<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 1999
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MEGABIOS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3156660
(State of Incorporation) (I.R.S. Employer Identification No.)
------------------------
MEGABIOS CORP.
863A MITTEN ROAD
BURLINGAME, CA 94010
(650) 697-1900
(Address and telephone number of principal executive offices)
------------------------
1997 EQUITY INCENTIVE PLAN
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(Full title of the plans)
BENJAMIN F. MCGRAW III
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MEGABIOS CORP.
863A MITTEN ROAD
BURLINGAME, CA 94010
(650) 697-1900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies to:
PATRICK A. POHLEN, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(650) 843-5000
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common Stock 1,200,000 (See Notes to Calculation $6,116,000 $1,700.25
($.001 par value) of Registration Fee)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) promulgated under the Securities Act
of 1933, as amended (the "Act"). The offering price per share and aggregate
offering price are based upon (a) the weighted average exercise price, for
shares subject to outstanding options granted by Megabios Corp. (the
"Registrant") under the Registrant's 1998 Non-Employee Directors' Stock
Option Plan, or (b) the average of the high and low prices of the
Registrant's Common Stock as reported on the Nasdaq Stock Market for February
22, 1999, for (i) shares reserved for future grant pursuant to the
Registrant's 1998 Non-Employee Directors' Stock Option Plan and (ii) shares
reserved for future grant pursuant to the Registrant's 1997 Equity Incentive
Plan (pursuant to Rule 457(c) under the Act).
<PAGE>
NOTES TO CALCULATION OF REGISTRATION FEE
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
TYPE OF SHARES NUMBER OF OFFERING PRICE AGGREGATE
SHARES PER SHARE OFFERING PRICE
<S> <C> <C> <C>
Shares issuable pursuant 50,000 $5.25 (1)(a) $262,500
to outstanding options
under the 1998 Non-Employee
Directors' Stock Option
Plan
Shares reserved for 150,000 $5.09 (1)(b)(i) $763,500
future issuance pursuant
to the 1998 Non-Employee
Directors' Stock Option
Plan
Shares reserved for 1,000,000 $5.09 (1)(b)(ii) $5,090,000
future issuance pursuant
to the 1997 Equity
Incentive Plan
Proposed Maximum Offering $6,116,000
Price
Registration Fee $1,700.25
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Megabios Corp. (the "Registrant") with the
Securities and Exchange Commission are incorporated by reference into this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended June
30, 1998 (File No. 0-22987), as amended.
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 (File No. 0-22987), including all material
incorporated by reference therein.
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1998 (File No. 0-22987), including all material
incorporated by reference therein.
(d) The Registrant's Current Report on Form 8-K (File No. 0-22987), as
amended, originally filed October 28, 1998.
(e) The Registrant's Current Report on Form 8-K (File No. 0-22987),
filed November 25, 1998.
(f) The Registrant's Current Report on Form 8-K (File No. 0-22987),
filed February 10, 1999.
(g) The description of the Registrant's Common Stock which is contained
in the Registration Statement on Form 8-A (File No. 0-22987), filed August
15, 1997, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including any amendment or report filed for the purpose of
updating such description.
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under
the Securities Act. The Registrant's Bylaws also provide that the Registrant
will indemnify its directors and officers and may indemnify its employees and
other agents to the fullest extent not prohibited by Delaware law.
The Registrant's Amended and Restated Certificate of Incorporation
provides for the elimination of liability for monetary damages for breach of
the directors' fiduciary duty of care to the Registrant and its stockholders.
These provisions do not eliminate the directors' duty of care and, in
appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Registrant, for acts or omissions
not in good faith or involving intentional misconduct, for knowing violations
of law, for any transaction from which the director derived an improper
personal benefit, and for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. The
provision does not affect a director's responsibilities under any other laws,
such as the federal securities laws.
The Registrant has entered into agreements with its directors and
executive officers that require the Registrant to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any
such person may be made a party by reason of the fact that such person is or
was a director or executive officer of the Registrant or any of its
affiliated enterprises. No indemnity will be provided, however, to any
director or executive officer on account of conduct that is knowingly
fraudulent or deliberately dishonest or constitutes willful misconduct. No
indemnification will be available if such indemnification is unlawful, or in
2.
<PAGE>
respect of any accounting of profits made from the purchase or sale of
securities of the Registrant in violation of Section 16(b) of the Exchange
Act. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<C> <S>
4.1* Amended and Restated Certificate of Incorporation of the Registrant.
4.2* Bylaws of the Registrant.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1* The Registrant's 1997 Equity Incentive Plan.
99.2* Form of Incentive Stock Option under the 1997 Equity Incentive Plan.
99.3* Form of Nonstatutory Stock Option under the 1997 Equity Incentive Plan.
99.4* The Registrant's 1997 Employee Stock Purchase Plan.
99.5* 1997 Employee Stock Purchase Plan Offering Document.
99.6** Form of Nonstatutory Stock Option granted outside the 1997 Equity Incentive Plan.
99.7 The Registrant's 1998 Non-Employee Directors' Stock Option Plan.
99.8 Form of Nonstatutory Stock Option (Initial Grant) under the 1998 Non-Employee Directors' Stock Option Plan.
99.9 Form of Nonstatutory Stock Option (Annual Grant) under the 1998 Non-Employee Directors' Stock Option Plan.
</TABLE>
* Documents incorporated by reference from the Registrant's Registration
Statement on Form S-1 (333-32593), as amended, filed with the SEC on July
31, 1997.
** Document incorporate by reference from the Registrant's Registration
Statement on Form S-8 (333-39795), filed with the SEC on November 7, 1997.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
a. 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;
3.
<PAGE>
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 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 prospectus filed with the Commission pursuant
to Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price 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)(i) and (a)(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 issuer pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
b. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
c. 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the 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 registrant will, unless
in the opinion of its 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 and will be governed by the final adjudication of such issue.
4.
<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 on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Burlingame, State of California, on
February 24, 1999.
MEGABIOS CORP.
By /s/ Benjamin F. McGraw III
--------------------------------------
Benjamin F. McGraw III
Chairman, Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Benjamin F. McGraw III and Bennet L.
Weintraub and each or any one of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, 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 requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes or substitute, 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:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Benjamin F. McGraw III
- --------------------------
Benjamin F. McGraw III Chairman, Chief Executive Officer February 24, 1999
and President (Principal Executive
Officer)
/s/ Bennet L. Weintraub
- --------------------------
Bennet L. Weintraub Vice President, Finance, and Chief
Financial Officer (Principal
Financial and Accounting Officer) February 24, 1999
/s/ Frank J. Caufield
- --------------------------
Frank J. Caufield Director February 24, 1999
/s/ Patrick G. Enright
- --------------------------
Patrick G. Enright Director February 24, 1999
/s/ A. Grant Heidrich
- --------------------------
A. Grant Heidrich Director February 24, 1999
/s/ Russell C. Hirsch
- -------------------------- February 24, 1999
Russell C. Hirsch, M.D., Director
Ph.D.
/s/ Raju Kucherlapati
- --------------------------
Raju Kucherlapati, Ph.D. Director February 24, 1999
</TABLE>
5.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
4.1* Amended and Restated Certificate of Incorporation of the Registrant.
4.2* Bylaws of the Registrant.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature pages.
99.1* The Registrant's 1997 Equity Incentive Plan.
99.2* Form of Incentive Stock Option under the 1997 Equity Incentive Plan.
99.3* Form of Nonstatutory Stock Option under the 1997 Equity Incentive Plan.
99.4* The Registrant's 1997 Employee Stock Purchase Plan.
99.5* 1997 Employee Stock Purchase Plan Offering Document.
99.6** Form of Nonstatutory Stock Option granted outside the 1997 Equity Incentive Plan.
99.7 The Registrant's 1998 Non-Employee Directors' Stock Option Plan.
99.8 Form of Nonstatutory Stock Option (Initial Grant) under the 1998 Non-Employee Directors' Stock Option Plan.
99.9 Form of Nonstatutory Stock Option (Annual Grant) under the 1998 Non-Employee Directors' Stock Option Plan.
</TABLE>
* Documents incorporated by reference from the Registrant's Registration
Statement on Form S-1 (333-32593), as amended, filed with the SEC on July
31, 1997.
** Document incorporate by reference from the Registrant's Registration
Statement on Form S-8 (333-39795), filed with the SEC on November 7, 1997.
<PAGE>
Exhibit 5.1
[Cooley Godward Letterhead]
February 24, 1999
Megabios Corp.
863A Mitten Road
Burlingame, CA 94010
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Megabios Corp. (the "Company") of a Registration Statement
on Form S-8 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of up to an aggregate of 1,200,000 shares of
the Company's Common Stock, $.001 par value (the "Shares"), pursuant to its
1997 Equity Incentive Plan and 1998 Non-Employee Directors' Stock Option Plan
(the "Plans").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, the Company's Amended and Restated Certificate of
Incorporation and Bylaws, as amended, and such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and
delivery of all documents where due execution and delivery are a prerequisite
to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plans, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ Patrick A. Pohlen
------------------------------
Patrick A. Pohlen
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 pertaining to the 1997 Equity Incentive Plan and the
1998 Non-Employee Directors' Stock Option Plan of Megabios Corp., of our
report dated July 31, 1998, with respect to the financial statements of
Megabios Corp. included in its Annual Report (Form 10-K) for the year ended
June 30, 1998, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Palo Alto, California
February 22, 1999
<PAGE>
MEGABIOS CORP.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED BY THE BOARD OF DIRECTORS SEPTEMBER 16, 1998
APPROVED BY STOCKHOLDERS DECEMBER 8, 1998
EFFECTIVE DATE: DECEMBER 8, 1998
TERMINATION DATE: NONE
1. PURPOSES.
(a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Non-Employee Directors of the Company.
(b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of its Non-Employee Directors, to secure and retain the services of
new Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "ANNUAL GRANT" means an Option granted annually to all Non-Employee
Directors who meet the specified criteria pursuant to subsection 6(b) of the
Plan.
(c) "ANNUAL MEETING" means the annual meeting of the stockholders of the
Company.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Megabios Corp., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, (i) who is
engaged by the Company or an Affiliate to render consulting or advisory services
and who is compensated for such services or (ii) who is a member of the Board of
Directors of an Affiliate. However, the
<PAGE>
term "Consultant" shall not include either Directors of the Company who are
not compensated by the Company for their services as Directors or Directors
of the Company who are merely paid a director's fee by the Company for their
services as Directors.
(i) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service. For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(o) "INITIAL GRANT" means an Option granted to a Non-Employee Director who
meets the specified criteria pursuant to subsection 6(a) of the Plan.
2
<PAGE>
(p) "NON-EMPLOYEE DIRECTOR" means a Director who is not employed by the
Company or an Affiliate.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(v) "PLAN" means this Megabios Corp. 1998 Non-Employee Directors' Stock
Option Plan.
(w) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(x) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine the provisions of each Option to the extent not
specified in the Plan.
(ii) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(iii) To amend the Plan or an Option as provided in Section 12.
3
<PAGE>
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Options shall not exceed in the aggregate two hundred thousand (200,000) shares
of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not acquired under such Option shall revert to and
again become available for issuance under the Plan.
(c) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
Nondiscretionary grants of Options, as set forth in Section 6, shall be
made under the Plan to all Non-Employee Directors.
6. NON-DISCRETIONARY GRANTS. Without any further action of the Board, each
Non-Employee Director shall be granted the following Options:
(a) INITIAL GRANTS. After the date of approval of the Plan by the Board,
each person who is elected or appointed for the first time to be a Non-Employee
Director automatically shall, upon the date of his or her initial election or
appointment to be a Non-Employee Director by the Board or stockholders of the
Company, be granted an Initial Grant to purchase twenty-five (25,000) shares of
Common Stock on the terms and conditions set forth herein.
(b) ANNUAL GRANTS. On the day following each Annual Meeting commencing
with the Annual Meeting in 1998, each person who is then a Non-Employee Director
automatically shall be granted an Annual Grant to purchase ten thousand (10,000)
shares of Common Stock on the terms and conditions set forth herein.
7. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
4
<PAGE>
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) EXERCISE PRICE. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes and
regulations and specified in the Option Agreement, in any combination of (i)
cash or check; (ii) delivery to the Company of other Common Stock; (iii)
deferred payment; or (iv) any other form of legal consideration that may be
acceptable to the Board and provided in the Option Agreement; provided,
however, that at any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment. In the case of any
deferred payment arrangement, interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
(d) TRANSFERABILITY. An Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.
(e) VESTING GENERALLY. Options shall vest and become exercisable as
follows:
(i) Initial Grants shall provide for vesting of 1/4th of the
shares 12 months after the date of the grant and 1/48th of the shares each month
thereafter over the next 36 months.
(ii) Annual Grants shall provide for vesting of 1/12th of the
shares each month after the date of the grant.
(f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date twelve
(12) months following the termination of the Optionholder's Continuous Service,
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.
5
<PAGE>
(g) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.
(h) DEATH OF OPTIONHOLDER. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's death, then the Option may
be exercised (to the extent the Optionholder was entitled to exercise the Option
as of the date of death) by the Optionholder's estate, by a person who acquired
the right to exercise the Option by bequest or inheritance or by a person
designated to exercise the Option upon the Optionholder's death, but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death or (2) the expiration of the term of such Option as set forth
in the Option Agreement. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Options and to issue and sell shares of Common Stock
upon exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any stock issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
10. MISCELLANEOUS.
(a) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.
6
<PAGE>
(b) NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(c) INVESTMENT ASSURANCES. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if
(iii) the issuance of the shares upon the exercise or acquisition of stock under
the Option has been registered under a then currently effective registration
statement under the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(d) WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option; or (iii) delivering to the
Company owned and unencumbered shares of the Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and
7
<PAGE>
maximum number of securities subject both to the Plan pursuant to subsection
4(a) and to the nondiscretionary Options specified in Section 5, and the
outstanding Options will be appropriately adjusted in the class(es) and
number of securities and price per share of stock subject to such outstanding
Options. The Board shall make such adjustments, and its determination shall
be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a transaction "without
receipt of consideration" by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to such event.
(c) CHANGE IN CONTROL. In the event of (1) a consolidation or merger of
the Company with or into any other entity or person; (2) any other corporate
reorganization in which the Company shall not be the continuing or surviving
entity; (3) any transaction or series of related transactions by the Company in
which in excess of 50% of the Company's voting power is transferred; or (4) any
sale, lease, license or other disposition of all or substantially all of the
assets of the Company, then any surviving corporation or acquiring corporation
shall assume any Options outstanding under the Plan or shall substitute similar
Options (including an option to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 11(c)) for those
outstanding under the Plan. In the event any surviving corporation or acquiring
corporation refuses to assume such Options or to substitute similar Options for
those outstanding under the Plan, then with respect to Options held by
Optionholders whose Continuous Service has not terminated, the vesting of such
Options shall be accelerated in full, and the Options shall terminate if not
exercised at or prior to such event. With respect to any other Options
outstanding under the Plan, such Options shall terminate if not exercised prior
to such event.
12. AMENDMENT OF THE PLAN AND OPTIONS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval.
(c) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(d) AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.
8
<PAGE>
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
No Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date the Plan is adopted by the
Board but no Option shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
15. CHOICE OF LAW.
All questions concerning the construction, validity and interpretation
of this Plan shall be governed by the law of the State of California, without
regard to such state's conflict of laws rules.
9
<PAGE>
MEGABIOS CORP.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION
(INITIAL GRANT)
________________________, Optionholder:
On __________________, 199___ (the "Grant Date"), an option was automatically
granted to you (the "Optionholder") pursuant to the Megabios Corp. (the
"Company") 1998 Non-Employee Directors' Stock Option Plan (the "Plan") to
purchase shares of the Company's common stock ("Common Stock"). This option is
NOT intended to qualify and will NOT be treated as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Defined terms not explicitly defined in this nonstatutory
stock option but defined in the Plan shall have the same meaning as in the Plan.
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for Non-Employee Directors (as defined in
the Plan).
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
twenty-five thousand (25,000) shares.
2. The exercise price of this option is _________________________
($________) per share, such amount being equal to the Fair Market Value of the
Common Stock on the Grant Date.
3. This option shall vest and become exercisable as to 1/4th of the
shares on the date twelve months from the Grant Date (indicated above) and
1/48th of the shares in equal monthly installments thereafter over the next 36
months, provided that vesting will cease upon the termination of your Continuous
Service.
4. The term of your option commences on the Grant Date and expires upon
the EARLIEST of the following:
(a) twelve (12) months after the termination of your Continuous
Service for any reason, including Disability, other than death;
(b) eighteen (18) months after the termination of your Continuous
Service due to your death; or
(c) the tenth (10th) anniversary of the Grant Date.
5. (a) You may exercise this option, to the extent specified above, by
delivering a Notice of Exercise (in the form attached to this option or in such
other form as the Company may designate) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such
-1-
<PAGE>
additional documents as the Company may then require. You may exercise this
option only for whole shares.
(b) You may elect to pay the exercise price under one of the
following alternatives:
(i) Payment in cash or check at the time of exercise;
(ii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Company's reported earnings (generally six months) or were not
acquired, directly or indirectly from the Company, owned free and clear of any
liens, claims, encumbrances or security interests, and valued at its Fair Market
Value on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time your option is exercised, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing,
your option may not be exercised by tender to the Company of Common Stock to the
extent such tender would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock; or
(iv) Payment by a combination of the methods of payment
specified in subparagraphs (i) through (iii) above.
(c) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the Company
of any tax-withholding obligation of the Company arising by reason of the
exercise of this option. Notwithstanding anything to the contrary contained
herein, you may not exercise this option unless the shares issuable upon
exercise of this option are then registered under the Securities Act, or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
6. Your option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise your option.
7. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed
-2-
<PAGE>
to you at the address specified below or at such other address as you
hereafter designate by written notice to the Company.
8. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto, and its provisions are hereby made a part of this
option, including without limitation the provisions of Section 7 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
9. Notwithstanding anything to the foregoing, this option shall NOT be
exercisable in whole or in part unless and until the Company's shareholders have
approved the Plan.
Dated the ____ day of _______________, 19___.
Very truly yours,
MEGABIOS CORP.
By:
---------------------------------------------------
Duly authorized on behalf of the Board of Directors
The Undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the Grant Date of this option, it sets
forth the entire understanding between the undersigned Optionholder and the
Company and its Affiliates regarding the acquisition of Common Stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options and any other stock awards previously
granted and delivered to the undersigned under stock award plans of the Company
and (ii) the following agreements only:
NONE:
-----------------------------------
OTHER:
-----------------------------------
-----------------------------------
-----------------------------------
--------------------------------
Optionholder
ATTACHMENTS: 1998 Non-Employee Directors' Stock Option Plan; Notice of Exercise
-3-
<PAGE>
NOTICE OF EXERCISE
Megabios Corp.
863A Mitten Rd.
Burlingame, CA 94010 Date of Exercise:
-----------------
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Stock option dated:
-----------------------
Number of shares as to which
option is exercised:
-----------------------
Certificates to be
issued in name of:
-----------------------
Total exercise price: $
-----------------------
Cash payment delivered
herewith: $
-----------------------
Value of __________ shares
of Common Stock delivered
herewith (1):
-----------------------
By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Company's 1998 Non-Employee
Directors' Stock Option Plan and (ii) to provide for the payment by me to you
(in the manner designated by you) of your withholding obligation, if any,
relating to the exercise of this option.
Very truly yours,
---------------------------------------
- ----------------
(1) Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
<PAGE>
MEGABIOS CORP.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION
(ANNUAL GRANT)
___________, Optionholder:
On __________________, 199___ (the "Grant Date"), an option was automatically
granted to you (the "Optionholder") pursuant to the Megabios Corp. (the
"Company") 1998 Non-Employee Directors' Stock Option Plan (the "Plan") to
purchase shares of the Company's common stock ("Common Stock"). This option is
NOT intended to qualify and will NOT be treated as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Defined terms not explicitly defined in this nonstatutory
stock option but defined in the Plan shall have the same meaning as in the Plan.
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for Non-Employee Directors (as defined in
the Plan).
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
ten thousand (10,000) shares.
2. The exercise price of this option is _________________________
($________) per share, such amount being equal to the Fair Market Value of the
Common Stock on the Grant Date.
3. This option shall vest and become exercisable in twelve (12) equal
monthly installments, provided that vesting will cease upon the termination of
your Continuous Service.
4. The term of your option commences on the Grant Date and expires upon
the EARLIEST of the following:
(a) twelve (12) months after the termination of your Continuous
Service for any other reason;
(b) twelve (12) months after the termination of your Continuous
Service due to Disability;
(c) eighteen (18) months after your death;
(d) the tenth (10th) anniversary of the Grant Date.
5. (a) You may exercise this option, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during
-1-
<PAGE>
regular business hours, together with such additional documents as the
Company may then require. You may exercise this option only for whole shares.
(b) You may elect to pay the exercise price under one of the
following alternatives:
(i) Payment in cash or check at the time of exercise;
(ii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Company's reported earnings (generally six months) or were not
acquired, directly or indirectly from the Company, owned free and clear of any
liens, claims, encumbrances or security interests, and valued at its Fair Market
Value on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time your option is exercised, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing,
your option may not be exercised by tender to the Company of Common Stock to the
extent such tender would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock; or
(iv) Payment by a combination of the methods of payment
specified in subparagraphs (i) through (iii) above.
(c) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the Company
of any tax-withholding obligation of the Company arising by reason of the
exercise of this option. Notwithstanding anything to the contrary contained
herein, you may not exercise this option unless the shares issuable upon
exercise of this option are then registered under the Securities Act, or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
6. Your option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise your option.
7. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed
-2-
<PAGE>
to you at the address specified below or at such other address as you
hereafter designate by written notice to the Company.
8. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto, and its provisions are hereby made a part of this
option, including without limitation the provisions of Section 7 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
9. Notwithstanding anything to the foregoing, this option shall NOT be
exercisable in whole or in part unless and until the Company's shareholders have
approved the Plan.
Dated the ____ day of __________, 19___.
Very truly yours,
MEGABIOS CORP.
By:
----------------------------------------------------
Duly authorized on behalf of the Board of Directors
The Undersigned:
(a) Acknowledges receipt of the foregoing option and the attachment
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the Grant Date of this option, it sets
forth the entire understanding between the undersigned Optionholder and the
Company and its Affiliates regarding the acquisition of Common Stock in the
Company and supersedes all prior oral and written agreements on that subject
with the exception of (i) the options and any other stock awards previously
granted and delivered to the undersigned under stock award plans of the Company
and (ii) the following agreements only:
NONE:
--------------------------------------
OTHER:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Optionholder
ATTACHMENTS: 1998 Non-Employee Directors' Stock Option Plan, Notice of Exercise
-3-
<PAGE>
NOTICE OF EXERCISE
Megabios Corp.
863a Mitten Rd.
Burlingame, CA 94010 Date of Exercise: _________________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Stock option dated: _______________
Number of shares as to which
option is exercised: _______________
Certificates to be
issued in name of: _______________
Total exercise price: $______________
Cash payment delivered
herewith: $______________
Value of __________ shares
of Common Stock delivered
herewith (1): _______________
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Company's 1998 Non-Employee Directors'
Stock Option Plan and (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option.
Very truly yours,
--------------------------------
- ------------------
1 Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
