ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between Collateral Therapeutics, Inc. (the "Corporation")
and ___________ ("Optionee") evidencing the stock option (the "Option")
granted this date to Optionee under the terms of the Corporation's 1998 Stock
Incentive Plan, and such provisions shall be effective immediately with such
grant date. All capitalized terms in this Addendum, to the extent not
otherwise defined herein, shall have the meanings assigned to them in the
Option Agreement.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock appreciation right
exercisable upon the following terms and conditions:
(i) Optionee shall have the unconditional right,
exercisable at any time during the thirty (30)-day period immediately
following a Hostile Take-Over, to surrender the Option to the
Corporation, to the extent the Option is at the time exercisable for one
or more shares of Common Stock. In return for the surrendered Option,
Optionee shall receive a cash distribution from the Corporation in an
amount equal to the excess of (A) the Take-Over Price of the shares of
Common Stock for which the surrendered option (or surrendered portion)
is at the time exercisable over (B) the aggregate Exercise Price payable
for such shares.
(ii) To exercise this limited stock appreciation right,
Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in
which there is specified the number of Option Shares as to which the
Option is being surrendered. Such notice must be accompanied by the
return of Optionee's copy of the Option Agreement, together with any
written amendments to such Agreement. The cash distribution shall be
paid to Optionee within five (5) business days following such delivery
date. The exercise of the limited stock appreciation right in
accordance with the terms of this Addendum is hereby approved by the
Plan Administrator, in advance of such exercise, and no further approval
of the Plan Administrator or the Board shall be required at the time of
the actual option surrender and cash distribution. Upon receipt of such
cash distribution, the Option shall be cancelled with respect to the
Option Shares for which the Option has been surrendered, and Optionee
shall cease to have any further right to acquire those Option Shares
under the Option Agreement. The Option shall, however, remain
outstanding and exercisable for the balance of the Option Shares (if
any) in accordance with the terms of the Option Agreement, and the
Corporation shall issue a replacement stock option agreement
(substantially in the same form of the surrendered Option Agreement) for
those remaining Option Shares.
(iii) In no event may this limited stock appreciation
right be exercised when there is not a positive spread between the Fair
Market Value of the Option Shares subject to the surrendered option and
the aggregate Exercise Price payable for such shares. This limited stock
appreciation right shall in all events terminate upon the expiration or
sooner termination of the Option term and may not be assigned or
transferred by Optionee, except to the extent the Option is transferable
in accordance with the provisions of the Option Agreement.
2. For purposes of this Addendum, the following definitions shall
be in effect:
(i) A HOSTILE TAKE-OVER shall be deemed to occur upon
the acquisition, directly or indirectly, by any person or related group
of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with,
the Corporation) of beneficial ownership (within the meaning of Rule
13d-3 of the 0000 Xxx) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept.
(ii) The TAKE-OVER PRICE per share shall be deemed to be
equal to the GREATER of (A) the Fair Market Value per Option Share on
the option surrender date or (B) the highest reported price per share of
Common Stock paid by the tender offeror in effecting the Hostile
Take-Over. However, if the surrendered Option is designated as an
Incentive Option in the Grant Notice, then the Take-Over Price shall not
exceed the clause (A) price per share.
IN WITNESS WHEREOF, Collateral Therapeutics, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
COLLATERAL THERAPEUTICS, INC.
By:
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Title:
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EFFECTIVE DATE: __________________, 199_
