EXHIBIT 99.4
SPECIAL ADDENDUM
TO
STOCK OPTION AGREEMENT
The provisions of this Special Addendum are hereby incorporated into,
and are hereby made a part of, that certain Stock Option Agreement (the
"Option Agreement") between Cygnus, Inc. (the "Corporation") and
_________________________________ ("Optionee") evidencing the grant on this
date of a stock option (the "Option") to Optionee under the terms of the
Corporation's 1994 Stock Option/Award Plan. The provisions of this Special
Addendum shall be effective immediately for such Option.
All capitalized terms in this Special Addendum, to the extent not
otherwise defined herein, shall have the meanings assigned to them in that
certain severance benefit agreement (the "Severance Agreement") between the
Corporation and Optionee dated August 28, 1998 and shall continue to have
those meanings whether or not the Severance Agreement remains in effect
throughout the term of each Option subject to this Special Addendum.
TERMINATION OF EMPLOYMENT WITHOUT CAUSE
A. Should Optionee's employment be terminated by the Corporation for
any reason other than Cause while the Option remains outstanding but not
otherwise fully exercisable for all of the Option Shares, then the Option
shall immediately become exercisable on an accelerated basis for that number
of Option Shares equal to the LESSER of (i) the total number of Option Shares
for which the Option is not otherwise, in accordance with the Exercise
Schedule in effect for that Option, exercisable on the Date of Termination or
(ii) twenty percent (20%) of (x) the total number of unvested Option Shares
at the time subject to the Option plus (y) the number of vested and
exercisable shares of the Corporation's common stock held by Optionee on the
Date of Termination. The Option shall remain outstanding until the EARLIEST
to occur of (i) the Expiration Date, (ii) the expiration of the nine
(9)-month period measured from the Date of Termination or (iii) the closing
date of any Change in Control in which the Option is not assumed by the
successor entity (or parent company) or otherwise continued in full force and
effect and will continue to vest and become exercisable for additional Option
Shares during the first five (5) months of that post-employment exercise
period. Accordingly, during that five (5)-month period, the Option will
continue to vest and become exercisable for any remaining unexercisable
Option Shares at a monthly rate equal to one percent (1%) of (x) the total
number of unvested shares at the time subject to the Option plus (y) the
number of vested and exercisable shares held by Optionee on such Date of
Termination. The Option shall become exercisable for those additional one
percent (1%) increments at the end of each month within that five (5)-month
post-employment exercise period.
B. After the end of such five (5)-month post-employment period, all
further vesting of the Option Shares shall cease, and the Option shall
thereupon terminate and cease to be exercisable for any Option Shares for
which those options have not otherwise become exercisable pursuant to the
vesting provisions of this Special Addendum. Optionee shall have until the
EARLIEST to occur of (i) the Expiration Date, (ii) the expiration of the nine
(9)-month period measured from the Date of Termination or (iii) the closing
date of any Change in Control in which the option is not assumed by the
successor entity (or parent company) or otherwise continued in full force and
effect in which to exercise the Option for any or all Option Shares for which
the Option is exercisable at the end of the five (5)-month post employment
exercise period.
C. Should a Change in Control occur during the period of Optionee's
employment with the Corporation, then the vesting acceleration and
post-service exercise provisions of that certain change in control benefit
agreement (the "Change in Control Agreement") between the Corporation and
Optionee dated ______________ __, 1996 and August 28, 1998 and any Special
Addendum to Stock Option Agreement implemented in evidence of those
provisions shall govern Optionee's rights under the Option and shall
supersede and replace the terms and conditions of this Special Addendum.
D. Should a Change in Control occur after the involuntary termination
of Optionee's employment by the Corporation other than for Cause but within
the five (5)-month post-employment period during which the Option Shares
would otherwise continue to vest and become exercisable for additional Option
Shares hereunder, then the vesting acceleration provisions of the Change in
Control Agreement and any Special Addendum to Stock Option Agreement
implemented in evidence of those provisions shall govern the accelerated
vesting of the Option and shall supersede and replace the vesting
acceleration provisions of this Special Addendum. However, the expiration of
the post-employment exercise period for the Option shall continue to remain
in effect until the EARLIEST to occur of (i) the Expiration Date, (ii) the
expiration of the nine (9)-month period measured from the Date of Termination
or (iii) the closing date of any Change in Control in which the Option is not
assumed by the successor entity (or parent company) or otherwise continued in
full force and effect.
E. Should a Change in Control occur more than five (5) months after
the termination of Optionee's employment with the Corporation for any reason,
then the Option shall not accelerate or vest as to any additional Option
Shares in connection with that Change in Control.
F. For purposes of this Addendum, the following definitions shall be
in effect:
CAUSE shall have the meaning given such term in Exhibit A to
the Severance Agreement.
2.
CHANGE IN CONTROL shall have the meaning given such term in Exhibit A
to the Severance Agreement.
DATE OF TERMINATION refers to cessation of employment and
shall have the meaning given such term in Exhibit A to the Severance
Agreement.
EXERCISE SCHEDULE shall mean the schedule set forth in the
Stock Option Agreement for the Option, pursuant to which the Option is
to vest and become exercisable in a series of installments over
Optionee's period of employment with the Corporation.
EXPIRATION DATE shall mean the expiration date of the ten
(10)-year term of the Option.
OPTION SHARES shall mean the shares of the Corporation's
common stock subject to the Option in question.
G. The provisions of this Special Addendum shall govern the period for
which the Option is to remain exercisable following the termination of
Optionee's employment without Cause and shall supersede any provisions to the
contrary in the Option Agreement.
H. The provisions of this Special Addendum shall survive the
expiration or termination of the Severance Agreement and shall accordingly
remain in full force and effect following any such expiration or termination.
IN WITNESS WHEREOF, Cygnus, Inc. has caused this Addendum to be
executed by its duly-authorized officer as of the Effective Date specified
below.
CYGNUS, INC.
By:____________________________
Title:_________________________
EFFECTIVE DATE:_________________ , 199___
3.
