Document:

Exhibit 4.2

 

AMENDMENT

TO THE

VALENTIS, INC.

AMENDED AND RESTATED 1997 EQUITY
INCENTIVE PLAN

 

 

 

                Pursuant
to the authority reserved to the Board of Directors (the “Board”) of Valentis,
Inc., a corporation organized under the laws of the State of Delaware (the
“Company”), under Section 13(a) of the Company’s Amended and Restated 1997
Equity Incentive Plan (the “Plan”), the Board hereby amends the Plan as
follows:

 

                1.             Share Reserve.  The first sentence of subsection 4(a) of the
Plan is amended to read in its entirety as follows:

 

                                “(a)         Subject
to the provisions of Section 12 relating to adjustments upon changes in stock,
the stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate seven hundred fifty thousand (750,000) shares of the Company’s Common
Stock.”

 

                2.             Eligibility.  The first sentence of subsection 5(c) of the
Plan is amended to read in its entirety as follows:

 

                                “(c)         Subject to the provisions of Section 12 relating
to adjustments upon changes in stock, no person shall be eligible to be granted
Options covering more than five hundred thousand (500,000) shares of the Common
Stock in any calendar year.”

 

* * * * * * * * * *

                I hereby certify that the foregoing Amendment to the
Plan was duly adopted by the Board of Directors of Valentis, Inc., effective as
of April 17, 2003, and was approved by the shareholders of the Company at the
Annual Meeting of Shareholders on May 29, 2003, as required under applicable
state and federal law.

                Executed on this 29th
day of May, 2003.

 

	
   

  	
  /s/ Alan C. Mendelson

  
	
   

  	
  Alan C. Mendelson,
  SecretaryExhibit 4.3

 

Valentis, Inc.

Amended and Restated

1998 Non-Employee Directors’ Stock Option Plan

Adopted by
the Board of Directors September 16, 1998

Approved By Stockholders December 8, 1998

Amended and
Restated by the Board of Directors March 13, 2002

Amended and Restated by the Board of Directors April
17, 2003

Approved by Stockholders May 29, 2003

 

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)           “Catch-Up Grant” means a one-time Option
granted to all Non-Employee Directors who meet the specified criteria pursuant
to subsection 6(c) of the Plan.

(f)            “Code” means the Internal Revenue Code of
1986, as amended.

 

 

 

(g)           “Common Stock” means the common stock of the
Company.

(h)           “Company” means Valentis, Inc. (formerly
Megabios Corp.), a Delaware corporation.

(i)            “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 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.

(j)            “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.

(k)           “Director” means a member of the Board of
Directors of the Company.

(l)            “Disability” means the permanent and total
disability of a person within the meaning of Section 22(c)(3) of the Code.

(m)          “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.

(n)           “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

(o)           “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.

 

 

(p)           “Initial Grant” means an Option granted to a
Non-Employee Director who meets the specified criteria pursuant to
subsection 6(a) of the Plan.

(q)           “Non-Employee Director” means a Director who
is not employed by the Company or an Affiliate.

(r)           “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.

(s)           “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.

(t)            “Option” means a Nonstatutory Stock Option
granted pursuant to the Plan.

(u)           “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.

(v)            “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.

(w)           “Plan” means this Amended and Restated
Valentis, Inc. 1998 Non-Employee Directors’ Stock Option Plan.

(x)           “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.

(y)           “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.

 

 

(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 twenty-five
thousand (225,000) 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 May 29, 2003, 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-six thousand (26,000)
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 for the fiscal year ended June 30, 2003,
each person who is then a Non-Employee Director and has served on the Board for
at least six months automatically shall be granted an Annual Grant to purchase
two thousand six hundred (2,600) shares of Common Stock on the terms and
conditions set forth herein.

(c)           Catch-Up
Grants.  No Initial Grants or Annual Grants have been made from
the date of the Annual Meeting on January 23, 2003 until the date of the
Special Meeting of Stockholders on May 29, 2003.  In lieu of such Initial Grants and Annual Grants, on the day
following the Special Meeting of Stockholders on May 29, 2003, each person who
is then a Non-Employee Director automatically shall be granted a Catch-Up Grant
to purchase twenty-six thousand (26,000) 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:

(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
no less than 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, including where 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, if such Option is approved by the holders of a
majority of the shares of common stock of the Company present and entitled to
vote at a duly convened meeting of shareholders.

(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 market rate of interest that is sufficient 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 1/48th of the shares each month after the date of the grant.

(iii)         Catch-Up Grants shall provide for vesting
of 1/4th of the shares on the date of the grant and 1/48th
of the shares each month after the one-year anniversary of 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.

(g)           Disability
of Optionholder.  In the event an Optionholder’s Continuous
Service terminates as 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.

(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 share 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
classes(es) and 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
of Control.  In the event of (1) a consolidation or
merger of the Company with our 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 vent 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, (i)
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, and (2) no amendment to the minimum price provision of Section
7(b) and no amendment to Section 12(e) shall be effective unless approved by
the holders of a majority of the shares of common stock of the Company present
and entitled to vote at a duly convened meeting of shareholders.

(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.

 

 

(e)           Repricing
Prohibited.  Notwithstanding any provision in this
Plan to the contrary, unless approved by the holders of a majority of the
shares of common stock of the Company present and entitled to vote at a duly
convened meeting of shareholders, no Option may be amended to reduce the price
per share of the shares subject to such Option below the exercise price as of
the date the Option is granted.  In
addition, unless approved by the holders of a majority of the shares of common
stock of the Company present and entitled to vote at a duly convened meeting of
shareholders, no Option may be granted in exchange for, or in connection with,
the cancellation or surrender of an Option having a higher exercise price or
less favorable vesting schedule.

13.          TERMINATION OR SUSPENSION OF THE PLAN.

(a)           Plan Term. 
The Board may suspend of 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.

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