MEGABIOS CORP
8-K, 1998-11-25
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT


                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                                November 24, 1998
                       ------------------------------------
                Date of Report (Date of earliest event reported)

                                 MEGABIOS CORP.
                             ----------------------
             (Exact name of registrant as specified in its charter)

            DELAWARE                 0-22987                  94-3156660
          ------------             -----------              --------------
(State or other jurisdiction of    (Commission             (I.R.S. Employer
         incorporation)            File Number)           Identification No.)

                                863A MITTEN ROAD
                              BURLINGAME, CA 94010
                        ---------------------------------
                    (Address of principal executive offices)

                                 (650) 697-1900
                        ----------------------------------
              (Registrant's telephone number, including area code)



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ITEM 5.  OTHER EVENTS

         Megabios Corp. ("Megabios") entered into an Agreement and Plan of 
Merger and Reorganization, dated as of October 24, 1998 (the "Reorganization 
Agreement"), among Megabios, Montana Acquisition Sub, Inc., a Delaware 
corporation and wholly-owned subsidiary of Megabios ("Merger Sub"), and 
GeneMedicine, Inc. ("GeneMedicine"). Pursuant to the Reorganization 
Agreement, and subject to the conditions set forth therein (including 
approval by the stockholders of Megabios and GeneMedicine), Merger Sub will 
be merged with and into GeneMedicine.

         The Boards of Directors of Megabios and GeneMedicine approved and 
executed that certain Amendment No. 1 to Agreement and Plan of Merger and 
Reorganization, dated November 24, 1998 (the "Amendment"), a copy of which is 
attached hereto as Exhibit 99.1. Pursuant to the terms of the Amendment, 
Megabios agreed to assume certain outstanding warrants to purchase 
GeneMedicine common stock and GeneMedicine agreed that its obligations under 
GeneMedicine's Employee Stock Purchase Plan (the "Purchase Plan") will be 
settled and participants' rights under the Purchase  Plan will terminate 
prior to consummation of the merger.

                                          1.
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

     (c)  Exhibits


     99.1 Amendment No. 1 to Agreement and Plan of Merger and Reorganization 
          dated as of November 24, 1998, by and among Megabios Corp., a 
          Delaware corporation, Montana Acquisition Sub, Inc., a Delaware 
          corporation and wholly-owned subsidiary of Megabios Corp., and 
          GeneMedicine, Inc., a Delaware corporation.

                                          2.
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                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date:  November 25, 1998                       MEGABIOS CORP.



                                               By:    /s/ Bennet L. Weintraub
                                                     ---------------------------
                                                      Bennet L. Weintraub
                                                      Chief Financial Officer


<PAGE>

                                  EXHIBIT INDEX

    99.1  Amendment No. 1 to Agreement and Plan of Merger and Reorganization
          dated as of November 24, 1998, by and among Megabios Corp., a Delaware
          corporation, Montana Acquisition Sub, Inc., a Delaware corporation and
          wholly-owned subsidiary of Megabios Corp., and GeneMedicine, Inc., a
          Delaware corporation.




<PAGE>
                               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
 
                                     A-1-1
<PAGE>
       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.
 
                                     A-1-2
<PAGE>
    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/ BENNET WEINTRAUB
 
                                          --------------------------------------
 
                                          Printed Name: Bennet Weintraub
 
      --------------------------------------------------------------------------
 
                                          Title: Vice President, Finance and
                                              Chief Financial Officer
 
                                          --------------------------------------
 
                                          MONTANA ACQUISITION SUB, INC.
 
                                          By: /s/ BENNET WEINTRAUB
 
                                          --------------------------------------
 
                                          Printed Name: Bennet Weintraub
 
      --------------------------------------------------------------------------
 
                                          Title: Chief Financial Officer
 
                                          --------------------------------------
 
                                          GENEMEDICINE, INC.
 
                                          By: /s/ RICHARD A. WALDRON
 
                                          --------------------------------------
 
                                          Printed Name: Richard A. Waldron
 
      --------------------------------------------------------------------------
 
                                          Title: Vice President and Chief
                                          Financial Officer
 
                                          --------------------------------------
 
                                     A-1-3


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