AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
AND
REORGANIZATION
THIS AMENDMENT NO. 1 ("Amendment") to Agreement and Plan of Merger and
Reorganization is made and entered into as of November 24, 1998, by and among
Megabios Corp., a Delaware corporation ("Megabios"), Montana Acquisition Sub,
Inc., a Delaware corporation, and GeneMedicine, Inc., a Delaware corporation
("GeneMedicine").
R E C I T A L S:
WHEREAS, the parties hereto entered into that certain Agreement and Plan of
Merger, dated as of October 24, 1998 (the "Merger Agreement"); and
WHEREAS, the parties hereto desire to amend the Merger Agreement to provide
for the assumption of GeneMedicine's outstanding warrants and the assumption and
cancellation of the GeneMedicine Employee Stock Purchase Plan by Megabios;
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 1.6 of the Merger Agreement is hereby amended in its entirety to
read as follows:
"1.6 STOCK OPTIONS AND WARRANTS. At the Effective Time, all
Company Options (as defined in Section 2.3(b)) and Company
Warrants (as defined in Section 2.3(c)) shall be assumed by Parent
in accordance with Section 6.5."
2. The parenthetic phrase at the end of Section 4.1(ii) of the Merger
Agreement is hereby amended in its entirety to read as follows:
"(except that the Company may issue Company Common Stock upon the
valid exercise of Company Options or Company Warrants and pursuant
to Company Plans);"
3. Section 6.5 of the Merger Agreement is hereby amended in its entirety to
read as follows:
"6.5 STOCK OPTIONS AND WARRANTS.
(A) At the Effective Time, all rights with respect to
Company Common Stock under each Company Option and each Company
Warrant then outstanding shall be converted into and become rights
with respect to Parent Common Stock. Parent shall assume each
Company Option in accordance with the terms (as in effect as of
the date of this Agreement) of the stock option plan under which
it was issued and the stock option agreement by which it is
evidenced as same may be amended or modified by the Company's
employment agreements and severance agreements, plans and
arrangements. Parent shall assume each Company Warrant in
accordance with the terms (as in effect as of the date of this
Agreement) of the agreement under which it was issued and the
warrant agreement by which it is evidenced. From and after the
Effective Time, (i) each Company Option and Company Warrant
assumed by Parent may be exercised solely for shares of Parent
Common Stock, (ii) the number of shares of Parent Common Stock
subject to each such Company Option or Company Warrant shall be
equal to the number of shares of Company Common Stock subject to
such Company Option or Company Warrant immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounding down to
the nearest whole share (with cash, less the applicable exercise
price, being payable for any fraction of a share), (iii) the per
share exercise price under each such Company Option or Company
Warrant shall be adjusted by dividing the respective per share
exercise price under such Company Option or Company Warrant
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by the Exchange Ratio and rounding up to the nearest cent and (iv)
any restriction on the exercise of any such Company Option or
Company Warrant shall continue in full force and effect and the
term, exercisability, vesting schedule and other provisions of
such Company Option or Company Warrant as may have been amended or
modified by the Company's employment agreements and severance
agreements, plans and arrangements shall otherwise remain
unchanged; PROVIDED, HOWEVER, that each Company Option and each
Company Warrant assumed by Parent in accordance with this Section
6.5(a) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock
dividend, reverse stock split, reclassification, recapitalization
or other similar transaction subsequent to the Effective Time.
(B) Notwithstanding anything to the contrary contained in
this Section 6.5, in lieu of assuming outstanding Company Options
in accordance with Section 6.5(a), Parent may, at its election,
cause such outstanding Company Options to be replaced by issuing
reasonably equivalent replacement stock options in substitution
therefor; PROVIDED, HOWEVER, that such replacement options shall
in any event comply with the provisions of the fourth sentence of
Section 6.5(a).
(C) The Company shall take all action that may be necessary
(under the plans or agreements pursuant to which Company Options
or Company Warrants are outstanding and otherwise) to effectuate
the provisions of this Section 6.5 and to ensure that, from and
after the Effective Time, holders of Company Options or Company
Warrants have no rights with respect thereto other than those
specifically provided in this Section 6.5."
4. A new Section 6.20, reading in its entirety as follows, is hereby added
to the Merger Agreement:
"6.20 COMPANY EMPLOYEE STOCK PURCHASE PLAN. Prior to January 1,
1999, the Company shall amend the Company's Employee Stock
Purchase Plan (the "Company ESPP") to provide that no new
offerings or purchase periods will commence under the Company ESPP
after December 31, 1998. Prior to the Effective Time, the Company
shall take all corporate action necessary to (a) provide that the
participants' accumulated payroll deductions made under the
Company ESPP will be used to purchase Company Common Stock
immediately prior to the Effective Time and (b) amend the Company
ESPP to provide that all offerings that have commenced under the
Company ESPP and all of participants' rights in such offerings
will terminate immediately prior to the Effective Time."
5. All references in the Merger Agreement to the term "Agreement" shall be
deemed to refer to the Merger Agreement, as amended by this Amendment.
6. Except as specifically modified by this Amendment, the terms of the
Merger Agreement shall remain in full force and effect.
7. This Amendment is made under, and shall be construed and enforced in
accordance with, the laws of the State of California applicable to agreements
made and to be performed solely therein, without giving effect to principles of
conflicts of law.
8. This Amendment may be executed in several counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
the undersigned, thereunto duly authorized, as of the date first set forth
above.
MEGABIOS CORP.
By: /s/ XXXXXX XXXXXXXXX
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Printed Name: Xxxxxx Xxxxxxxxx
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Title: Vice President, Finance and
Chief Financial Officer
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MONTANA ACQUISITION SUB, INC.
By: /s/ XXXXXX XXXXXXXXX
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Printed Name: Xxxxxx Xxxxxxxxx
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Title: Chief Financial Officer
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GENEMEDICINE, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Printed Name: Xxxxxxx X. Xxxxxxx
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Title: Vice President and Chief
Financial Officer
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