant to Section 4.01(a)(i) through
     (xvi), since the date of the most recent financial statements included in
     the Filed Company SEC Documents, there has not been any adoption or
     amendment by the Company or any of its Subsidiaries of any collective
     bargaining agreement or any employment, bonus, pension, profit sharing,
     deferred compensation, incentive compensation, stock ownership, stock
     purchase, stock appreciation, restricted stock, stock option, "phantom"
     stock, performance, retirement, thrift, savings, stock bonus, paid time
     off, perquisite, fringe benefit, vacation, severance, disability, death
     benefit, hospitalization, medical, welfare benefit or other plan,
     program, policy, arrangement or understanding (whether or not legally
     binding) maintained, contributed to or required to be maintained or
     contributed to by the Company or any of its Subsidiaries or any other
     person or entity that, together with the Company, is treated as a single
     employer under Section 414(b), (c), (m) or (o) of the Code (each, a
     "Commonly Controlled Entity"), in each case providing benefits to any
     current or former director, officer, employee or consultant of the
     Company or any of its Subsidiaries (collectively, the "Company Benefit
     Plans"), or any material change in any actuarial or other assumption used
     to calculate funding obligations with respect to any Company Pension
     Plans, or any change in the manner in which contributions to any Company
     Pension Plans are made or the basis on which such contributions are
     determined, other than amendments or other changes as required to ensure
     that such Company Benefit Plan is not then out of compliance with
     applicable law, or reasonably determined by the Company to be necessary
     or appropriate to preserve the qualified status of a Company Pension Plan
     under Section 401(a) of the Code. There exist no currently binding
     Company Benefit Agreements. There are no collective bargaining or other
     labor union agreements to which the Company or any of its Subsidiaries is
     a party or by which the Company or any of its Subsidiaries is bound. As
     of the date hereof, none of the employees of the Company or any of its
     Subsidiaries are represented by any union with respect to their
     employment by the Company or such Subsidiary. As of the date hereof,
     since January 1, 2001, neither the Company nor any of its Subsidiaries
     has experienced any labor disputes, union organization attempts or work
     stoppages, slowdowns or lockouts due to labor disagreements.

          (l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
     Disclosure Schedule contains a complete and accurate list of each Company
     Benefit Plan that is an "employee pension benefit plan" (as defined in
     Section 3(2) of ERISA) (sometimes referred to herein as a "Company
     Pension Plan"), each Company Benefit Plan that is an "employee welfare
     benefit plan" (as defined in Section 3(1) of ERISA) and all other Company
     Benefit Plans. The Company has provided or made available to Parent
     complete and accurate copies of (A) each Company Benefit Plan (or, in the
     case of any unwritten Company Benefit Plans, descriptions thereof), (B)
     the two most recent annual reports on Form 5500 required to be filed with
     the Internal Revenue Service (the "IRS") with respect to each Company
     Benefit Plan (if any such report was required), (C) the most recent
     summary plan description for each Company Benefit Plan for which such
     summary plan description is required and (D) each trust agreement and
     insurance or group annuity contract relating to any Company Benefit Plan.
     Each Company Benefit Plan has been administered in all material respects
     in accordance with its terms. The Company, its Subsidiaries and all the
     Company Benefit Plans are all in compliance in all material respects with
     the applicable provisions of ERISA, the Code and all other applicable
     laws, including laws of foreign


<PAGE>


     jurisdictions, and the terms of all collective bargaining agreements.

          (ii) All Company Pension Plans intended to be tax-qualified have
     received favorable determination letters from the IRS with respect to
     "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and have timely
     filed with the IRS determination letter applications with respect to
     "GUST" (as defined in Section 1 of Notice 2001-42), to the effect that
     such Company Pension Plans are qualified and exempt from Federal income
     taxes under Sections 401(a) and 501(a), respectively, of the Code, no
     such determination letter has been revoked (or, to the Knowledge of the
     Company, has revocation been threatened) and no event has occurred since
     the date of the most recent determination letter or application therefor
     relating to any such Company Pension Plan that would reasonably be
     expected to adversely affect the qualification of such Company Pension
     Plan or materially increase the costs relating thereto or require
     security under Section 307 of ERISA. In addition, all Company Pension
     Plans have been, or shall have been by the end of the 2002 plan year,
     amended to comply with the requirements of the Economic Growth and Tax
     Relief Reconciliation Act of 2001 which are or have become effective on
     or before the end of the 2002 plan year, as set forth in Notice 2001-42.
     All Company Pension Plans required to have been approved by any foreign
     Governmental Entity have been so approved, no such approval has been
     revoked (or, to the Knowledge of the Company, has revocation been
     threatened) and no event has occurred since the date of the most recent
     approval or application therefor relating to any such Company Pension
     Plan that would reasonably be expected to materially affect any such
     approval relating thereto or materially increase the costs relating
     thereto. The Company has delivered or made available to Parent a complete
     and accurate copy of the most recent determination letter received prior
     to the date hereof with respect to each Company Pension Plan, as well as
     a complete and accurate copy of each pending application for a
     determination letter, if any. The Company has also provided or made
     available to Parent a complete and accurate list of all amendments to any
     Company Pension Plan as to which a favorable determination letter has not
     yet been received.


<PAGE>


          (iii) Neither the Company nor any Commonly Controlled Entity has (A)
     maintained, contributed to or been required to contribute to any Company
     Benefit Plan that is subject to Title IV of ERISA or (B) has any
     unsatisfied liability under Title IV of ERISA.

          (iv) All reports, returns and similar documents with respect to all
     Company Benefit Plans required to be filed with any Governmental Entity
     or distributed to any Company Benefit Plan participant have been duly and
     timely filed or distributed. None of the Company or any of its
     Subsidiaries has received notice of, and to the Knowledge of the Company,
     there are no investigations by any Governmental Entity with respect to,
     termination proceedings or other claims (except claims for benefits
     payable in the normal operation of the Company Benefit Plans), suits or
     proceedings against or involving any Company Benefit Plan or asserting
     any rights or claims to benefits under any Company Benefit Plan that
     would give rise to any material liability, and, to the Knowledge of the
     Company, there are not any facts that could give rise to any material
     liability in the event of any such investigation, claim, suit or
     proceeding.

          (v) All contributions, premiums and benefit payments under or in
     connection with the Company Benefit Plans that are required to have been
     made as of the date hereof in accordance with the terms of the Company
     Benefit Plans have been timely made or have been reflected on the most
     recent consolidated balance sheet filed or incorporated by reference into
     the Filed Company SEC Documents. Neither any Company Pension Plan nor any
     single-employer plan of any Commonly Controlled Entity has an
     "accumulated funding deficiency" (as such term is defined in Section 302
     of ERISA or Section 412 of the Code), whether or not waived.

          (vi) With respect to each Company Benefit Plan, (A) there has not
     occurred any prohibited transaction (within the meaning of Section 406 of
     ERISA or Section 4975 of the Code) in which the Company or any of its
     Subsidiaries or any of their respective employees, or, to the Knowledge
     of the Company, any trustee, administrator or other fiduciary of such
     Company Benefit Plan, or any agent of the foregoing, has engaged that
     would reasonably be expected to


<PAGE>

     subject the Company or any of its Subsidiaries or any of their respective
     employees, or a trustee, administrator or other fiduciary of any trust
     created under any Company Benefit Plan, to the tax or penalty on
     prohibited transactions imposed by Section 4975 of the Code or the
     sanctions imposed under Title I of ERISA and (B) neither the Company nor
     any of its Subsidiaries nor, to the Knowledge of the Company, any
     trustee, administrator or other fiduciary of any Company Benefit Plan nor
     any agent of any of the foregoing, has engaged in any transaction or
     acted in a manner, or failed to act in a manner, that would reasonably be
     expected to subject the Company or any of its Subsidiaries or, to the
     Knowledge of the Company, any trustee, administrator or other fiduciary,
     to any liability for breach of fiduciary duty under ERISA or any other
     applicable law. No Company Benefit Plan or related trust has been
     terminated, nor has there been any "reportable event" (as that term is
     defined in Section 4043 of ERISA) for which the 30-day reporting
     requirement has not been waived with respect to any Company Benefit Plan
     during the last five years, and no notice of a reportable event will be
     required to be filed in connection with the transactions contemplated by
     this Agreement.

          (vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
     discloses whether each Company Benefit Plan that is an employee welfare
     benefit plan is (A) unfunded or self-insured, (B) funded through a
     "welfare benefit fund", as such term is defined in Section 419(e) of the
     Code, or other funding mechanism or (C) insured. Each such employee
     welfare benefit plan may be amended or terminated (including with respect
     to benefits provided to retirees and other former employees) without
     material liability (other than benefits then payable under such plan
     without regard to such amendment or termination) to the Company or any of
     its Subsidiaries at any time after the Effective Time. Each of the
     Company and its Subsidiaries complies in all material respects with the
     applicable requirements of Section 4980B(f) of the Code or any similar
     state statute with respect to each Company Benefit Plan that is a group
     health plan, as such term is defined in Section 5000(b)(1) of the Code or
     such state statute. Neither the Company nor any of its Subsidiaries has
     any material obligations for retiree health or life insurance benefits
     under any


<PAGE>


     Company Benefit Plan (other than for continuation coverage required under
     Section 4980(f) of the Code).

          (viii) None of the execution and delivery of this Agreement, the
     obtaining of the Stockholder Approval or the consummation of the Merger
     or any other transaction expressly contemplated by this Agreement
     (including as a result of any termination of employment on or following
     the Effective Time) will (A) entitle any current or former director,
     officer, employee or consultant of the Company or any of its Subsidiaries
     to severance or termination pay, (B) accelerate the time of payment or
     vesting, or trigger any payment or funding (through a grantor trust or
     otherwise) of, compensation or benefits under, increase the amount
     payable or trigger any other material obligation pursuant to, any Company
     Benefit Plan or Company Benefit Agreement or (C) result in any breach or
     violation of, or a default under, any Company Benefit Plan or Company
     Benefit Agreement. The Company's good faith estimate as of the date
     hereof of the total amount of all payments and the fair market value of
     all non-cash benefits (other than Company Stock Options and Company
     Restricted Stock) that may become payable or provided to any director,
     officer, employee or consultant of the Company or any of its Subsidiaries
     under the Company Benefit Agreements (assuming for such purpose that such
     individual's employment were terminated immediately following the
     Effective Time as if the Effective Time were the date hereof) is set
     forth in Section 3.01(l)(viii) of the Company Disclosure Schedule.

          (ix) Neither the Company nor any of its Subsidiaries has any
     material liability or obligations, including under or on account of a
     Company Benefit Plan, arising out of the hiring of persons to provide
     services to the Company or any of its Subsidiaries and treating such
     persons as consultants or independent contractors and not as employees of
     the Company or any of its Subsidiaries.

          (x) No deduction by the Company or any of its Subsidiaries in
     respect of any "applicable employee remuneration" (within the meaning of
     Section 162(m) of the Code) has been disallowed or is subject to
     disallowance by reason of Section 162(m) of the Code.


<PAGE>


          (m) NO EXCESS PARACHUTE PAYMENTS. No amount or other entitlement or
     economic benefit that could be received (whether in cash or property or
     the vesting of property) as a result of the execution and delivery of
     this Agreement, the obtaining of the Stockholder Approval, the
     consummation of the Merger or any other transaction contemplated by this
     Agreement (including as a result of termination of employment on or
     following the Effective Time) by or for the benefit of any director,
     officer, employee or consultant of the Company or any of its Affiliates
     who is a "disqualified individual" (as such term is defined in proposed
     Treasury Regulation Section 1.280G-1) under any Company Benefit Plan,
     Company Benefit Agreement or otherwise would be characterized as an
     "excess parachute payment" (as such term is defined in Section 280G(b)(1)
     of the Code), and no disqualified individual is entitled to receive any
     additional payment from the Company or any of its Subsidiaries, the
     Surviving Corporation or any other person in the event that the excise
     tax required by Section 4999(a) of the Code is imposed on such
     disqualified individual. Section 3.01(m) of the Company Disclosure
     Schedule sets forth the Company's good faith estimate, calculated as of
     the date of this Agreement, (i) the "base amount" (as such term is
     defined in Section 280G(b)(3) of the Code) for the Company's chief
     executive officer and each other disqualified individual (defined as set
     forth above) (collectively, the "Primary Company Executives") and (ii)
     the maximum amount of "parachute payments" as defined in Section 280G of
     the Code that could be paid or provided to each Primary Company Executive
     as a result of the execution and delivery of this Agreement, the
     obtaining of the Stockholder Approval, the consummation of the Merger or
     any other transaction contemplated by this Agreement (including as a
     result of any termination of employment on or following the Effective
     Time).

          (n) TAXES. (i) Each of the Company and its Subsidiaries has filed or
     has caused to be filed in a timely manner (within any applicable
     extension period) all tax returns required to be filed with any taxing
     authority pursuant to the Code (and any applicable U.S. Treasury
     regulations) or applicable state, local or foreign tax laws. All such tax
     returns are complete and accurate in all material respects. Each of the
     Company and its Subsidiaries has paid or caused to be paid (or the
     Company has paid on its behalf) all taxes


<PAGE>


     due and owing, and the most recent financial statements contained in the
     Filed Company SEC Documents reflect an adequate reserve (determined in
     accordance with GAAP) (excluding any reserves for deferred taxes
     established to reflect timing differences between book and tax income)
     for all taxes accrued and payable by the Company and its Subsidiaries for
     all taxable periods and portions thereof accrued through the date of such
     financial statements.

          (ii) No tax return of the Company or any of its Subsidiaries is or
     has ever been under audit or examination by any taxing authority, and no
     written notice of such an audit or examination has been received by the
     Company or any of its Subsidiaries. The Company has received no notice of
     and otherwise has no knowledge of any deficiency, refund litigation,
     proposed adjustment or matter in controversy with respect to any material
     amount of taxes due and owing by the Company or any of its Subsidiaries.
     Each deficiency resulting from any completed audit or examination
     relating to material taxes by any taxing authority has been timely paid
     or is being contested in good faith and has been reserved for on the
     books of the Company. No issues relating to taxes were raised by the
     relevant taxing authority in any completed audit or examination that
     could reasonably be expected to recur in a later taxable period and have
     a material effect on the Company in such later taxable period. There is
     no currently effective agreement or other document extending, or having
     the effect of extending, the period of assessment or collection of any
     taxes of the Company or its Subsidiaries, nor has any request been made
     in writing for any such extension, and no power of attorney (other than
     powers of attorney authorizing employees of the Company to act on behalf
     of the Company) with respect to any taxes has been executed or filed with
     any taxing authority.

          (iii) None of the Company or any of its Subsidiaries will be
     required to include in a taxable period ending after the Effective Time a
     material amount of taxable income attributable to income that accrued
     (for purposes of the financial statements of the Company included in the
     Filed Company SEC Documents) in a prior taxable period (or portion of a
     taxable period) but was not recognized for tax purposes in any prior
     taxable period as a result of (A) an open


<PAGE>


     transaction disposition made on or before the Effective Time, (B) a
     prepaid amount received on or prior to the Effective Time, (C) the
     installment method of accounting, (D) the completed contract method of
     accounting, (E) the long-term contract method of accounting, (F) the cash
     method of accounting or Section 481 of the Code or (G) any comparable
     provisions of state or local tax law, domestic or foreign, or for any
     other reason, other than any amounts that are specifically reflected in a
     reserve for taxes on the financial statements of the Company included in
     the Filed Company SEC Documents.

          (iv) The Company and its Subsidiaries have complied with all
     applicable statutes, laws, ordinances, rules and regulations relating to
     the payment and withholding of any material amount of taxes (including
     withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
     the Code and similar provisions under any Federal, state, local or
     foreign tax laws) and have, within the time and the manner prescribed by
     law, withheld from and paid over to the proper governmental authorities
     all material amounts required to be so withheld and paid over under
     applicable laws.

          (v) In the three (3) year period prior to the Effective Time, none
     of the Company or any of its Subsidiaries has constituted either a
     "distributing corporation" or a "controlled corporation" as such terms
     are defined in Section 355 of the Code in a distribution of stock outside
     of the affiliated group of which the Company is the common parent
     qualifying or intended to qualify for tax-free treatment (in whole or in
     part) under Section 355(a) or 361 of the Code.

          (vi) Neither the Company nor any of its Subsidiaries has filed a
     consent under Section 341 of the Code concerning collapsible
     corporations.

          (vii) Neither the Company nor any of its Subsidiaries joins or has
     joined, for any taxable period in the filing of any affiliated,
     aggregate, consolidated, combined or unitary tax return other than
     consolidated tax returns for the consolidated group of which the Company
     is the common parent. None of the Company and its Subsidiaries has any
     liability for the Taxes of any Person (other than Taxes of the Company


<PAGE>

     and its Subsidiaries) (i) under Treasury Regulation Section 1.1502-6 (or
     any similar provision of state, local or foreign law), (ii)_as a
     transferee or successor, (iii) by contract or (iv) otherwise.

          (viii) No claim has ever been made by any authority in a
     jurisdiction where any of the Company or its Subsidiaries does not file a
     tax return that it is, or may be, subject to a material amount of tax by
     that jurisdiction.

          (ix) Neither the Company nor any of its Subsidiaries is a party to
     or bound by any tax sharing agreement, tax indemnity obligation or
     similar agreement, arrangement or practice with respect to taxes
     (including any advance pricing agreement, closing agreement or other
     agreement relating to taxes with any taxing authority).

          (x) No taxing authority has asserted in writing any material liens
     for taxes with respect to any assets or properties of the Company or its
     Subsidiaries, except for statutory liens for taxes not yet due and
     payable.

          (xi) Neither the Company nor any of its Subsidiaries has been a
     United States real property holding corporation within the meaning of
     Section 897(c)(2) of the Code during the applicable period specified in
     Section 897(c)(1)(A)(ii) of the Code.

          (xii) As used in this Agreement (A) "tax" or "taxes" shall include
     (whether disputed or not) all Federal, state, local and foreign income,
     property, sales, use, excise, withholding, payroll, employment, social
     security, capital gain, alternative minimum, transfer and other taxes and
     similar governmental charges, including any interest, penalties and
     additions with respect thereto; (B) "taxing authority" means any Federal,
     state, local or foreign government, any subdivision, agency, commission
     or authority thereof, or any quasi-governmental body exercising tax
     regulatory authority; and (C) "tax return" or "tax returns" means all
     returns, declarations of estimated tax payments, reports, estimates,
     information returns and statements (including any related or supporting
     information with respect to any of foregoing) filed or to be filed with
     any taxing authority in connection


<PAGE>


     with the determination, assessment, collection or administration of any
     taxes.

          (o) TITLE TO PROPERTIES. (i) Each of the Company and its
     Subsidiaries has good and valid title to, or valid leasehold or sublease
     interests or other comparable contract rights in or relating to all of
     its properties and other assets necessary for the conduct of its business
     as currently conducted, except as have been disposed of in the ordinary
     course of business and except for defects in title, easements,
     restrictive covenants and similar encumbrances that individually or in
     the aggregate have not materially interfered with, and would not
     reasonably be expected to materially interfere with, its ability to
     conduct its business as presently conducted. All such properties and
     other assets, other than properties and other assets in which the Company
     or any of its Subsidiaries has a leasehold or sublease interest or other
     comparable contract right, are free and clear of all Liens, except for
     Liens that individually or in the aggregate have not materially
     interfered with, and would not reasonably be expected to materially
     interfere with, the ability of the Company or any of its Subsidiaries to
     conduct their respective businesses as presently conducted.

          (ii) Each of the Company and its Subsidiaries has complied with the
     terms of all leases or subleases to which it is a party and under which
     it is in occupancy, and all leases to which the Company is a party and
     under which it is in occupancy are in full force and effect, except for
     such failure to comply or be in full force and effect that individually
     or in the aggregate has not had and would not reasonably be expected to
     have a Material Adverse Effect. Each of the Company and its Subsidiaries
     is in possession of the properties or assets purported to be leased under
     all its leases, except for such failure to be in possession that
     individually or in the aggregate has not had and would not reasonably be
     expected to have a Material Adverse Effect. Neither the Company nor any
     of its Subsidiaries has received as lessee any written notice from the
     lessor of any event or occurrence that has resulted or could result (with
     or without the giving of notice, the lapse of time or both) in a default
     with respect to any material lease or sublease to which it is a party.

          (p) INTELLECTUAL PROPERTY. (i) Section 3.01(p)(i) of the Company
     Disclosure Schedule sets forth, as of the date hereof, a complete and
     accurate list of all patents and applications therefor, registered
     trademarks and applications therefor, domain name registrations and
     copyright registrations (if any) owned by or licensed to the Company or
     any of its Subsidiaries. Such intellectual property rights as listed in
     Section 3.01(p)(i) of the Company Disclosure Schedule, together with any
     tradename rights, trade secret or know-how rights, service mark rights,
     rights in computer programs or software, or other type of intellectual
     property rights that are owned or licensed by the Company or any of its
     Subsidiaries and are material to the conduct of the business of the
     Company and its Subsidiaries, are collectively referred to herein as
     "Intellectual Property Rights". All Intellectual Property Rights are
     either (x) owned by, or subject to an obligation of assignment to, the
     Company or a Subsidiary of the Company free and clear of all Liens or (y)
     licensed to the Company or a Subsidiary of the Company free and clear (to
     the Knowledge of the Company) of all Liens. There are no claims pending
     or, to the Knowledge of the Company, threatened with regard to the
     ownership or licensing by the Company or any of its Subsidiaries of any
     Intellectual Property Rights which individually or in the aggregate have
     had or would reasonably be expected to have a Material Adverse Effect.
     Except as provided for in any agreement identified in Section 3.01(p)(v)
     of the Company Disclosure Schedule, the Company and its Subsidiaries have
     the legal power to convey to a successor all of their respective
     ownership and license interests in the Intellectual Property Rights.

          (ii) To the Knowledge of the Company, the Intellectual Property
     Rights of the Company or any of its Subsidiaries have not been infringed,
     and are not being infringed, in a manner which individually or in the
     aggregate has had or would reasonably be expected to have a Material
     Adverse Effect. The Company and its Subsidiaries have used commercially
     reasonable efforts to investigate the potential infringement of any
     Intellectual Property Rights.

          (iii) There are no pending or, to the Knowledge of the Company,
     threatened claims that the Company or any of its Subsidiaries has
     infringed or is


<PAGE>


     infringing (including with respect to the manufacture, use or sale by the
     Company or any of its Subsidiaries of any commercial products or to the
     operations of the Company and its Subsidiaries) any intellectual property
     rights of any person which individually or in the aggregate have had or
     would reasonably be expected to have a Material Adverse Effect. To the
     Knowledge of the Company, there is no intellectual property right or
     other legal right that could be asserted by a person to exclude or
     prevent the Company or any of its Subsidiaries from freely using any
     intellectual property under its Intellectual Property Rights that is
     material to the conduct of the business of the Company and its
     Subsidiaries. To the Knowledge of the Company, there is no contractual,
     legal or other restriction on the use of any Intellectual Property Rights
     which are owned by or licensed to the Company, other than as set forth in
     the agreements identified in Section 3.01(p)(v) of the Company Disclosure
     Schedule. The Company and its Subsidiaries have used commercially
     reasonable efforts to avoid infringing the valid, enforceable
     intellectual property rights of other persons, other than such
     infringements which individually or in the aggregate have not had or
     would not reasonably be expected to have a Material Adverse Effect.

          (iv) The patent applications listed in Section 3.01(p)(i) of the
     Company Disclosure Schedule that are owned by the Company or any of its
     Subsidiaries are (and such material applications that are licensed to the
     Company or any of its Subsidiaries are to the Company's Knowledge after
     diligent review) pending and have not been abandoned, and have been and
     continue to be timely prosecuted. All patents, registered trademarks and
     applications therefor owned by the Company or any of its Subsidiaries
     have been (and all such material patents, registered trademarks and
     applications licensed to the Company or any of its Subsidiaries have been
     to the Company's Knowledge after diligent review) duly registered and/or
     filed with or issued by each appropriate Governmental Entity in the
     jurisdiction indicated in Section 3.01(p)(i) of the Company Disclosure
     Schedule, all necessary affidavits of continuing use have been (or, with
     respect to material licenses, to the Company's Knowledge after diligent
     review have been) timely filed, and all necessary maintenance fees have
     been (or, with respect


<PAGE>

     to material licenses, to the Company's Knowledge after diligent review
     have been) timely paid to continue all such rights in effect. None of the
     patents listed in Section 3.01(p)(i) of the Company Disclosure Schedule
     that are owned by the Company or any of its Subsidiaries has (and no such
     material patents that are licensed to the Company or any of its
     Subsidiaries have to the Company's Knowledge after diligent review)
     expired or been declared invalid, in whole or in part, by any
     Governmental Entity. There are no ongoing interferences, oppositions,
     reissues, reexaminations or other proceedings involving any of the
     patents or patent applications listed in Section 3.01(p)(i) of the
     Company Disclosure Schedule and owned by the Company or any of its
     Subsidiaries (or, with respect to material patents or patent
     applications, to the Company's Knowledge after diligent review, licensed
     to the Company or any of its Subsidiaries), including ex parte and
     post-grant proceedings, in the United States Patent and Trademark Office
     or in any foreign patent office or similar administrative agency, other
     than such interferences, oppositions, reissues, reexaminations or
     proceedings that individually or in the aggregate have not had and would
     not reasonably be expected to have a Material Adverse Effect. To the
     Knowledge of the Company based on reasonable investigation, there are no
     published patents, patent applications, articles or other prior art
     references, or any other prior art or material information, that could
     adversely affect the validity or enforceability of any patent listed in
     Section 3.01(p)(i) of the Company Disclosure Schedule that relates to any
     of the Specified Compounds or that is otherwise material to the conduct
     of the business of the Company or its Subsidiaries. Each of the patents
     and patent applications listed in Section 3.01(p)(i) of the Company
     Disclosure Schedule that are owned by the Company or any of its
     Subsidiaries properly identifies (and to the Knowledge of the Company
     based on reasonable investigation, such material patents and applications
     licensed to the Company or any of its Subsidiaries properly identify)
     each and every inventor of the claims thereof as determined in accordance
     with the laws of the jurisdiction in which such patent is issued or such
     patent application is pending. Each inventor named on the patents and
     patent applications listed in Section 3.01(p)(i) of the Company
     Disclosure Schedule that are owned by the Company or any of its
     Subsidiaries, alone or together with any joint owners,


<PAGE>


     has executed (and such inventors named on such material patents and
     applications licensed to the Company or any of its Subsidiaries, to the
     Company's Knowledge based on reasonable investigation, have executed) an
     agreement agreeing to assign or actually assigning his or her entire
     right, title and interest in and to such patent or patent application,
     and the inventions embodied and claimed therein, to the Company or a
     Subsidiary of the Company, alone or together with any joint owners as
     appropriate, or in the case of licensed Patents, to the appropriate
     owners from whom the Company's license rights have been duly conveyed. To
     the Knowledge of the Company based on reasonable investigation, no such
     inventor has any contractual or other obligation that would preclude any
     such assignment or otherwise conflict with the obligations of such
     inventor to the Company or such Subsidiary or appropriate owners under
     such agreement with the Company or such Subsidiary or such appropriate
     owners, as the case may be.

          (v) Section 3.01(p)(v) of the Company Disclosure Schedule sets forth
     a complete and accurate list of all agreements with respect to any
     options, rights, licenses or interests of any kind relating to
     Intellectual Property Rights granted (x) to the Company or any of its
     Subsidiaries (other than agreements commonly generated in the ordinary
     course of business (including software licenses for generally available
     software, employee assignment agreements, nondisclosure agreements,
     consulting agreements, material transfer agreements, clinical trial
     agreements and evaluation agreements) that individually and in the
     aggregate have not had and would not reasonably be expected to have a
     Material Adverse Effect) or (y) by the Company or any of its Subsidiaries
     to any other person (other than agreements commonly generated in the
     ordinary course of business (including software licenses for generally
     available software, employee assignment agreements, nondisclosure
     agreements, consulting agreements, material transfer agreements, clinical
     trial agreements and evaluation agreements) that individually and in the
     aggregate have not had and would not reasonably be expected to have a
     Material Adverse Effect). There are no such options, rights, licenses or
     interests of any kind relating to Intellectual Property Rights other than
     as set forth in the agreements listed in Section 3.01(p)(v) of the
     Company Disclosure Schedule. Section


<PAGE>


     3.01(p)(v)-(A) of the Company Disclosure Schedule sets forth, as of the
     date hereof, all agreements under which the Company or any Subsidiary of
     the Company is obligated to make payments (in any form, including
     royalties, milestones and other contingent payments) to third parties for
     use of any intellectual property rights with respect to the
     commercialization of any of the Specified Compounds.

          (vi) The Company and its Subsidiaries have used reasonable efforts
     to maintain their material trade secrets in confidence, including
     entering into licenses and contracts that generally require licensees,
     contractors and other third persons with access to such trade secrets to
     keep such trade secrets confidential.

          (vii) Section 3.01(p)(vii) of the Company Disclosure Schedule sets
     forth a complete and accurate list of each application or official
     request for any extension (i.e., under Hatch-Waxman) of the term of any
     patent owned or licensed by the Company or any of its Subsidiaries
     relating to any commercial product of the Company or any of its
     Subsidiaries that was subject to regulatory review, including an
     identification of the patent and the term extension requested. To the
     Knowledge of the Company, it or its Subsidiary (as the case may be)
     exercised due diligence during the regulatory review of each such
     product. To the Knowledge of the Company based on reasonable
     investigation, there is no information that would materially affect the
     eligibility of such patent for the full period of the term of the
     extension requested.

          (viii) As used in this Section 3.01(p), "Specified Compounds" means
     the drug products or candidates being sold, manufactured, or developed by
     the Company that are set forth in Section 3.01(p)(viii) of the Company
     Disclosure Schedule.

          (q) VOTING REQUIREMENTS. The affirmative vote of holders of a
     majority of the outstanding shares of Company Common Stock at the
     Stockholders' Meeting or any adjournment or postponement thereof to adopt
     this Agreement (the "Stockholder Approval") is the only vote of the
     holders of any class or series of capital stock of the Company necessary
     to adopt this Agreement and approve the transactions contemplated hereby.


<PAGE>


          (r) STATE TAKEOVER STATUTES; COMPANY CERTIFICATE PROVISIONS. The
     Board of Directors of the Company has unanimously approved the terms of
     this Agreement and the consummation of the Merger and the other
     transactions contemplated by this Agreement, and such approval represents
     all the action necessary to render inapplicable to this Agreement, the
     Merger and the other transactions contemplated by this Agreement, the
     restrictions (i) on "business combinations" (as defined in Section 203 of
     the DGCL ("Section 203")) set forth in Section 203 and (ii) on "Business
     Combinations" (as defined in Article VII of the Company Certificate
     ("Article VII")) set forth in Article VII, in each case to the extent, if
     any, such restrictions would otherwise be applicable to this Agreement,
     the Merger and the other transactions contemplated by this Agreement. For
     purposes of Article VII, the approval of the Board of Directors of the
     Company referred to in the immediately preceding sentence constitutes the
     approval of the Merger and the other transactions contemplated by this
     Agreement by the "Continuing Directors" (as defined in Article VII)
     pursuant to paragraph 1(a) of Article VII. No other state takeover
     statute or similar statute or regulation or similar provision of the
     Company Certificate or the Company By-laws applies or purports to apply
     to this Agreement, the Merger or the other transactions contemplated by
     this Agreement.

          (s) Brokers and Other Advisors. No broker, investment banker,
     financial advisor or other person (other than JPMorgan Securities Inc.),
     the fees and expenses of which will be paid by the Company, is entitled
     to any broker's, finder's, financial advisor's or other similar fee or
     commission in connection with the transactions contemplated by this
     Agreement based upon arrangements made by or on behalf of the Company.
     The Company has delivered to Parent complete and accurate copies of all
     agreements under which any such fees or expenses are payable and all
     indemnification and other agreements related to the engagement of the
     persons to whom such fees are payable. The fees and expenses of all
     accountants, brokers, financial advisors (including JPMorgan Securities
     Inc.) and legal counsel (including Latham & Watkins LLP) retained by the
     Company in connection with this Agreement or the transactions
     contemplated hereby incurred or to be incurred by the Company will not
     exceed the fees and


<PAGE>

     expenses set forth in Section 3.01(s) of the Company Disclosure Schedule.

          (t) OPINION OF FINANCIAL ADVISOR. The Company has received the oral
     opinion of JPMorgan Securities Inc., dated the date hereof, to the effect
     that, as of such date, the Merger Consideration is fair, from a financial
     point of view, to the holders of shares of Company Common Stock. A signed
     copy of the written opinion confirming such oral opinion will be
     delivered to Parent promptly after delivery thereof to the Company.

          (u) DEVELOPMENT, DISTRIBUTION, MARKETING, SUPPLY AND MANUFACTURING
     AGREEMENTS. (i)Section 3.01(u) of the Company Disclosure Schedule sets
     forth, as of the date hereof, a complete and accurate list of all
     Contracts (other than arrangements with wholesalers entered into in the
     ordinary course of business consistent with past practice) to which the
     Company or any of its Subsidiaries is a party (x) relating to research,
     development, distribution, sale, supply, license, marketing or
     manufacturing of any product of the Company or any Subsidiary of the
     Company or any product or patent or other Intellectual Property Right
     licensed by the Company or any Subsidiary of the Company, in each case
     that have a remaining value of $250,000 or more individually, (y)
     relating to the distribution by third parties of any product of the
     Company or any Subsidiary of the Company or any product or patent or
     other Intellectual Property Right licensed by the Company or any
     Subsidiary of the Company and (z) entered into in connection with
     Biotechnology Research Partners, Ltd. The Company has made available to
     Parent a complete and accurate copy of each such Contract.

          (ii) Section 3.01(u)(ii) of the Company Disclosure Schedule sets
     forth a complete and accurate list of all Contracts (other than
     arrangements with wholesalers entered into in the ordinary course of
     business consistent with past practice) to which the Company or any of
     its Subsidiaries is a party relating to the research, development,
     distribution, sale, supply, license, marketing or manufacturing of any
     product of the Company or any Subsidiary of the Company or any product,
     patent or other Intellectual Property Right licensed by the Company or
     any Subsidiary of the


<PAGE>

     Company, which grant an exclusive right to such third party for the
     research, development, distribution, supply, license, marketing or
     manufacturing of any such product, patent or other Intellectual Property
     Right.

          (v) REGULATORY COMPLIANCE. (i) As to each product subject to the
     FDCA and the FDA regulations promulgated thereunder or similar Legal
     Provisions in any foreign jurisdiction that are developed, manufactured,
     tested, distributed and/or marketed by the Company or any of its
     Subsidiaries (each such product, a "Medical Device", a "Biologic" or a
     "Drug", as the case may be), each such Medical Device, Biologic or Drug
     is being developed, manufactured, tested, distributed and/or marketed in
     compliance with all applicable requirements under the FDCA and similar
     Legal Provisions, including those relating to investigational use,
     premarket clearance or marketing approval to market a Medical Device, and
     applications or abbreviated applications to market a new Biologic or a
     new Drug, good manufacturing practices, labeling, advertising, record
     keeping, filing of reports and security, and in compliance with the AMA's
     guidelines on gifts to physicians, except for failures in compliance that
     individually or in the aggregate have not had and would not reasonably be
     expected to have a Material Adverse Effect. Neither the Company nor any
     of its Subsidiaries has received any material notice or other material
     communication from the FDA or any other Governmental Entity (A)
     contesting the premarket clearance or approval of, the uses of or the
     labeling or promotion of any products of the Company or any of its
     Subsidiaries or (B) otherwise alleging any material violation applicable
     to any Medical Device, Biologic or Drug by the Company or any of its
     Subsidiaries of any Legal Provision.

          (ii) No Medical Device, Biologic or Drug is under consideration for
     or has been recalled, withdrawn, suspended or discontinued (other than
     for commercial or other business reasons) by the Company or any of its
     Subsidiaries in the United States or outside the United States (whether
     voluntarily or otherwise). No proceedings in the United States or outside
     of the United States of which the Company has Knowledge (whether
     completed or pending) seeking the recall, withdrawal, suspension, seizure
     or discontinuance of any Medical Device, Biologic or Drug are pending


<PAGE>

     against the Company or any of its Subsidiaries or, to the Knowledge of
     the Company, any licensee of any Medical Device, Biologic or Drug, nor
     have any such proceedings been pending at any time in the five year
     period prior to the date hereof. To the Knowledge of the Company, there
     are no facts, circumstances or conditions that would reasonably be
     expected to form the basis for any investigation, suit, claim, action
     (legal or regulatory) or proceeding (legal or regulatory) with respect to
     a recall, withdrawal, suspension, seizure or discontinuance of any Drug
     or Biologic of the Company or with respect to any of the Specified
     Compounds. Complete and accurate copies of all material data of the
     Company with respect to the safety or efficacy of the Specified Compounds
     have been made available to Parent.

          (iii) As to each Biologic or Drug of the Company or any of its
     Subsidiaries for which a biological license application, new drug
     application, investigational new drug application or similar state or
     foreign regulatory application has been approved, the Company and its
     Subsidiaries are in compliance with 21 U.S.C.ss.ss.355, Section 626 of
     the Public Health Service Act or 21 C.F.R. Parts 312, 314, 600 or 601 et
     seq., respectively, and similar Legal Provisions and all terms and
     conditions of such licenses or applications, except for any such failure
     or failures to be in compliance which individually or in the aggregate
     has not had and would not reasonably be expected to have a Material
     Adverse Effect. As to each such drug, the Company and any relevant
     Subsidiary of the Company, and the officers, employees or agents of the
     Company or such Subsidiary, have included in the application for such
     drug, where required, the certification described in 21 U.S.C.ss.
     335a(k)(1) or any similar Legal Provision and the list described in 21
     U.S.C.ss. 335a(k)(2) or any similar Legal Provision, and each such
     certification and list was true, complete and correct in all material
     respects when made. In addition, the Company and its Subsidiaries are in
     substantial compliance with all applicable registration and listing
     requirements set forth in 21 U.S.C.ss.360 and 21 C.F.R. Part 207 and all
     similar Legal Provisions.

          (iv) No article of any Biologic or Drug manufactured and/or
     distributed by the Company or any


<PAGE>


     of its Subsidiaries is (A) adulterated within the meaning of 21 U.S.C.
     ss. 351 (or similar Legal Provisions), (B) misbranded within the meaning
     of 21 U.S.C. ss. 352 (or similar Legal Provisions) or (C) a product that
     is in violation of 21 U.S.C. ss. 355 (or similar Legal Provisions),
     except for failures to be in compliance with the foregoing that
     individually or in the aggregate have not had and would not reasonably be
     expected to have a Material Adverse Effect.

          (v) Neither the Company nor any of its Subsidiaries, nor, to the
     Knowledge of the Company, any officer, employee or agent of the Company
     or any of its Subsidiaries, has made an untrue statement of a material
     fact or fraudulent statement to the FDA or any other Governmental Entity,
     failed to disclose a material fact required to be disclosed to the FDA or
     any other Governmental Entity, or committed an act, made a statement, or
     failed to make a statement that, at the time such disclosure was made,
     would reasonably be expected to provide a basis for the FDA or any other
     Governmental Entity to invoke its policy respecting "Fraud, Untrue
     Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
     in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
     the Company nor any of its Subsidiaries, nor, to the Knowledge of the
     Company, any officer, employee or agent of the Company or any of its
     Subsidiaries, has been convicted of any crime or engaged in any conduct
     for which debarment is mandated by 21 U.S.C.ss. 335a(a) or any similar
     Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
     Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
     the Knowledge of the Company, any officer, employee or agent of the
     Company or any of its Subsidiaries, has been convicted of any crime or
     engaged in any conduct for which such person or entity could be excluded
     from participating in the federal health care programs under Section 1128
     of the Social Security Act or any similar Legal Provision.

          (vi) Neither the Company nor any of its Subsidiaries has received
     any written notice that the FDA or any other Governmental Entity has (a)
     commenced, or threatened to initiate, any action to withdraw its approval
     or request the recall of any Medical Device, Biologic or Drug, (b)
     commenced, or threatened to initiate, any action to enjoin production of
     any


<PAGE>


     Medical Device, Biologic or Drug or (c) to the Company's Knowledge,
     commenced, or threatened to initiate, any action to enjoin the production
     of any Medical Device, Biologic or Drug produced at any facility where
     any Medical Device, Biologic or Drug is manufactured, tested or packaged,
     except for any such action that individually or in the aggregate has not
     had and would not reasonably be expected to have a Material Adverse
     Effect.

          (vii) To the Knowledge of the Company, there are no facts,
     circumstances or conditions that would reasonably be expected to form the
     basis for any material investigation, suit, claim, action (legal or
     regulatory) or proceeding (legal or regulatory) by a Governmental Entity
     against or affecting the Company or any of its Subsidiaries relating to
     or arising under (a) the FDCA or the regulations of the FDA promulgated
     thereunder or (b) the Social Security Act or regulations of the Office of
     the Inspector General of the Department of Health and Human Services.

          (viii) Notwithstanding the foregoing, each representation and
     warranty made by the Company in this Section 3.01(v) with respect to the
     Medical Devices, Biologics or Drugs licensed by the Company to third
     parties (for which the Company has assumed or retained no responsibility
     for regulatory compliance) set forth on Section 3.01(v)(viii) of the
     Company Disclosure Schedule shall be deemed to be limited to the
     Company's Knowledge.

          (w) INSURANCE. Section 3.01(w) of the Company Disclosure Schedule
     contains a complete and accurate list of all policies of fire, liability,
     workers' compensation, title and other forms of insurance owned, held by
     or applicable to the Company (or its assets or business) as of the date
     hereof, and the Company has heretofore made available to Parent a
     complete and accurate copy of all such policies, including all
     occurrence-based policies applicable to the Company (or its assets or
     business) for all periods prior to the Closing Date. All such policies
     (or substitute policies with substantially similar terms and underwritten
     by insurance carriers with substantially similar or higher ratings) are
     in full force and effect, all premiums with respect thereto covering all
     periods up to and including the Closing Date have been


<PAGE>


     paid, and no notice of cancellation or termination has been received with
     respect to any such policy except for such policies, premiums,
     cancellations or terminations that individually or in the aggregate have
     not had and would not reasonably be expected to have a Material Adverse
     Effect. Such policies are sufficient for compliance by the Company with
     all Contracts to which the Company is a party, and each of the Company
     and its Subsidiaries has complied in all material respects with the
     provisions of each such policy under which it is an insured party. The
     Company has not been refused any insurance with respect to its assets or
     operations by any insurance carrier to which it has applied for any such
     insurance or with which it has carried insurance, during the last three
     (3) years. There are no pending or, to the Knowledge of the Company,
     threatened claims under any insurance policy that individually or in the
     aggregate have had or would reasonably be expected to have a Material
     Adverse Effect.

          SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:

          (a) Organization, Standing and Corporate Power. Each of Parent and
     Sub is a corporation duly organized, validly existing and in good
     standing under the laws of the jurisdiction in which it is incorporated
     and has all requisite corporate power and authority to carry on its
     business as now being conducted. Each of Parent and Sub is duly qualified
     or licensed to do business and is in good standing in each material
     jurisdiction in which the nature of its business or the ownership,
     leasing or operation of its properties makes such qualification or
     licensing necessary. Parent has made available to the Company complete
     and accurate copies of its certificate of incorporation and bylaws and
     the certificate of incorporation and bylaws of Sub, in each case as
     amended to date.

          (b) Authority; Noncontravention. Each of Parent and Sub has all
     requisite corporate power and authority to execute and deliver this
     Agreement and to consummate the transactions contemplated by this
     Agreement. The execution and delivery of this Agreement and the
     consummation of the transactions contemplated by this Agreement have been
     duly authorized by all necessary


<PAGE>


     corporate action on the part of Parent and Sub and no other corporate
     proceedings on the part of Parent or Sub are necessary to authorize this
     Agreement or to consummate the transactions contemplated hereby. This
     Agreement and the transactions contemplated hereby do not require
     approval of the holders of any shares of capital stock of Parent. This
     Agreement has been duly executed and delivered by each of Parent and Sub
     and, assuming the due authorization, execution and delivery by the
     Company, constitutes a legal, valid and binding obligation of Parent and
     Sub, as applicable, enforceable against Parent and Sub, as applicable, in
     accordance with its terms, subject to bankruptcy, insolvency, fraudulent
     transfer, moratorium, reorganization or similar laws affecting the rights
     of creditors generally and the availability of equitable remedies
     (regardless of whether such enforceability is considered in a proceeding
     at equity or at law). The execution and delivery of this Agreement do
     not, and the consummation of the Merger and the other transactions
     contemplated by this Agreement and compliance by Parent and its
     Subsidiaries with the provisions of this Agreement will not, (x) conflict
     with, or result in any violation or breach of, or default (with or
     without notice or lapse of time, or both) under, the Restated Certificate
     of Incorporation or By-laws of Parent or the Certificate of Incorporation
     or By-laws of Sub, (y) conflict with, or result in any violation or
     breach of, or default (with or without notice or lapse of time, or both)
     under, or give rise to a right of, or result in, termination,
     cancellation or acceleration of any obligation or to the loss of a
     benefit under, or result in the creation of any Lien in or upon any of
     the properties or other assets of Parent or Sub under, any Contract to
     which Parent or Sub is a party or any of their respective properties or
     other assets is subject, in any way that would prevent, materially impede
     or materially delay the consummation by Parent of the Merger (including
     the payments required to be made pursuant to Article II) or the other
     transactions contemplated hereby or (z) subject to the governmental
     filings and other matters referred to in the following sentence, conflict
     with, or result in any violation or breach of, or default (with or
     without notice or lapse of time, or both) under, any (A) statute, law,
     ordinance, rule or regulation applicable to Parent or Sub or their
     respective properties or other assets or (B) order,


<PAGE>


     writ, injunction, decree, judgment or stipulation, in each case
     applicable to Parent or Sub or their respective properties or other
     assets, and in each case, in any way that would prevent, materially
     impede or materially delay the consummation by Parent of the Merger
     (including the payments required to be made pursuant to Article II) or
     the other transactions contemplated hereby. No material consent,
     approval, order or authorization of, action by or in respect of, or
     registration, declaration or filing with, any Governmental Entity is
     required by or with respect to Parent or Sub in connection with the
     execution and delivery of this Agreement by Parent and Sub or the
     consummation by Parent and Sub of the Merger or the other transactions
     contemplated by this Agreement, except for (1) the filing of a premerger
     notification and report form by Parent under the HSR Act and the receipt,
     termination or expiration, as applicable, of approvals or waiting periods
     required under the HSR Act or any other applicable competition, merger
     control, antitrust or similar law or regulation and (2) the filing of the
     Certificate of Merger with the Secretary of State of the State of
     Delaware.

          (c) Information Supplied. None of the information supplied or to be
     supplied by or on behalf of Parent or Sub specifically for inclusion or
     incorporation by reference in the Proxy Statement will, at the date it is
     first mailed to the stockholders of the Company and at the time of the
     Stockholders' Meeting, contain any untrue statement of a material fact or
     omit to state any material fact required to be stated therein or
     necessary in order to make the statements therein, in light of the
     circumstances under which they are made, not misleading.

          (d) Interim Operations of Sub. Sub was formed solely for the purpose
     of engaging in the transactions contemplated hereby, has engaged in no
     other business activities and has conducted its operations only as
     contemplated hereby.

          (e) Capital Resources. Parent has, and will have at the Effective
     Time, sufficient cash to pay the aggregate Merger Consideration.

          (f) Brokers. No broker, investment banker, financial advisor or
     other person is entitled to any


<PAGE>


     broker's, finder's, financial advisor's or other similar fee or
     commission in connection with the transactions contemplated by this
     Agreement based upon arrangements made by or on behalf of Parent or Sub.

          (g) Company Stock. Neither Parent nor Sub is, nor at any time during
     the last three years has it been, an "interested stockholder" of the
     Company as defined in Section 203. As of the date hereof, neither Parent
     nor Sub owns (directly or indirectly, beneficially or of record), and is
     not a party to any agreement, arrangement or understanding for the
     purpose of acquiring, holding, voting or disposing of, in each case, any
     shares of capital stock of the Company (except as contemplated by this
     Agreement and except for any such shares that may be owned by any
     employee benefit or other plan administered by or on behalf of Parent or
     any of its Subsidiaries, to the extent the determination to acquire such
     shares was not directed by Parent or Sub).

                                  ARTICLE IV

                   COVENANTS RELATING TO CONDUCT OF BUSINESS

          SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE
COMPANY. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as expressly
permitted pursuant to this Section 4.01(a)(i) through (xvi) or otherwise
pursuant to this Agreement, the Company shall, and shall cause each of its
Subsidiaries to, carry on its business in the ordinary course consistent with
past practice (including in respect of research and development activities and
programs) and in compliance in all material respects with all applicable laws,
rules, regulations and treaties and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, employees
and consultants and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
with the intention that its goodwill and ongoing business shall be unimpaired
at the Effective Time. In addition to and without limiting the


<PAGE>


     generality of the foregoing, during the period from the date of this
     Agreement to the Effective Time, except as otherwise set forth in Section
     4.01(a) of the Company Disclosure Schedule or as otherwise expressly
     permitted pursuant to this Agreement, the Company shall not, and shall
     not permit any of its Subsidiaries to, without Parent's prior written
     consent:

               (i) (x) declare, set aside or pay any dividends on, or make any
          other distributions (whether in cash, stock or property) in respect
          of, any of its capital stock, other than dividends or distributions
          by a direct or indirect wholly owned Subsidiary of the Company to
          its shareholders, (y) split, combine or reclassify any of its
          capital stock or issue or authorize the issuance of any other
          securities in respect of, in lieu of or in substitution for shares
          of its capital stock or (z) purchase, redeem or otherwise acquire
          any shares of its capital stock or any other securities thereof or
          any rights, warrants or options to acquire any such shares or other
          securities, except for purchases, redemptions or other acquisitions
          of capital stock or other securities required under the terms of any
          plans, arrangements or agreements existing on the date hereof
          between the Company or any of its Subsidiaries and any director,
          officer, employee or consultant of the Company or any of its
          Subsidiaries (complete and accurate copies of which have been
          heretofore delivered to Parent);

               (ii) issue, deliver, sell, grant, pledge or otherwise encumber
          or subject to any Lien any shares of its capital stock, any other
          voting securities or any securities convertible into, or any rights,
          warrants or options to acquire, any such shares, voting securities
          or convertible securities, or any "phantom" stock, "phantom" stock
          rights, stock appreciation rights or stock based performance units,
          including pursuant to Contracts as in effect on the date hereof
          (other than the issuance of shares of Company Common Stock upon the
          conversion of Company Preferred Stock or Company Notes, or the
          exercise of Company Stock Options (including rights under the ESPP,
          subject to Section 5.04(b)) or Warrants, in each case outstanding on
          the date hereof in accordance with their terms on the date hereof);

               (iii) amend (x) the Company Certificate or the Company By-laws
          or other comparable charter or


<PAGE>


     organizational documents of any of the Company's Subsidiaries or (y) the
     Certificate of Designation with respect to the Company Preferred Stock or
     the Indenture dated as of August 5, 2002 between the Company and Wells
     Fargo Bank, National Association, with respect to the Company Notes, in
     each case except as may be required by law or the rules and regulations
     of the SEC or The Nasdaq Stock Market, Inc.;

               (iv) directly or indirectly acquire (x) by merging or
          consolidating with, or by purchasing assets of, or by any other
          manner, any person or division, business or equity interest of any
          person or (y) any asset or assets that, individually, has a purchase
          price in excess of $500,000 or, in the aggregate, have a purchase
          price in excess of $1,000,000, except for new capital expenditures,
          which shall be subject to the limitations of clause (vii) below, and
          except for purchases of components, raw materials or supplies in the
          ordinary course of business consistent with past practice;

               (v) (x) sell, lease, license, mortgage, sell and leaseback or
          otherwise encumber or subject to any Lien or otherwise dispose of
          any of its properties or other assets or any interests therein
          (including securitizations), except for sales of inventory and used
          equipment in the ordinary course of business consistent with past
          practice; or (y) enter into, modify or amend any lease of property,
          except for modifications or amendments that are not materially
          adverse to the Company and its Subsidiaries taken as a whole;

               (vi) (x) incur any indebtedness for borrowed money or guarantee
          any such indebtedness of another person, issue or sell any debt
          securities or calls, options, warrants or other rights to acquire
          any debt securities of the Company or any of its Subsidiaries,
          guarantee any debt securities of another person, enter into any
          "keep well" or other agreement to maintain any financial statement
          condition of another person or enter into any arrangement having the
          economic effect of any of the foregoing or (y) make any loans,
          advances or capital contributions to, or investments in, any other
          person, other than to employees in the ordinary course of business
          consistent with past practice;


<PAGE>


               (vii) make any new capital expenditure or expenditures in
          excess of the amounts set forth in Section 4.01(a)(vii) of the
          Company Disclosure Schedule;

               (viii) except as required by law or any judgment by a court of
          competent jurisdiction, (v) pay, discharge, settle or satisfy any
          material claims, liabilities, obligations or litigation (absolute,
          accrued, asserted or unasserted, contingent or otherwise), other
          than the payment, discharge, settlement or satisfaction in the
          ordinary course of business consistent with past practice or in
          accordance with their terms, of liabilities disclosed, reflected or
          reserved against in the most recent financial statements (or the
          notes thereto) of the Company included in the Filed Company SEC
          Documents (for amounts not in excess of such reserves) or incurred
          since the date of such financial statements in the ordinary course
          of business consistent with past practice, (w) cancel any
          indebtedness (other than upon the conversion of any Company Notes
          outstanding on the date hereof in accordance with their terms on the
          date hereof), (x) waive or assign any claims or rights of
          substantial value or (y) waive any benefits of, or agree to modify
          in any respect, or, subject to the terms hereof, knowingly fail to
          enforce, or consent to any matter with respect to which consent is
          required under, any standstill or similar agreement containing
          provisions prohibiting a third party from purchasing the capital
          stock of the Company or otherwise seeking to influence or exercise
          control over the Company to which the Company or any of its
          Subsidiaries is a party or (z) waive any material benefits of, or
          agree to modify in any material respect, or, subject to the terms
          hereof, knowingly fail to enforce in any material respect, or
          consent to any matter with respect to which consent is required
          under, any material confidentiality or similar agreement to which
          the Company or any of its Subsidiaries is a party;

               (ix) enter into any material Contracts relating to the
          research, clinical trial, development, distribution, sale, supply,
          license, marketing, co-promotion or manufacturing of products of the
          Company or any Subsidiary of the Company or products licensed by the
          Company or any Subsidiary of the Company, or the Intellectual
          Property Rights of the Company or any


<PAGE>


          Subsidiary of the Company, other than (x) confidentiality agreements
          entered into in the ordinary course of business consistent with past
          practice containing customary terms which do not impose any
          obligations on the Company or its Subsidiaries other than those
          relating to the treatment of confidential information, (y)
          consulting agreements entered into in the ordinary course of
          business consistent with past practice which individually have
          aggregate values of no more than $50,000 and (z) pursuant to any
          such Contracts currently in place (that have been disclosed in
          writing to Parent prior to the date hereof) in accordance with their
          terms as of the date hereof;

               (x) enter into, modify, amend or terminate any material
          Contract or waive, release or assign any material rights or claims
          thereunder, which if so entered into, modified, amended, terminated,
          waived, released or assigned would reasonably be expected to (A)
          materially adversely affect the Company, (B) impair in any material
          respect the ability of the Company to perform its obligations under
          this Agreement or (C) prevent or materially delay the consummation
          of the transactions contemplated by this Agreement;

               (xi) enter into any Contract to the extent consummation of the
          transactions contemplated by this Agreement or compliance by the
          Company with the provisions of this Agreement would reasonably be
          expected to conflict with, or result in a violation or breach of, or
          default (with or without notice or lapse of time, or both) under, or
          give rise to a right of, or result in, termination, cancellation or
          acceleration of any obligation or to the loss of a benefit under, or
          result in the creation of any Lien in or upon any of the properties
          or other assets of the Company or any of its Subsidiaries under, or
          give rise to any increased, additional, accelerated, or guaranteed
          right or entitlements of any third party under, or result in any
          material alteration of, any provision of such Contract;

               (xii) enter into any Contract containing any restriction on the
          ability of the Company or any of its Subsidiaries to assign its
          rights, interests or obligations thereunder, unless such restriction
          expressly excludes any assignment to Parent or any of its
          Subsidiaries in connection with or following the consummation of the
          Merger and the other transactions


<PAGE>


          contemplated by this Agreement;

               (xiii) sell, transfer or license to any person or otherwise
          extend, amend or modify any rights to the Intellectual Property
          Rights of the Company or any of its Subsidiaries, other than
          pursuant to (x) confidentiality agreements entered into in the
          ordinary course of business consistent with past practice containing
          customary terms which do not impose any obligations on the Company
          or its Subsidiaries other than those relating to the treatment of
          confidential information, (y) consulting agreements entered into in
          the ordinary course of business consistent with past practice which
          individually have aggregate values of no more than $50,000 and (z)
          any such Contracts currently in place (that have been disclosed in
          writing to Parent prior to the date hereof) in accordance with their
          terms as of the date hereof;

               (xiv) except as otherwise contemplated by this Agreement or as
          required to ensure that any Company Benefit Plan or Company Benefit
          Agreement is not then out of compliance with applicable law or to
          comply with any Contract or Company Benefit Plan or Company Benefit
          Agreement entered into prior to the date hereof (complete and
          accurate copies of which have been heretofore delivered to Parent),
          (A) adopt, enter into, terminate or amend (I) any collective
          bargaining agreement or Company Benefit Plan or (II) any Company
          Benefit Agreement or other agreement, plan or policy involving the
          Company or any of its Subsidiaries and one or more of their
          respective current or former directors, officers, employees or
          consultants, (B) increase in any manner the compensation, bonus or
          fringe or other benefits of, or pay any bonus of any kind or amount
          whatsoever to, any current or former director, officer, employee or
          consultant, except for any planned salary increases and payment of
          bonuses, each as described in Section 4.01(a)(xiv) of the Company
          Disclosure Schedule, (C) pay any benefit or amount not required
          under any Company Benefit Plan or Company Benefit Agreement or any
          other benefit plan or arrangement of the Company or any of its
          Subsidiaries as in effect on the date of this Agreement, other than
          as contemplated in clause (B), (D) grant or pay any severance or
          termination pay or increase in any manner the severance or
          termination pay of any current or former director, officer, employee
          or consultant of the


<PAGE>


          Company or any of its Subsidiaries, (E) grant any awards under any
          bonus, incentive, performance or other compensation plan or
          arrangement, Company Benefit Agreement or Company Benefit Plan
          (including the grant of Company Stock Options (including rights
          under the ESPP), Company Restricted Stock, "phantom" stock, stock
          appreciation rights, "phantom" stock rights, stock based or stock
          related awards, performance units or restricted stock or the removal
          of existing restrictions in any Company Benefit Agreements, Company
          Benefit Plans or agreements or awards made thereunder), other than
          as contemplated in clause (B), (F) amend or modify any Stock Option
          or Warrant, (G) take any action to fund or in any other way secure
          the payment of compensation or benefits under any employee plan,
          agreement, contract or arrangement or Company Benefit Plan or
          Company Benefit Agreement, (H) take any action to accelerate the
          vesting or payment of any compensation or benefit under any Company
          Benefit Plan or Company Benefit Agreement or (I) materially change
          any actuarial or other assumption used to calculate funding
          obligations with respect to any Company Pension Plan or change the
          manner in which contributions to any Company Pension Plan are made
          or the basis on which such contributions are determined;

               (xv) except as required by GAAP or by the Company's independent
          public accountants, revalue any material assets of the Company or
          any of its Subsidiaries or make any material change in accounting
          methods, principles or practices; or

               (xvi) authorize any of, or commit, resolve, propose or agree to
          take any of, the foregoing actions.

          (b) Other Actions. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that
would, or that would reasonably be expected to, result in any of the
conditions to the Merger set forth in Article VI not being satisfied.

          (c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing if, to such party's
Knowledge, (i) any representation or warranty made by it (and, in the case of
Parent, made by Sub) contained in this Agreement that is qualified as to
materiality becomes untrue or inaccurate in any respect or any such
representation or warranty that is


<PAGE>


not so qualified becomes untrue or inaccurate in any material respect or (ii)
it (and, in the case of Parent, Sub) fails to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. The Company and Parent
shall, to the extent permitted by law, promptly provide the other with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby, other than the
portions of such filings that include confidential information not directly
related to the transactions contemplated by this Agreement.

          (d) Certain Tax Matters. (i) During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, (A) timely file all tax returns ("Post-Signing Returns")
required to be filed by or on behalf of each such entity; (B) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (C) accrue a reserve in the books and records and financial statements
of any such entity in accordance with past practice for all taxes payable by
such entity for which no Post-Signing Return is due prior to the Effective
Time; (D) promptly notify Parent of any suit, claim, action, investigation,
proceeding or audit (collectively, "Actions") pending against or with respect
to the Company or any of its Subsidiaries in respect of any material amount of
tax and not settle or compromise any such Action without Parent's consent; (E)
not make any material tax election or settle or compromise any material tax
liability, other than with Parent's consent or other than in the ordinary
course of business; and (F) cause all existing tax sharing agreements, tax
indemnity obligations and similar agreements, arrangements or practices with
respect to taxes to which the Company or any of its Subsidiaries is or may be
a party or by which the Company or any of its Subsidiaries is or may otherwise
be bound to be terminated as of the Closing Date so that after such date
neither the Company nor any of its Subsidiaries shall have any further rights
or liabilities thereunder. Any tax returns described in this Section 4.01(d)
shall be complete and correct in all material respects and shall be prepared
on a basis consistent with the past practice of the Company, provided that no
Post-Signing Returns shall be filed with


<PAGE>


          any taxing authority without Parent's prior written consent.

          (ii) The Company shall deliver to Parent at or prior to the Closing
a certificate, in form and substance satisfactory to Parent, duly executed and
acknowledged, certifying that the payment of the Merger Consideration and any
payments made in respect of Appraisal Shares pursuant to the terms of this
Agreement are exempt from withholding pursuant to the Foreign Investment in
Real Property Tax Act.

          SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or authorize or knowingly permit any
investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative (collectively, "Representatives") retained by it or
any of its Subsidiaries to (and shall instruct such Representatives not to),
directly or indirectly through another person, (i) solicit, initiate or
knowingly encourage, or take any other action designed to, or which could
reasonably be expected to, facilitate, any Takeover Proposal or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information, or otherwise cooperate in
any way with, any Takeover Proposal. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Takeover Proposal and request the prompt return or destruction of all
confidential information previously furnished. Notwithstanding the foregoing,
at any time prior to obtaining the Stockholder Approval, in response to a bona
fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Takeover Proposal
was not solicited after the date hereof and was made after the date hereof and
did not otherwise result from a breach of this Section 4.02(a), the Company
may, if its Board of Directors determines in good faith (after consultation
with outside counsel) that the failure to do so would result in a breach of
its fiduciary duties to the stockholders of the Company under applicable law,
and subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company and its Subsidiaries to the person making such Takeover
Proposal (and its Representatives) pursuant to a


<PAGE>


customary confidentiality agreement not less restrictive as a whole of such
person than the Confidentiality Agreement, provided that all such information
has previously been provided to Parent or is provided to Parent prior to or
substantially concurrent with the time it is provided to such person, and (y)
participate in discussions or negotiations with the person making such
Takeover Proposal (and its Representatives) regarding such Takeover Proposal.

          The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or any of its Subsidiaries or of any resulting
parent company of the Company, other than the transactions contemplated by
this Agreement.

          The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
stockholders) owning, directly or indirectly, all or substantially all of the
shares of Company Common Stock then outstanding (or of the surviving entity in
a merger or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all the assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be (i) more
favorable to the stockholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably capable of being completed, taking into account all


<PAGE>


financial, legal, regulatory and other aspects of such proposal.

          (b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (any action described in this clause (i) being referred to as a
"Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of its
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement constituting or related to, or that is intended to or
would reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement"). Notwithstanding the foregoing, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may, if such Board
of Directors determines in good faith (after consultation with outside
counsel) that the failure to do so would result in a breach of its fiduciary
duties to the stockholders of the Company under applicable law, (x) make a
Company Adverse Recommendation Change or (y) in response to a Superior
Proposal that was not solicited after the date hereof and was made after the
date hereof and did not otherwise result from a breach of this Section 4.02,
cause the Company to terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal); provided,
however, that (1) no Company Adverse Recommendation Change may be made and (2)
no such termination of this Agreement by the Company may be made, in each case
until after the third business day following Parent's receipt of written
notice from the Company advising Parent that the Board of Directors of the
Company intends to make a Company Adverse Recommendation Change or terminate
this Agreement pursuant to this Section 4.02(b) and specifying the reasons
therefor, including the terms and conditions of any Superior Proposal that is
the basis of the


<PAGE>


proposed action by the Board of Directors (it being understood and agreed that
any amendment to the financial terms or any other material term of such
Superior Proposal shall require a new written notice by the Company and a new
two business day period). In determining whether to make a Company Adverse
Recommendation Change or to terminate this Agreement pursuant to this Section
4.02(b), the Board of Directors of the Company shall take into account any
changes to the financial terms of this Agreement proposed by Parent in
response to any such written notice by the Company or otherwise.

          (c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any Takeover Proposal, the material terms and
conditions of any such Takeover Proposal (including any changes thereto) and
the identity of the person making any such Takeover Proposal. The Company
shall keep Parent fully informed of the status and material details (including
any material change to the terms thereof) of any such Takeover Proposal.

          (d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y) making
any disclosure to the stockholders of the Company if, in the good faith
judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would be inconsistent with its
obligations under applicable law, including the Board of Directors' duty of
candor to the stockholders of the Company; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 4.02(b).

                                  ARTICLE V

                             ADDITIONAL AGREEMENTS

          SECTION 5.01. PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS'
MEETING. (a) As promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall file with the SEC
the Proxy Statement and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to


<PAGE>


any comments of the SEC with respect thereto and to cause the Proxy Statement
to be mailed to the stockholders of the Company as promptly as practicable
following the date of this Agreement. The Company shall promptly notify Parent
upon the receipt of any comments from the SEC or the staff of the SEC or any
request from the SEC or the staff of the SEC for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between the Company and its Representatives, on the one hand, and the SEC and
the staff of the SEC, on the other hand. Notwithstanding the foregoing, prior
to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or the staff of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such
document or response all comments reasonably proposed by Parent; provided,
that Parent shall use commercially reasonable efforts to provide or cause to
be provided its comments to the Company as promptly as reasonably practicable
after the Proxy Statement is transmitted to Parent for its review.

          (b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
solely for the purpose of obtaining the Stockholder Approval. Subject to
Sections 4.02(b) and 4.02(d), the Company shall, through its Board of
Directors, recommend to its stockholders adoption of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, the Company's obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board of
Directors' or such committee's approval or recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement.

          SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other Representatives, reasonable access
(including for the purpose of coordinating integration activities and
transition planning with the


<PAGE>


employees of the Company and its Subsidiaries) during normal business hours
and upon reasonable prior notice to the Company during the period prior to the
Effective Time or the termination of this Agreement to all its and its
Subsidiaries' properties, books, contracts, commitments, personnel and records
and, during such period, the Company shall furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal or state
securities laws, (b) a copy of each correspondence or written communication
with any United States Federal governmental agency and (c) all other
information concerning its and its Subsidiaries' business, properties and
personnel as Parent may reasonably request. Except for disclosures expressly
permitted by the terms of the Confidentiality Agreement dated as of December
15, 2002 between Parent and the Company (as it may be amended from time to
time, the "Confidentiality Agreement"), Parent shall hold, and shall cause its
officers, employees, accountants, counsel, financial advisors and other
Representatives to hold, all information received from the Company, directly
or indirectly, in confidence in accordance with the Confidentiality Agreement.
No investigation pursuant to this Section 5.02 or information provided or
received by any party hereto pursuant to this Agreement will affect any of the
representations or warranties of the parties hereto contained in this
Agreement or the conditions hereunder to the obligations of the parties
hereto.

          SECTION 5.03. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all acts necessary to cause the conditions to
Closing to be satisfied as promptly as practicable, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity and


<PAGE>


(iii) the obtaining of all necessary consents, approvals or waivers from third
parties; provided that none of the Company, Parent or Sub shall be required to
make any payment to any such third parties or concede anything of value to
obtain such consents. In connection with and without limiting the foregoing,
the Company and Parent shall duly file with the U.S. Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification and
report form (the "HSR Filing") required under the HSR Act with respect to the
transactions contemplated by this Agreement as promptly as practicable. The
HSR Filing shall be in substantial compliance with the requirements of the HSR
Act. Each party shall cooperate with the other party to the extent necessary
to assist the other party in the preparation of its HSR Filing, to request
early termination of the waiting period required by the HSR Act and, if
requested, to promptly amend or furnish additional information thereunder. The
Company and its Board of Directors shall (1) take all reasonable action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement, the Merger or any of
the other transactions contemplated by this Agreement and (2) if any state
takeover statute or similar statute becomes applicable to this Agreement, the
Merger or any of the other transactions contemplated by this Agreement, take
all reasonable action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Merger and the other transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require Parent to agree to, or proffer to,
divest or hold separate any assets or any portion of any business of Parent,
the Company or any of their respective Subsidiaries.

          SECTION 5.04. COMPANY STOCK OPTIONS; ESPP. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:

               (i) adjust the terms of all outstanding Company Stock Options
          (other than rights granted under the ESPP), whether vested or
          unvested, as necessary to provide that, at the Effective Time, each
          such Company Stock Option outstanding immediately prior to the



<PAGE>


          Effective Time shall be amended and converted into an option to
          acquire, on the same terms and conditions as were applicable under
          such Company Stock Option, the number of shares of common stock, par
          value $1.00 per share, of Parent ("Parent Common Stock") (rounded
          down to the nearest whole share) determined by multiplying the
          number of shares of Company Common Stock subject to such Company
          Stock Option by the Option Exchange Ratio (as defined below), at a
          price per share of Parent Common Stock equal to (A) the aggregate
          exercise price for the shares of Company Common Stock otherwise
          purchasable pursuant to such Company Stock Option divided by (B) the
          aggregate number of shares of Parent Common Stock deemed purchasable
          pursuant to such Company Stock Option (each, as so adjusted, an
          "Adjusted Option"), provided that such exercise price shall be
          rounded up to the nearest whole cent. The "Option Exchange Ratio"
          means the quotient obtained by dividing the Common Stock Merger
          Consideration by the Average Closing Price (as defined below) and
          rounding to the nearest 1/10,000. The "Average Closing Price" means
          the amount equal to the average per share closing price of Parent
          Common Stock, as reported on the New York Stock Exchange Composite
          Transaction Tape for the five (5) consecutive trading days ending
          with the second trading day immediately preceding the Effective
          Time;

               (ii) adjust the terms of each share of Company Restricted Stock
          as necessary to provide that the restrictions on such shares shall
          lapse at the Effective Time; and

               (iii) make such other changes to the Company Stock Plans as
          Parent and the Company may agree are appropriate to give effect to
          the Merger.

          (b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee of the
Board of Directors of the Company administering the ESPP), shall adopt such
resolutions or take such other actions as may be required to provide that (i)
participants may not increase their payroll deductions or purchase elections
from those in effect on the date of this Agreement, (ii) no offering period
shall be commenced after the date of this Agreement, (iii) each participant's
outstanding right to purchase shares of


<PAGE>


Company Common Stock under the ESPP shall terminate on the day immediately
prior to the day on which the Effective Time occurs, provided that all amounts
allocated to each participant's account under the ESPP as of such date shall
thereupon be used to purchase from the Company whole shares of Company Common
Stock at the applicable price determined under the terms of the ESPP for then
outstanding offering periods using such date as the final purchase date for
each such offering period and (iv) the ESPP shall terminate immediately
following the purchases of Company Common Stock on the day prior to the day on
which the Effective Time occurs.

          (c) The adjustments provided in Section 5.04(a)(i) with respect to
any Company Stock Options that are "incentive stock options" as defined in
Section 422 of the Code shall be and are intended to be effected in a manner
which is consistent with Section 424(a) of the Code.

          (d) As soon as practicable following the Effective Time, Parent
shall deliver to the holders of Adjusted Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Adjusted Options, including that
such Adjusted Options and agreements have been assumed by Parent and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.04 after giving effect to the Merger).

          (e) As soon as practicable following the Effective Time, Parent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares of Parent Common
Stock equal to the number of shares of Parent Common Stock subject to the
Adjusted Options. Such registration statement shall be kept effective (and the
current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Options may remain
outstanding.

          (f) Except as otherwise contemplated by this Section 5.04 and except
to the extent required under the respective terms of the Adjusted Options, all
restrictions or limitations on transfer and vesting with respect to Adjusted
Options awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its Subsidiaries, to the extent that such
restrictions or


<PAGE>


limitations shall not have already lapsed, shall remain in full force and
effect with respect to such Adjusted Options after giving effect to the Merger
and the assumption by Parent as set forth above.

(g)      The Company shall ensure that following the Effective Time, no holder
         of a Company Stock Option (or former holder of a Company Stock
         Option) or any participant in any Company Stock Plan, Company Benefit
         Plan or Company Benefit Agreement shall have any right thereunder to
         acquire any capital stock of the Company or the Surviving Corporation
         or any other equity interest therein (including "phantom" stock or
         stock appreciation rights).

          SECTION 5.05. INDEMNIFICATION, ADVANCEMENT OF EXPENSES, EXCULPATION
AND INSURANCE. (a) Parent shall cause the Surviving Corporation to assume the
obligations with respect to all rights to indemnification, advancement of
expenses and exculpation from liabilities for acts or omissions occurring at
or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company as provided in the Company Certificate,
the Company By-laws or any indemnification agreement between such directors or
officers and the Company (in each case, as in effect on the date hereof),
without further action, as of the Effective Time and such obligations shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from and after the Effective Time; provided, that in
the event any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any claim or claims shall
continue until final disposition of any and all such claims.

          (b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and other assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation shall expressly assume the obligations
set forth in this Section 5.05.

          (c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the


<PAGE>


Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and contractual provisions) and amount no less
favorable to such directors and officers or (ii) request that the Company
obtain such extended reporting period coverage under its existing insurance
programs (to be effective as of the Effective Time); provided further,
however, that in satisfying its obligation under this Section 5.05(c), neither
the Company nor Parent shall be obligated to pay more than $8,200,000 in the
aggregate, less any applicable credit (the "Premium Amount"), to obtain such
coverage. It is understood and agreed that in the event such coverage cannot
be obtained for the Premium Amount or less in the aggregate, Parent shall be
obligated to provide such coverage as may be obtained for the Premium Amount.

          (d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.

          SECTION 5.06. FEES AND EXPENSES. (a) Except as provided in paragraph
(b) of this Section 5.06, all fees and expenses incurred in connection with
this Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated; provided, that the fees and expenses
incurred in connection with the printing, filing and mailing to stockholders
of the Proxy Statement and the solicitation of the Stockholder Approval, and
all SEC and other regulatory filing fees incurred in connection with the Proxy
Statement, shall be shared equally by the Company and Parent.

          (b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e), (ii) this


<PAGE>


Agreement is terminated by the Company pursuant to Section 7.01(f) or (iii)
(A) prior to the obtaining of the Stockholder Approval, a Takeover Proposal
shall have been made to the Company or shall have been made directly to the
stockholders of the Company generally or shall have otherwise become publicly
known or any person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal, (B) thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section 7.01(b)(i) (but
only if a vote to obtain the Stockholder Approval or the Stockholders' Meeting
has not been held) or Section 7.01(b)(iii) and (C) within 9 months after such
termination, the Company enters into a definitive agreement to consummate, or
consummates, the transactions contemplated by any Takeover Proposal, then the
Company shall pay Parent a fee equal to $70,000,000 (the "Termination Fee") by
wire transfer of same-day funds (x) in the case of a payment required by
clause (i) above, on the first business day following the date of termination
of this Agreement, (y) in the case of a payment required by clause (ii) above,
on the date of termination of this Agreement and (z) in the case of a payment
required by clause (iii) above, on the first business day following the date
of the first to occur of the events referred to in clause (iii)(C).

          (c) The Company and Parent acknowledge and agree that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.06(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the Termination Fee
from the date such payment was required to be made until the date of payment
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.

          SECTION 5.07. PUBLIC ANNOUNCEMENTS. Except with respect to any
Company Adverse Recommendation Change made in accordance with the terms of
this Agreement, Parent and the Company shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including


<PAGE>


the Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as such party may reasonably
conclude may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.

          SECTION 5.08. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's prior written consent, such consent not to be
unreasonably withheld or delayed.

          SECTION 5.09. EMPLOYEE MATTERS. (a) For a period of not less than
twelve months following the Effective Time, the employees of the Company who
remain in the employment of the Surviving Corporation and its Subsidiaries
(the "Continuing Employees") shall receive employee benefits that in the
aggregate are substantially comparable to the employee benefits provided under
the Company's employee benefit plans to such employees immediately prior to
the Effective Time; provided that neither Parent nor the Surviving Corporation
nor any of their Subsidiaries shall have any obligation to issue, or adopt any
plans or arrangements providing for the issuance of shares of capital stock,
warrants, options, stock appreciation rights or other rights in respect of any
shares of capital stock of any entity or any securities convertible or
exchangeable into such shares pursuant to any such plans or arrangements;
provided, further, that no plans or arrangements of the Company or any of its
Subsidiaries providing for such issuance nor the Company's Flexible Time Off
program shall be taken into account in determining whether employee benefits
are substantially comparable in the aggregate.

          (b) Nothing contained herein shall be construed as requiring, and
the Company shall take no action that would have the effect of requiring,
Parent or the Surviving Corporation to continue any specific plans or to
continue the employment of any specific person.


<PAGE>


          (c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program, (iii) for purposes of eligibility and
participation under any health or welfare plan maintained by Parent (other
than any post-employment health or post-employment welfare plan) and (iv)
unless covered under another arrangement with or of the Company, for benefit
accrual purposes under Parent's severance plan (in the case of each of clauses
(i), (ii), (iii) and (iv), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation), but not for
purposes of any other employee benefit plan of Parent.

          (d) With respect to any welfare plan maintained by Parent in which
Continuing Employees are eligible to participate after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions and exclusions with respect to
participation and coverage requirements applicable to such employees to the
extent such conditions and exclusions were satisfied or did not apply to such
employees under the welfare plans of the Company and its Subsidiaries prior to
the Effective Time and (ii) provide each Continuing Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any analogous deductible or out-of-pocket requirements to the extent
applicable under any such plan.

          SECTION 5.10. COMPANY NOTES AND COMPANY PREFERRED STOCK. Each of the
Company, Parent and Sub shall take each action required to be taken by such
party pursuant to (i) the Indenture dated as of August 5, 2002 between the
Company and Wells Fargo Bank, National Association, with respect to the
Company Notes and (ii) the Certificate of Designation with respect to the
Company Preferred Stock, in each case as necessary to consummate the Merger
and the other transactions contemplated by this Agreement in compliance
therewith.

          SECTION 5.11. CONSENTS AND OTHER ACTION. The Company agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to accomplish
the items set forth on Section 5.11 of the


<PAGE>


Company Disclosure Schedule as soon as practicable after the date hereof.

                                  ARTICLE VI

                             CONDITIONS PRECEDENT

          SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by law) waiver on or
prior to the Closing Date of the following conditions:

     (a)  STOCKHOLDER APPROVAL. The Stockholder Approval shall have been
          obtained.

     (b)  HSR ACT. The waiting period (and any extension thereof) applicable
          to the Merger under the HSR Act shall have been terminated or shall
          have expired.

     (c)  NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
          preliminary or permanent injunction or other judgment or order
          issued by any court of competent jurisdiction or other statute, law,
          rule, legal restraint or prohibition (collectively, "Restraints")
          shall be in effect (i) preventing the consummation of the Merger or
          (ii) which otherwise has had or would reasonably be expected to have
          a Material Adverse Effect.

          SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:

     (a)  REPRESENTATIONS AND WARRANTIES. The representations and warranties
          of the Company contained in this Agreement that are qualified as to
          materiality shall be true and correct, and the representations and
          warranties of the Company contained in this Agreement that are not
          so qualified shall be true and correct in all material respects, in
          each case as of the date of this Agreement and as of the Closing
          Date as though made on the Closing Date, except to the extent such



<PAGE>


          representations and warranties expressly relate to an earlier date,
          in which case as of such earlier date. Parent shall have received a
          certificate signed on behalf of the Company by the chief executive
          officer and the chief financial officer of the Company to such
          effect.

     (b)  PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
          performed in all material respects all obligations required to be
          performed by it under this Agreement at or prior to the Closing
          Date, and Parent shall have received a certificate signed on behalf
          of the Company by the chief executive officer and the chief
          financial officer of the Company to such effect.

     (c)  NO LITIGATION. There shall not be pending or threatened any suit,
          action or proceeding by any Governmental Entity (i) challenging the
          acquisition by Parent or Sub of any shares of Company Common Stock
          or Company Preferred Stock, seeking to restrain or prohibit the
          consummation of the Merger, or seeking to place limitations on the
          ownership of shares of Company Common Stock or Company Preferred
          Stock (or shares of common stock or preferred stock of the Surviving
          Corporation) by Parent or Sub or seeking to obtain from the Company,
          Parent or Sub any damages that are material in relation to the
          Company, (ii) seeking to prohibit or materially limit the ownership
          or operation by the Company, Parent or any of their respective
          Subsidiaries of any portion of any business or of any assets of the
          Company, Parent or any of their respective Subsidiaries, or to
          compel the Company, Parent or any of their respective Subsidiaries
          to divest or hold separate any portion of any business or of any
          assets of the Company, Parent or any of their respective
          Subsidiaries, as a result of the Merger, (iii) seeking to prohibit
          Parent or any of its Subsidiaries from effectively controlling in
          any material respect the business or operations of the Company or
          any of its Subsidiaries or (iv) otherwise having, or being
          reasonably expected to have, a Material Adverse Effect.

     (d)  RESTRAINTS. No Restraint that would reasonably be expected to
          result, directly or indirectly, in any of the effects referred to in
          clauses (i) through (iv) of paragraph (c) of this


<PAGE>


          Section 6.02 shall be in effect.

          SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:

     (a)  REPRESENTATIONS AND WARRANTIES. The representations and warranties
          of Parent and Sub contained in this Agreement that are qualified as
          to materiality shall be true and correct, and the representations
          and warranties of Parent and Sub contained in this Agreement that
          are not so qualified shall be true and correct in all material
          respects, in each case as of the date of this Agreement and as of
          the Closing Date as though made on the Closing Date, except to the
          extent such representations and warranties expressly relate to an
          earlier date, in which case as of such earlier date. The Company
          shall have received a certificate signed on behalf of Parent by an
          executive officer of Parent to such effect.

     (b)  PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub shall
         have performed in all material respects all obligations required to
         be performed by them under this Agreement at or prior to the Closing
         Date, and the Company shall have received a certificate signed on
         behalf of Parent by an executive officer of Parent to such effect.

          SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by and subject to
Section 5.03.

                                 ARTICLE VII

                       TERMINATION, AMENDMENT AND WAIVER

          SECTION 7.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:


<PAGE>


     (a)  by mutual written consent of Parent, Sub and the Company;

     (b)  by either Parent or the Company:

          (i)   if the Merger shall not have been consummated on or before
                August 1, 2003; provided, however, that the right to terminate
                this Agreement under this Section 7.01(b)(i) shall not be
                available to any party whose breach of a representation or
                warranty in this Agreement or whose action or failure to act
                has been a principal cause of or resulted in the failure of
                the Merger to be consummated on or before such date;

          (ii)  if any Restraint having any of the effects set forth in
                Section 6.01(c) shall be in effect and shall have become final
                and nonappealable; or

          (iii) if the Stockholder Approval shall not have been obtained at
                the Stockholders' Meeting duly convened therefor or at any
                adjournment or postponement thereof;

     (c)  by Parent (i) if the Company shall have breached or failed to
          perform any of its representations, warranties, covenants or
          agreements set forth in this Agreement, which breach or failure to
          perform (A) would give rise to the failure of a condition set forth
          in Section 6.02(a) or 6.02(b) and (B) is incapable of being cured by
          the Company within 30 calendar days following receipt of written
          notice of such breach or failure to perform from Parent or (ii) if
          any Restraint having the effects referred to in clauses (i) through
          (iv) of Section 6.02(c) shall be in effect and shall have become
          final and nonappealable;

     (d)  by the Company, if Parent shall have breached or failed to perform
          any of its representations, warranties, covenants or agreements set
          forth in this Agreement, which breach or failure to perform (A)
          would give rise to the failure of a condition set forth in Section
          6.03(a) or 6.03(b) and (B) is incapable of being cured by Parent
          within 30 calendar days following receipt of written notice of such
          breach or failure to perform from the Company;


<PAGE>


(e)      by Parent, in the event that prior to the obtaining of the
         Stockholder Approval (i) a Company Adverse Recommendation Change
         shall have occurred or (ii) the Board of Directors of the Company
         fails publicly to reaffirm its recommendation of this Agreement, the
         Merger or the other transactions contemplated by this Agreement
         within ten business days of receipt of a written request by Parent to
         provide such reaffirmation following a Takeover Proposal; or

     (f)  by the Company in accordance with Section 4.02(b).

          SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.01(s), Section 3.02(f), the penultimate sentence
of Section 5.02, Section 5.06, this Section 7.02 and Article VIII, which
provisions shall survive such termination, and except with respect to any
liabilities or damages incurred or suffered by a party as a result of the
wilful and material breach (or any termination of this Agreement resulting
therefrom) by the other party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.

          SECTION 7.03. AMENDMENT. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

          SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
law, waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso to the first sentence of Section 7.03 and to the extent permitted by
law, waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party to


<PAGE>


any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.

          SECTION 7.05. PROCEDURE FOR TERMINATION OR AMENDMENT. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by law.

                                 ARTICLE VIII

                              GENERAL PROVISIONS

          SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.

          SECTION 8.02. NOTICES. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

          if to Parent or Sub, to:

               Johnson & Johnson
               One Johnson & Johnson Plaza
               New Brunswick, NJ 08933

               Telecopy No.: (732) 524-2788

               Attention: John T. Crisan


<PAGE>


               with a copy to:

               Cravath, Swaine & Moore
               Worldwide Plaza
               825 Eighth Avenue
               New York, NY 10019

               Telecopy No.: (212) 474-3700

               Attention: Robert I. Townsend, III, Esq.

          if to the Company, to:

               Scios Inc.
               820 West Maude Avenue
               Sunnyvale, CA 94085

               Telecopy No.: (408) 616-8319

               Attention: Matthew Hooper

               with a copy to:

               Latham & Watkins LLP
               135 Commonwealth Drive
               Menlo Park, CA 94025

               Telecopy No.: (650) 463-2600

               Attention: Christopher L. Kaufman, Esq.

          SECTION 8.03. Definitions. For purposes of this Agreement:

          (a)  an "Affiliate" of any person means another person that directly
               or indirectly, through one or more intermediaries, controls, is
               controlled by, or is under common control with, such first
               person;

          (b)  "Knowledge" of any person that is not an individual means, with
               respect to any matter in question, the actual knowledge of the
               persons listed on Section 8.03(b) of the Company Disclosure
               Schedule;

          (c)  "Material Adverse Change" or "Material Adverse Effect" means
               any (i) change, (ii) effect, (iii) event, (iv) occurrence, (v)
               state of facts or (vi) development or developments which
               individually or in the aggregate

<PAGE>


               would reasonably be expected to result in any change or effect,
               that (A) is materially adverse to the business, financial
               condition, properties, assets, liabilities (contingent or
               otherwise) or results of operations of the Company and its
               Subsidiaries, taken as a whole, or (B) would reasonably be
               expected to prevent or materially impede, interfere with,
               hinder or delay the consummation by the Company of the Merger
               or the other transactions contemplated by this Agreement;
               provided, that none of the following shall be deemed,
               either alone or in combination, to constitute, and none of the
               following shall be taken into account in determining whether
               there has been or will be, a Material Adverse Effect or a
               Material Adverse Change: any change, effect, event, occurrence,
               state of facts or development or developments (1) in financial
               or securities markets or the economy in general, including any
               fluctuation, in and of itself, in the price of shares of
               Company Common Stock (it being understood that the facts or
               occurrences giving rise or contributing to such fluctuation may
               be deemed to constitute, or be taken into account in
               determining whether there has been or will be, a Material
               Adverse Effect or a Material Adverse Change), (2) in the
               biopharmaceutical industry in general, to the extent that the
               effects thereof do not disproportionately impact the Company or
               (3) as a result of any failure, in and of itself, by the
               Company to meet any internal or published projections,
               forecasts or revenue or earnings predictions for any period
               ending on or after the date of this Agreement (it being
               understood that the facts or occurrences giving rise or
               contributing to such failure may be deemed to constitute, or be
               taken into account in determining whether there has been or
               will be, a Material Adverse Effect or a Material Adverse
               Change);

          (d)  "person" means an individual, corporation, partnership, limited
               liability company, joint venture, association, trust,
               unincorporated organization or other entity; and

          (e)  a "Subsidiary" of any person means another person, an amount of
               the voting securities, other voting rights or voting
               partnership interests of which is sufficient to elect at least
               a majority of its board of directors or other governing body
               (or, if there are no such voting interests, 50% or more of the
               equity


<PAGE>


               interests of which) is owned directly or indirectly by such
               first person.

          SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns.

          SECTION 8.05. CONSENTS AND APPROVALS. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.

          SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.


<PAGE>


          SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement and the Confidentiality Agreement and (b) except for the provisions
of Article II and Section 5.05, are not intended to confer upon any person
other than the parties any legal or equitable rights or remedies.

          SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.

          SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any assignment without such consent
shall be null and void, except that Sub, upon prior written notice to the
Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

          SECTION 8.10. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or in any state court in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in


<PAGE>


the State of Delaware or of any state court located in the State of Delaware
in the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action relating to
this Agreement or the transactions contemplated by this Agreement in any court
other than a Federal court located in the State of Delaware or a state court
located in the State of Delaware.

          SECTION 8.11. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.

          SECTION 8.12. PERFORMANCE BY SUB. Parent hereby agrees to cause Sub
to comply with its obligations hereunder and to cause Sub to consummate the
Merger as contemplated herein, and whenever this Agreement requires Sub to
take any action, such requirement shall be deemed to include an undertaking by
Parent to cause Sub to take such action.


<PAGE>


          IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.

                              JOHNSON & JOHNSON,

                                 by /s/ Christine A. Poon
                                    ------------------------------------
                                    Name: Christine A Poon
                                    Title: Worldwide Chairman,
                                           Pharmaceuticals Group and
                                           Member, Executive Committee


                              SATURN MERGER SUB, INC.,

                                 by /s/ Christine A. Poon
                                    ------------------------------------
                                    Name: Christine A. Poon
                                    Title: President


                              SCIOS INC.,

                                 by /s/ Richard B. Brewer
                                    ------------------------------------
                                    Name: Richard B. Brewer
                                    Title: President and Chief
                                           Executive Officer

<PAGE>


                                                                       ANNEX I
                                                       TO THE MERGER AGREEMENT

                            Index of Defined Terms
                            ----------------------
Term
- ----

Acquisition Agreement..........................................Section 4.02(b)
Actions........................................................Section 4.01(d)
Adjusted Option...................................................Section 5.04
Affiliate......................................................Section 8.03(a)
Agreement.............................................................Preamble
Applicable ESPP Price..........................................Section 5.04(b)
Applicable ESPP Shares.........................................Section 5.04(b)
Appraisal Shares...............................................Section 2.01(d)
Article VII....................................................Section 3.01(r)
Biologic.......................................................Section 3.01(v)
Certificate....................................................Section 2.01(c)
Certificate of Merger.............................................Section 1.03
Class Action Suit..............................................Section 3.01(h)
Closing...........................................................Section 1.02
Closing Date......................................................Section 1.02
Code...........................................................Section 2.02(h)
Common Stock Merger Consideration..............................Section 2.01(c)
Commonly Controlled Entity.....................................Section 3.01(k)
Company...............................................................Preamble
Company Adverse Recommendation Change..........................Section 4.02(b)
Company Benefit Agreements.....................................Section 3.01(g)
Company Benefit Plans..........................................Section 3.01(k)
Company By-laws................................................Section 3.01(a)
Company Certificate............................................Section 1.05(a)
Company Common Stock..................................................Preamble
Company Consolidated Group.....................................Section 3.01(n)
Company Disclosure Schedule.......................................Section 3.01
Company Notes..................................................Section 3.01(c)
Company Pension Plan...........................................Section 3.01(l)
Company Preferred Stock...............................................Preamble
Company Restricted Stock.......................................Section 3.01(c)
Company SEC Documents..........................................Section 3.01(e)
Company Stock-Based Awards.....................................Section 3.01(c)
Company Stock Options..........................................Section 3.01(c)
Company Stock Plans............................................Section 3.01(c)
Confidentiality Agreement.........................................Section 5.02
Continuing Employees...........................................Section 5.09(a)
Contract.......................................................Section 3.01(d)
DGCL..............................................................Section 1.01
Drug...........................................................Section 3.01(v)
Effective Time....................................................Section 1.03
Environmental Laws.............................................Section 3.01(j)
ERISA..........................................................Section 3.01(j)
ESPP...........................................................Section 3.01(c)
Exchange Act...................................................Section 3.01(d)
Exchange Fund..................................................Section 2.02(a)
FDA............................................................Section 3.01(j)
FDCA...........................................................Section 3.01(j)
Filed Company SEC Documents.......................................Section 3.01
GAAP...........................................................Section 3.01(e)
Governmental Entity............................................Section 3.01(d)
Hazardous Materials............................................Section 3.01(j)
HSR Act........................................................Section 3.01(d)
HSR Filing........................................................Section 5.03
Intellectual Property Rights...................................Section 3.01(p)
IRS............................................................Section 3.01(l)
Knowledge......................................................Section 8.03(b)


<PAGE>


Legal Provisions...............................................Section 3.01(j)
Liens..........................................................Section 3.01(b)
Material Adverse Change........................................Section 8.03(c)
Material Adverse Effect........................................Section 8.03(c)
Medical Device.................................................Section 3.01(v)
Merger................................................................Preamble
Merger Consideration...........................................Section 2.01(c)
Option Exchange Ratio.............................................Section 5.04
Parent................................................................Preamble
Parent Common Stock...............................................Section 5.04
Paying Agent...................................................Section 2.02(a)
Permits........................................................Section 3.01(j)
person.........................................................Section 8.03(d)
Post-Signing Returns...........................................Section 4.01(d)
Preferred Stock Merger Consideration...........................Section 2.01(c)
Premium Amount.................................................Section 5.05(c)
Primary Company Executives.....................................Section 3.01(m)
Proxy Statement................................................Section 3.01(d)
Representatives................................................Section 4.02(a)
Release........................................................Section 3.01(j)
Restraints.....................................................Section 6.01(c)
SEC............................................................Section 3.01(d)
Section 203....................................................Section 3.01(r)
Section 262....................................................Section 2.01(d)
Securities Act.................................................Section 3.01(e)
Specified Compounds............................................Section 3.01(p)
Stockholder Approval...........................................Section 3.01(q)
Stockholders' Meeting..........................................Section 5.01(b)
Sub...................................................................Preamble
Subsidiary.....................................................Section 8.03(e)
Superior Proposal..............................................Section 4.02(a)
Surviving Corporation.............................................Section 1.01
Takeover Proposal..............................................Section 4.02(a)
taxes..........................................................Section 3.01(n)
taxing authority...............................................Section 3.01(n)
tax returns....................................................Section 3.01(n)
Termination Fee................................................Section 5.06(b)
Warrants.......................................................Section 3.01(c)


<PAGE>


                                                                     EXHIBIT A
                                                       TO THE MERGER AGREEMENT


                     RESTATED CERTIFICATE OF INCORPORATION
                         OF THE SURVIVING CORPORATION

          FIRST: The name of the corporation (hereinafter called the
"Corporation") is Scios Inc.

          SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is Corporate
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle; and the name of the registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.

          THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.

          FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share.

          FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.

          SIXTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director or
officer derived an improper personal benefit. No amendment to or repeal of
this Article SIXTH shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior
to such amendment or repeal.


<PAGE>


          SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.

          The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.

          EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>4
<FILENAME>ex4_7.txt
<DESCRIPTION>FIRST SUPPLEMENTAL INDENTURE
<TEXT>

                                                                   Exhibit 4.7
                                                                EXECUTION COPY





                                  SCIOS INC.,


                               JOHNSON & JOHNSON


                                      AND


                    WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                  as Trustee


                         FIRST SUPPLEMENTAL INDENTURE


                          Dated as of April 29, 2003




<PAGE>


                         FIRST SUPPLEMENTAL INDENTURE dated as of April 29,
                    2003, among SCIOS INC., a Delaware corporation (the
                    "Company"), JOHNSON & JOHNSON, a New Jersey corporation
                    ("Parent"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
                    trustee (the "Trustee").


          WHEREAS, pursuant to the Indenture dated as of August 5, 2002 (the
"Indenture"), between the Company and the Trustee, the Company issued
$150,000,000 aggregate principal amount of 5.50% Convertible Subordinated
Notes Due 2009 (the "Securities");

          WHEREAS, pursuant to the Agreement and Plan of Merger dated as of
February 10, 2003 (the "Merger Agreement"), among Parent, Saturn Merger Sub,
Inc, a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
and the Company, Sub has agreed to merge (the "Merger") with and into the
Company, with the Company being the surviving corporation in the Merger, and
following which the Company will be a wholly owned subsidiary of Parent;

          WHEREAS, pursuant to the Merger Agreement, as of the effective time
of the Merger (the "Effective Time") (a) each issued and outstanding share of
common stock, par value $.001 per share, of the Company ("Scios Common
Stock"), other than shares directly owned by the Company, Parent or Sub, shall
be converted into the right to receive $45.00 in cash without interest and (b)
each issued and outstanding share of Series B preferred stock, par value $.001
per share, of the Company (the "Scios Preferred Stock"), other than shares
directly owned by the Company, Parent or Sub, shall be converted into the
right to receive $4,500.00 in cash without interest;

          WHEREAS, pursuant to Section 10.7 of the Indenture, as a result of
the Merger, the Company is required to execute and deliver to the Trustee a
supplemental indenture;

          WHEREAS Parent desires to unconditionally and irrevocably guarantee,
on a subordinated basis, the obligations of the Company under the Indenture
and the Securities on the terms and conditions set forth herein;

          WHEREAS, Section 9.1 of the Indenture provides that the Company,
when authorized by resolutions of the Board of Directors of the Company, the
Company and the Trustee may from time to time and at any time enter into a
supplemental indenture, without the consent of any Holder of the Securities,
to, among other things, (i) comply with Section 10.7 of the Indenture and (ii)
make any change that would provide any additional rights or benefits to the
Holders of the Securities or that does not adversely affect the legal rights
under the Indenture or any such Holders; and


<PAGE>


          WHEREAS, the Company and Parent have complied with all conditions
precedent provided for in the Indenture relating to this First Supplemental
Indenture.

          NOW, THEREFORE, the Company, Parent and the Trustee hereby agree for
the equal and ratable benefit of the Holders of the Securities as follows:


                                  ARTICLE I

                                 Definitions

          SECTION 1.1. DEFINITIONS. (a) Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Indenture.

          (b) Section 1.1 of the Indenture is hereby amended to add the
following definitions:

          "DESIGNATED PARENT SENIOR INDEBTEDNESS" means Parent Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which
Parent is a party) expressly provides that such Parent Senior Indebtedness
shall be "Designated Parent Senior Indebtedness" for purposes of the Indenture
(provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Parent Senior Indebtedness to
exercise the rights of Designated Parent Senior Indebtedness). If any payment
made to any holder of any Designated Parent Senior Indebtedness or its
Representative with respect to such Designated Parent Senior Indebtedness is
rescinded or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of Parent or otherwise, the
reinstated Indebtedness of Parent arising as a result of such rescission or
return shall constitute Designated Parent Senior Indebtedness effective as of
the date of such rescission or return.

          "EFFECTIVE TIME" means the time at which the merger of Saturn Merger
Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent,
with and into the Company, with the Company as the surviving corporation,
becomes effective.

          "PARENT" means Johnson & Johnson, a New Jersey corporation, having
its principal office at One Johnson & Johnson Plaza, New Brunswick, NJ 08933.

          "PARENT RESOLUTION" means a copy of a resolution certified by the
secretary or an assistant secretary of Parent to have been duly adopted by the
board of directors or finance committee of Parent and to be in full force and
effect on the date of such certification, and delivered to the Trustee.

          "PARENT OFFICERS' CERTIFICATE" means a certificate signed by two
Officers of Parent.


<PAGE>


          "PARENT SENIOR INDEBTEDNESS" means the principal of, premium, if
any, interest (including all interest accruing subsequent to the commencement
of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding) and
rent payable on or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of Parent,
whether outstanding on the date of this First Supplemental Indenture or
thereafter created, incurred, assumed, guaranteed or in effect guaranteed by
Parent (including all deferrals, renewals, extensions or refundings of, or
amendments, modifications or supplements to, the foregoing), unless in the
case of any particular Indebtedness the instrument creating or evidencing the
same or the assumption or guarantee thereof expressly provides that such
Indebtedness shall not be senior in right of payment to Parent's guarantees
under Section 3.1 of this Supplemental Indenture or expressly provides that
such Indebtedness is "pari passu" or "junior" to Parent's guarantees under
Section 3.1 of this Supplemental Indenture. Notwithstanding the foregoing, the
term "Parent Senior Indebtedness" shall not include any Indebtedness of Parent
to any subsidiary of Parent, all of the outstanding voting stock of which is
owned, directly or indirectly, by Parent. If any payment made to any holder of
any Parent Senior Indebtedness or its Representative with respect to such
Parent Senior Indebtedness is rescinded or must otherwise be returned by such
holder or Representative upon the insolvency, bankruptcy or reorganization of
Parent or otherwise, the reinstated Indebtedness of Parent arising as a result
of such rescission or return shall constitute Parent Senior Indebtedness
effective as of the date of such rescission or return.

          (c) Each reference to "the Company" in the definitions of the terms
"Indebtedness" and "Officer" in Section 1.1 of the Indenture is hereby deleted
and replaced with a reference to "such Person".


                                  ARTICLE II

          SECTION 2.1. CONVERSION RIGHT. Notwithstanding any provisions of the
Indenture or the Securities to the contrary, subject to and upon compliance
with the provisions of this Article II of this First Supplemental Indenture,
the Holder of any Security outstanding at the Effective Time of the Merger
shall have the right, at the Effective Time and at any time thereafter during
the period such Security shall be convertible as specified in paragraph 9 of
the Securities, to convert such Security only into an amount in cash equal to
the product of the number of shares of Company Common Stock into which such
Security was convertible immediately prior to the Effective Time and $45.00 in
cash, without interest thereon. The Company acknowledges that immediately
preceding the Effective Time the Conversion Price was $39.30 and that as a
result of the Merger each $1,000 aggregate principal amount of the Securities
shall be convertible only into the right to receive $1,145.04 in cash without
interest thereon.


<PAGE>


          SECTION 2.2. CONVERSION PROCEDURE. Notwithstanding any provisions of
the Indenture or the Securities to the contrary, in order to convert a
Security, a Holder must (1) deliver to a Conversion Agent written notice in
form satisfactory to the Company that the Holder elects to convert such
Security into cash which notice shall also state the name (with address) in
which the cash shall be issued, (2) surrender the Security to a Conversion
Agent, (3) furnish appropriate endorsements and transfer documents if required
by the Registrar or Conversion Agent, (4) pay the amount of interest, if any,
the Holder may be paid as provided in the immediately succeeding sentence of
this paragraph, and (5) pay any transfer or similar tax if required pursuant
to Section 1.3 hereof. If any Security is converted during the period from,
but excluding, a record date for the payment of interest to, but excluding,
the next succeeding interest payment date, unless such Security has been
called for redemption on a redemption date between such dates, such Security,
when surrendered for conversion, must be accompanied by payment of an amount
equal to the interest payable to the registered Holder on such interest
payment date on the principal amount so converted. Except as provided in the
immediately preceding sentence, no payment or adjustment for the principal of,
premium, if any, interest on or liquidated damages with respect to, the
Securities will be made. The following sentence does not apply in the case of
a Security or portions of a Security called for redemption or subject to
repurchase following a Change in Control during that period. A Security which
the Holder has elected to be repurchased may be converted only if the Holder
withdraws its election to have such Security repurchased in accordance with
the terms of the Indenture before the close of business on the business day
prior to the Repurchase Date. A Holder may convert a portion of a Security if
the portion is $1,000 principal amount or an integral multiple of $1,000
principal amount. Upon surrender of a Security that is converted in part the
Trustee shall authenticate for the Holder a new Security equal in principal
amount to the unconverted portion of the Security surrendered. If the last day
on which a Security may be converted is a Legal Holiday in a place where a
Conversion Agent is located, the Security may be surrendered to that
Conversion Agent on the next succeeding day that is not a Legal Holiday.

          As soon as practicable after satisfaction of the requirements listed
above, the Company shall cause to be issued or delivered at the office of the
Conversion Agent to such Holder, or on his written order, a check representing
the amount of cash into which such Security may be converted.

          SECTION 2.3. TAX CONSIDERATIONS. If a Holder converts its Security,
the Company shall pay any documentary, stamp or similar issue or transfer tax
due in respect of the payment of cash upon the conversion. However, the Holder
shall pay any such tax which is due in respect of any transfer involved in the
issuance and delivery of any check in a name other than the Holder's name.


<PAGE>


                                 ARTICLE III

                                  GUARANTEE

          SECTION 3.1. GUARANTEE. Parent hereby unconditionally and
irrevocably guarantees, as a primary obligor and not merely as a surety, to
each Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of, premium, if any, and interest (including
liquidated damages (as defined in the Indenture), if any) in respect of the
Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under the
Indenture (including obligations to the Trustee) and the Securities and (b)
the full and punctual performance within applicable grace periods of all other
obligations of the Company under the Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations"). Parent
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from it, and that it will remain bound
under this Article III notwithstanding any extension or renewal of any
Obligation.

          Parent waives presentation to, demand of payment from and protest to
the Company of any of the Obligations and also waives notice of protest for
nonpayment. Parent waives notice of any default under the Securities or the
Obligations. The obligations of Parent under this Section 3.1 shall not be
affected by (a) the failure of any Holder or the Trustee to assert any claim
or demand or to enforce any right or remedy against the Company or any other
Person under the Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any Obligation; (c) any rescission,
waiver, amendment, modification or supplement of any of the terms or
provisions of the Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations
or any of them; (e) the failure of any Holder or the Trustee to exercise any
right or remedy against any other guarantor of the Obligations; or (f) any
change in the ownership of the Company.

          Parent further agrees that its guarantees under this Section 3.1
constitutes a guarantee of payment, performance and compliance when due (and
not a guarantee of collection) and waives any right to require that any resort
be had by any Holder or the Trustee to any security held for payment of the
Obligations.

          The guarantee of Parent under this Section 3.1 shall, to the extent
and in the manner set forth in Article IV of this First Supplemental
Indenture, be subordinated and subject in right of payment to the prior
payment in full of all Parent Senior Indebtedness and is made subject to the
provisions of Article IV of this First Supplemental Indenture.

          Except as set forth in Section 3.2 of this First Supplemental
Indenture, the obligations of Parent under this Section 3.1 shall not be
subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense,


<PAGE>


setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of Parent
under this Section 3.1 shall not be discharged or impaired or otherwise
affected by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of Parent or would otherwise operate as a discharge of
Parent as a matter of law or equity.

          Parent agrees that its guarantee under this Section 3.1 shall remain
in full force and effect until payment in full of all the Obligations. Parent
further agrees that its guarantee under this Section 3.1 shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Holder or the Trustee upon the bankruptcy or reorganization of the Company
or otherwise.

          In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee may have at law or in equity against
Parent by virtue hereof, upon the failure of the Company to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
by redemption or otherwise, or to perform or comply with any other Obligation,
Parent hereby promises to and shall, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the
Trustee an amount equal to the sum of (i) the unpaid principal amount of such
Obligations, (ii) accrued and unpaid interest on such Obligations (but only to
the extent not prohibited by law) and (iii) all other monetary Obligations of
the Company to the Holders and the Trustee.

          Parent agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations
guaranteed hereby until payment in full of all Obligations and all obligations
to which the Obligations are subordinated as provided in Article IV of this
First Supplemental Indenture. Parent further agrees that, as between it, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the Obligations guaranteed hereby may be accelerated as provided
in Article VI of the Indenture for the purposes of the guarantee under this
Section 3.1, and (y) in the event of any declaration of acceleration of such
Obligations as provided in Article VI of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by
Parent for the purposes of this Section 3.1.

          Parent also agrees to pay any and all costs and expenses (including
reasonable attorneys' fees and expenses) incurred by the Trustee or any Holder
in enforcing any rights under this Section 3.1.

          SECTION 3.2. LIMITATION ON LIABILITY. Any term or provision of the
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Obligations guaranteed under this Section 3.1 by Parent shall not exceed the
maximum amount that can be hereby guaranteed without rendering the Indenture,
as it relates to


<PAGE>


Parent, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors
generally.

          SECTION 3.3. SUCCESSORS AND ASSIGNS. This Article III shall be
binding on Parent and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in the Indenture
and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of the
Indenture.


                                  ARTICLE IV

                        SUBORDINATION OF THE GUARANTEE

          SECTION 4.1. Agreement to Subordinate. Parent covenants and agrees,
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees, that the
obligations of Parent under Section 3.1 of this First Supplemental Indenture
with respect to the payment of the principal of, premium, if any, and interest
(including liquidated damages (as defined in the Indenture), if any) on all
Securities (including, but not limited to, the redemption price with respect
to Securities called for redemption in accordance with Section 3.1 of the
Indenture) issued under the Indenture shall, to the extent and in the manner
set forth in this Article IV, be subordinated and subject in right of payment
to the prior payment in full of all Parent Senior Indebtedness and that the
subordination is for the benefit of the holders of Parent Senior Indebtedness.

          No provision of this Article IV shall prevent the occurrence of any
default or Event of Default under the Indenture.

          SECTION 4.2. PAYMENTS TO HOLDERS. Parent shall not make any payment
pursuant to its obligations under Section 3.1 of this First Supplemental
Indenture with respect to any of the Obligations (including, but not limited
to, the redemption price with respect to the Securities to be called for
redemption in accordance with Section 3.1 of the Indenture) if:

          (a) a default in the payment of principal, premium, if any,
interest, rent or other obligations in respect of Parent Senior Indebtedness
occurs and is continuing (a "Parent Payment Default"), unless and until such
Parent Payment Default shall have been cured or waived or shall have ceased to
exist; or

          (b) a default, other than a Parent Payment Default, on any
Designated Parent Senior Indebtedness (a "Parent Non-Payment Default") occurs
and is continuing that then permits holders of such Designated Parent Senior
Indebtedness to accelerate its maturity and the Trustee receives a written
notice of the default (a "Parent Payment Blockage Notice") from a holder of
Designated Parent Senior Indebtedness, a Representative of Designated Parent
Senior Indebtedness or Parent.


<PAGE>


          No Parent Non-Payment Default that existed or was continuing on the
date of delivery of any Parent Payment Blockage Notice to the Trustee shall
be, or be made, the basis for a subsequent Parent Payment Blockage Notice.

          Parent may and shall resume payments on and distributions in respect
of the Securities pursuant to its obligations under Section 3.1 of this First
Supplemental Indenture, including any past scheduled payments of the principal
of, premium, if any, and interest (including liquidated damages (as defined in
the Indenture), if any) on such Securities to which the holders of the
Securities would have been entitled but for the provisions of this Article IV:

          (1)  in the case of a Parent Payment Default, on the date upon which
               such Parent Payment Default is cured or waived or ceases to
               exist; and

          (2)  in the case of a Parent Non-Payment Default, the earlier of (i)
               the date upon which such default is cured or waived or ceases
               to exist or (ii) 179 days after the Parent Payment Blockage
               Notice is received by the Trustee if the maturity of such
               Designated Parent Senior Indebtedness has not been accelerated
               and no Parent Payment Default with respect to any Parent Senior
               Indebtedness has occurred which has not been cured or waived or
               ceased to exist (in such event clause (1) above shall instead
               be applicable),

unless this Article IV otherwise prohibits such payment or distribution at the
time of such payment or distribution.

          Upon any payment by Parent, or distribution of assets of Parent,
whether in cash, property or securities, to creditors upon any dissolution or
winding up or liquidation or reorganization of Parent, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Parent Senior Indebtedness shall
first be paid in full in cash or other payment satisfactory to the holders of
such Parent Senior Indebtedness, or provision is made for such payment thereof
in accordance with its terms provided for in cash or other payment
satisfactory to the holders of such Parent Senior Indebtedness, before any
payment by Parent is made on account of the principal of, premium, if any, or
interest (including liquidated damages (as defined in the Indenture), if any)
on the Securities; and upon any such dissolution or winding up or liquidation
or reorganization of Parent or bankruptcy, insolvency, receivership or other
proceeding, any payment by Parent, or distribution of assets of Parent of any
kind or character, whether in cash, property or securities, to which the
holders of the Securities or the Trustee would be entitled, except for the
provision of this Article IV, shall (except as aforesaid) be paid by Parent or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the holders of the
Securities or by the Trustee under the Indenture if received by them or it,
directly to the holders of Parent Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Parent Senior


<PAGE>


Indebtedness held by such holders, or as otherwise required by law or a court
order) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Parent Senior Indebtedness may have been issued, as their respective interests
may appear, to the extent necessary to pay all Parent Senior Indebtedness in
full in cash or other payment satisfactory to the holders of such Parent
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Parent Senior Indebtedness, before any
payment or distribution is made to the holders of the Securities or to the
Trustee.

          For purposes of this Article IV, the words, "cash, property or
securities" shall not be deemed to include shares of stock of Parent as
reorganized or readjusted, or securities of Parent or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article IV with
respect to Parent's guarantees under Section 3.1 of this Supplemental
Indenture to the payment of all Parent Senior Indebtedness which may at the
time be outstanding; provided that the Parent Senior Indebtedness is assumed
by the new corporation, if any, resulting from any reorganization or
readjustment.

          In the event of the acceleration of the Securities because of an
Event of Default and a demand for payment is made on Parent pursuant to
Section 3.1 of this First Supplemental Indenture, no payment or distribution
by Parent pursuant to any of its obligations under Section 3.1 of this First
Supplemental Indenture shall be made to the Trustee or any holder of
Securities in respect of the principal of, premium, if any, or interest
(including liquidated damages (as defined in the Indenture), if any) on the
Securities (including, but not limited to, the redemption price with respect
to the Securities called for redemption in accordance with Section 3.1 of the
Indenture) until all Parent Senior Indebtedness have been paid in full in cash
or other payment satisfactory to the holders of Parent Senior Indebtedness or
such acceleration is rescinded in accordance with the terms of the Indenture.
If payment of the Securities is accelerated because of an Event of Default and
a demand for payment is made on Parent pursuant to Article III of this First
Supplemental Indenture, Parent shall promptly notify holders of Parent Senior
Indebtedness of the acceleration.

          In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of Parent, whether in cash, property or
securities (including, without limitation, by way of setoff or otherwise),
prohibited by the foregoing provisions in this Section 4.2, shall be received
by the Trustee or the holders of the Securities before all Parent Senior
Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Parent Senior Indebtedness, or provision is made for such
payment thereof in accordance with its terms in cash or other payment
satisfactory to the holders of such Parent Senior Indebtedness, such payment
or distribution shall be held in trust for the benefit of and shall be paid
over or delivered to the holders of Parent Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Parent Senior
Indebtedness may have been issued, as their respective interests may appear,
as


<PAGE>


calculated by Parent, for application to the payment of any Parent Senior
Indebtedness remaining unpaid to the extent necessary to pay all Parent Senior
Indebtedness in full in cash or other payment satisfactory to the holders of
such Parent Senior Indebtedness, after giving effect to any concurrent payment
or distribution to or for the holders of such Parent Senior Indebtedness.

          Nothing in this Section 4.2 shall apply to claims of the Trustee
under Section 7.7 of the Indenture or to payments to the Trustee made by
Parent pursuant to its obligations under Section 3.1 of this First
Supplemental Indenture with respect to Section 7.7 of the Indenture. This
Section 4.2 shall be subject to the further provisions of Section 4.5.

          SECTION 4.3. SUBROGATION OF SECURITIES. Subject to the payment in
full of all Parent Senior Indebtedness, the rights of the holders of the
Securities shall be subrogated, to the extent of the payments or distributions
made to the holders of such Parent Senior Indebtedness pursuant to the
provisions of this Article IV (equally and ratably with the holders of all
indebtedness of Parent which by its express terms is subordinated to other
indebtedness of Parent to substantially the same extent as the Securities are
subordinated and is entitled to like rights of subrogation), to the rights of
the holders of Parent Senior Indebtedness to receive payments or distributions
of cash, property or securities of Parent applicable to the Parent Senior
Indebtedness until the principal, premium, if any, and interest (including
liquidated damages (as defined in the Indenture), if any) on the Securities
shall be paid in full; and, for the purposes of such subrogation, no payments
or distributions to the holders of the Parent Senior Indebtedness of any cash,
property or securities to which the holders of the Securities or the Trustee
would be entitled except for the provisions of this Article IV, and no payment
over pursuant to the provisions of this Article IV, to or for the benefit of
the holders of Parent Senior Indebtedness by holders of the Securities or the
Trustee, shall, as between Parent, its creditors other than holders of Parent
Senior Indebtedness, and the holders of the Securities, be deemed to be a
payment by Parent to or on account of the Parent Senior Indebtedness; and no
payments or distributions of cash, property or securities to or for the
benefit of the holders of the Securities pursuant to the subrogation
provisions of this Article IV which would otherwise have been paid to the
holders of Parent Senior Indebtedness shall be deemed to be a payment by
Parent to or for the account of the Securities. It is understood that the
provisions of this Article IV are and are intended solely for the purposes of
defining the relative rights of the holders of the Securities, on the one
hand, and the holders of the Parent Senior Indebtedness, on the other hand.

          Nothing contained in this Article IV or elsewhere in this First
Supplemental Indenture, in the Indenture or in the Securities is intended to
or shall impair, as among Parent, its creditors other than the holders of
Parent Senior Indebtedness, and the holders of the Securities, the obligation
of Parent, which is absolute and unconditional, to make payments pursuant to
its obligations under Section 3.1 of this First Supplemental Indenture with
respect to the payment of the principal of, premium, if any, and interest
(including liquidated damages (as defined in the Indenture), if any) on


<PAGE>


the Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
holders of the Securities and creditors of Parent other than the holders of
the Parent Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the holder of any Security from exercising all remedies
otherwise permitted by applicable law upon a default by Parent under its
obligations under Section 3.1 of this First Supplemental Indenture, subject to
the rights, if any, under this Article IV of the holders of Parent Senior
Indebtedness in respect of cash, property or securities of Parent received
upon the exercise of any such remedy.

          SECTION 4.4. AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of a
Security, whether upon original issue or upon transfer, assignment or exchange
thereof, authorizes and directs the Trustee on the holder's behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in this Article IV and appoints the Trustee to act as the holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.9 of the Indenture at least thirty (30) days before
the expiration of the time to file such claim, the holders of any Parent
Senior Indebtedness or their representatives are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Securities.

          SECTION 4.5. NOTICE TO TRUSTEE. During any period for which a demand
for payment by Parent pursuant to Article III remains outstanding, Parent
shall give prompt written notice in the form of a Parent Officers' Certificate
to a Trust Officer of the Trustee having responsibility for the administration
of the trust established by the Indenture and to any paying agent of any fact
known to Parent which would prohibit the making of any payment of monies to or
by the Trustee or any paying agent in respect of the Securities pursuant to
the provisions of this Article IV. Notwithstanding the provisions of this
Article IV or any other provision of the Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article IV, unless and until a
Trust Officer of the Trustee having responsibility for the administration of
the trust established by the Indenture shall have received written notice
thereof from Parent (in the form of a Parent Officers' Certificate) or a
holder or holders of Parent Senior Indebtedness or from any trustee thereof;
and before the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such facts exist; provided that if
on a date not less than three (3) Business Days prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the principal of, or premium,
if any, or interest (including liquidated damages (as defined in the
Indenture), if any) on any Security) the Trustee shall not have received, with
respect to such monies, the notice provided for in this Section 4.5, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to apply monies received to the purpose for
which they were received, and shall


<PAGE>


not be affected by any notice to the contrary which may be received by it on
or after such prior date.

          The Trustee shall be entitled to conclusively rely on the delivery
to it of a written notice by a person representing himself or herself to be a
holder of Parent Senior Indebtedness (or a trustee on behalf of such holder)
to establish that such notice has been given by a holder of Parent Senior
Indebtedness or a trustee on behalf of any such holder or holders. The Trustee
shall not be required to make any payment or distribution to or on behalf of a
holder of Parent Senior Indebtedness pursuant to this Article IV unless it has
received reasonably satisfactory evidence as to the amount of Parent Senior
Indebtedness held by such person, the extent to which such person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such person under this Article IV.

          SECTION 4.6. TRUSTEE'S RELATION TO PARENT SENIOR INDEBTEDNESS. The
Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article IV in respect of any Parent Senior Indebtedness at any
time held by it, to the same extent as any other holder of Parent Senior
Indebtedness, and nothing in this First Supplemental Indenture, in Section
7.11 of the Indenture or elsewhere in the Indenture shall deprive the Trustee
of any of its rights as such holder.

          With respect to the holders of Parent Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article IV, and no implied
covenants or obligations with respect to the holders of Parent Senior
Indebtedness shall be read into the Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Parent Senior
Indebtedness.

          SECTION 4.7. NO IMPAIRMENT OF SUBORDINATION. No right of any present
or future holder of any Parent Senior Indebtedness to enforce subordination as
provided in this Article IV shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Parent or by any act or
failure to act, in good faith, by any such holder, or by any noncompliance by
Parent with the terms, provisions and covenants of the Indenture, regardless
of any knowledge thereof with which any such holder may have or otherwise be
charged.

          SECTION 4.8. ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any
paying agent other than the Trustee shall have been appointed by the Company
and be then acting under the Indenture, the term "Trustee" as used in this
Article IV shall (unless the context otherwise requires) be construed as
extending to and including such paying agent within its meaning as fully for
all intents and purposes as if such paying agent were named in this Article IV
in addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 4.5 shall not apply to Parent or any Affiliate of Parent
if it or such Affiliate acts as paying agent.


<PAGE>


          The Trustee shall not be responsible for the actions or inactions of
any other paying agents (including Parent if acting as its own paying agent)
and shall have no control of any funds held by such other paying agents.

          SECTION 4.9. PARENT SENIOR INDEBTEDNESS ENTITLED TO RELY. The
holders of Parent Senior Indebtedness (including, without limitation,
Designated Parent Senior Indebtedness) shall have the right to rely upon this
Article IV.

          SECTION 4.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of Parent
referred to in this Article IV, the Trustee and the Holders shall be entitled
to conclusively rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining
the persons entitled to participate in such payment or distribution, the
holders of Parent Senior Indebtedness and other indebtedness of Parent, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article IV.


                                  ARTICLE V

                           MISCELLANEOUS AMENDMENTS

          SECTION 5.1. Section 3.7 is hereby amended as follows: the first,
sixth, eighth and tenth references to "the Company" are hereby deleted and
replaced with "the Company and Parent".

          SECTION 5.2. Section 3.8 is hereby deleted in its entirety and
replaced with a reference to "[Reserved]".

          SECTION 5.3. The first, second, third, fourth, fifth and sixth
references to "the Company" in Section 4.3 of the Indenture are hereby deleted
and replaced with references to "the Company and Parent".

          SECTION 5.4. Section 9.1 of the Indenture is hereby amended so that
the beginning of the first paragraph thereof reads "Without the consent of the
Holders of the Securities, the Company when authorized by a Board Resolution,
and the Parent when authorized by a Parent Resolution, and the Trustee may".

          SECTION 5.5. Section 9.2 of the Indenture is hereby amended so that
(i) the beginning of the first sentence of the first paragraph thereof reads
"The Company when authorized by a Board Resolution, and the Parent when
authorized by a Parent Resolution, and the Trustee may", (ii) "or Parent, as
the case may be," is inserted after the reference to "the Company" in the
second sentence of the first paragraph, (iii) "or Parent


<PAGE>


Senior Indebtedness" is inserted after all references to "Senior Indebtedness"
in the second paragraph and (iv) "or the First Supplemental Indenture" is
inserted after the reference to "Section Twelve" in the second paragraph.

          SECTION 5.6. Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and
10.8 are hereby deleted in their entirety and replaced with a reference to
"[Reserved]". All references in the Indenture and the Securities to the
aforementioned Sections within said Article X of the Indenture shall be deemed
to be references to the appropriate Sections of this First Supplemental
Indenture.

          SECTION 5.7. The heading and provisions of Section 12.9 of the
Indenture are hereby deleted in their entirety and replaced with a reference
to "[Reserved]".


                                  ARTICLE VI

                  ACCEPTANCE OF FIRST SUPPLEMENTAL INDENTURE

          SECTION 6.1. TRUSTEE'S ACCEPTANCE. The Trustee hereby accepts this
First Supplemental Indenture and agrees to perform the same under the terms
and conditions set forth in the Indenture.


                                 ARTICLE VII

                           Miscellaneous Provisions

          SECTION 7.1. EFFECTIVENESS OF FIRST SUPPLEMENTAL INDENTURE. This
First Supplemental Indenture shall be effective as of the Effective Time. In
the event the Merger Agreement shall be terminated or the Merger shall
otherwise not become effective, this First Supplemental Indenture shall be
null and void and without effect.

          SECTION 7.2. EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the
execution and delivery of this First Supplemental Indenture by the Company,
Parent and the Trustee, the Indenture shall be supplemented and amended in
accordance herewith, and this First Supplemental Indenture shall form a part
of the Indenture for all purposes, and every Holder heretofore or hereafter
authenticated and delivered under the Indenture shall be bound thereby.

          SECTION 7.3. INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except as
supplemented or amended hereby, all other provisions in the Indenture and the
Securities, to the extent not inconsistent with the terms and provisions of
this First Supplemental Indenture, shall remain in full force and effect.

          SECTION 7.4. Incorporation of Indenture. All the provisions of this
First Supplemental Indenture shall be deemed to be incorporated in, and made a
part of, the


<PAGE>


Indenture; and the Indenture, as supplemented and amended by this First
Supplemental Indenture, shall be read, taken and construed as one and the same
instrument.

          SECTION 7.5. ADDRESS OF PARENT FOR NOTICES. Any notice, request or
communication by Parent or the Trustee to the other is duly given if in
writing and delivered in person, mailed by first-class mail or by express
delivery to the other's address, in the case of the Trustee, stated in Section
13.2 of the Indenture or, in the case of Parent, stated below:

          Johnson & Johnson
          One Johnson & Johnson Plaza
          New Brunswick, NJ 08933
          Attention:  Treasurer

If a notice or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it. All notices or
communications shall be in writing.

          SECTION 7.6. HEADINGS. The headings of the Articles and Sections of
this First Supplemental Indenture are inserted for convenience of reference
and shall not be deemed to be a part thereof.

          SECTION 7.7. COUNTERPARTS. This First Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

          SECTION 7.8. CONFIRMATION AND PRESERVATION OF INDENTURE. The
Indenture as supplemented and amended by this First Supplemental Indenture is
in all respects confirmed and preserved.

          SECTION 7.9. CONFLICT WITH TRUST INDENTURE ACT. If any provision of
this First Supplemental Indenture limits, qualifies or conflicts with any
provision of the Trust Indenture Act that is required under the Trust
Indenture Act to be part of and govern any provision of this First
Supplemental Indenture, the provision of the Trust Indenture Act shall
control. If any provision of this First Supplemental Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the provision of the Trust Indenture Act shall be deemed to apply to
the Indenture as so modified or to be excluded by this First Supplemental
Indenture, as the case may be.

          SECTION 7.10. SUCCESSORS. All covenants and agreements in this First
Supplemental Indenture by the Company and Parent shall be binding upon and
accrue to benefit of their respective successors. All covenants and agreements
in this First Supplemental Indenture by the Trustee shall be binding upon and
accrue to the benefit of its successors.


<PAGE>


          SECTION 7.11. SEPARABILITY CLAUSE. In case any provision in this
First Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

          SECTION 7.12. BENEFITS OF FIRST SUPPLEMENTAL INDENTURE. Nothing in
this First Supplemental Indenture, the Indenture or the Securities, express or
implied, shall give to any Person, other than the parties hereto and thereto
and their successors hereunder and thereunder and the holders, any benefit of
any legal or equitable right, remedy or claim under this First Supplemental
Indenture, the Indenture or the Securities.

          SECTION 7.13. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals
herein contained are made by the Company and Parent, and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representations as to the validity or sufficiency of this
First Supplemental Indenture.

          SECTION 7.14. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE. In
entering into this First Supplemental Indenture, the Trustee shall be entitled
to the benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided, and the Trustee shall not be under any
responsibility to determine the correctness of any provisions contained in
this First Supplemental Indenture relating to the amount of cash receivable by
Holders upon the conversion of their Securities.

          SECTION 7.15. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, SHALL GOVERN THIS FIRST
SUPPLEMENTAL INDENTURE.



<PAGE>


          IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.

                                        SCIOS INC.,

                                          by
                                               /s/ Matthew R. Hooper
                                             --------------------------------
                                            Name:  Matthew R. Hooper
                                            Title: Vice President and
                                                   General Counsel



                                        JOHNSON & JOHNSON,

                                          by
                                               /s/ John A. Papa
                                            ---------------------------------
                                            Name:  John A. Papa
                                            Title: Treasurer


                                        WELLS FARGO BANK, NATIONAL
                                        ASSOCIATION, as Trustee,

                                          by
                                               /s/ Robert Schneider
                                            --------------------------------
                                            Name:  Robert Schneider
                                            Title: Vice President

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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