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 Endorex Corp. (the "Corporation") and
("Optionee") evidencing the stock option (the "Option")
granted on , 199 to Optionee under the terms of the
Corporation's Amended and Restated 1995 Omnibus Incentive Plan, and such
provisions shall be effective immediately. All capitalized terms in this
Addendum, to the extent not otherwise defined herein, shall have the meanings
assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION/CHANGE IN CONTROL
1. To the extent the Option is, in connection with a Corporate
Transaction, to be assumed by the successor entity (or its parent company), the
Option shall not accelerate upon the occurrence of that Corporate Transaction,
and the Option shall accordingly continue, over Optionee's period of Service
after the Corporate Transaction, to become exercisable for the Option Shares in
one or more installments in accordance with the provisions of the Option
Agreement. However, immediately upon an Involuntary Termination of Optionee's
Service within eighteen (18) months following such Corporate Transaction, the
Option (or any replacement grant), to the extent outstanding at the time but
not otherwise fully exercisable, shall automatically accelerate so that the
Option shall become immediately exercisable for all the Option Shares at the
time subject to the Option and may be exercised for any or all of those Option
Shares as fully vested shares.
2. The Option shall not accelerate upon the occurrence of a
Change in Control, and the Option shall, over Optionee's period of Service
following such Change in Control, continue to become exercisable for the Option
Shares in one or more installments in accordance with the provisions of the
Option Agreement. However, immediately upon an Involuntary Termination of
Optionee's Service within eighteen (18) months following the Change in Control,
the Option, to the extent outstanding at the time but not otherwise fully
exercisable, shall automatically accelerate so that the Option shall become
immediately exercisable for all the Option Shares at the time subject to the
Option and may be exercised for any or all of those Option Shares as fully
vested shares.
3. The Option as accelerated under Paragraphs 1 or 2 shall
remain so exercisable until the earlier of (i) the Expiration Date or (ii) the
expiration of the one (1)-year period measured from the date of the Optionee's
Involuntary Termination.
4. For purposes of this Addendum the following definitions shall
be in effect:
(i) An Involuntary Termination shall mean the
termination of Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or
discharge by the Corporation for reasons other than
Misconduct, or
(B) Optionee's voluntary resignation following
(I) a change in Optionee's position with the Corporation (or
Parent or Subsidiary employing Optionee) which materially
reduces Optionee's level of responsibility, (II) a reduction
in Optionee's level of compensation (including base salary,
fringe benefits and participation in any corporate-
performance based bonus or incentive programs) by more than
fifteen percent (15%) or (III) a relocation of Optionee's
place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected
by the Corporation without Optionee's consent.
(ii) A Change in Control shall be deemed to occur in
the event of a change in ownership or control of the Corporation
effected through either of the following transactions:
(A) 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,
or is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) 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, or
(B) a change in the composition of the Board
over a period of thirty-six (36) consecutive months or less
such that a majority of the Board members ceases, by reason
of one or more contested elections for Board membership, to
be comprised of individuals who either (i) have been Board
members continuously since the beginning of such period or
(ii) have been elected or nominated for election as Board
members during such period by at least a majority of the
Board members described in clause (i) who were still in
office at the time such election or nomination was approved
by the Board.
5. The provisions of Paragraph 1 of this Addendum shall govern
the period for which the Option is to remain exercisable following the
Involuntary Termination of Optionee's Service within twelve (12) months after
the Corporate Transaction or Change in Control and shall supersede any
provisions to the contrary in Paragraph 5 of the Option Agreement.
IN WITNESS WHEREOF, Endorex Corp. has caused this Addendum to be
executed by its duly-authorized officer, and Optionee has executed this
Addendum, all as of the Effective Date specified below.
ENDOREX CORP.
By:
Title:
EFFECTIVE DATE: , 199