ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement dated
(the "Option Agreement") by and between Endorex Corp. (the "Corporation") and
("Optionee") evidencing the stock option (the "Option")
granted on , 19 to Optionee under the terms of the
Corporation's Amended and Restated 1995 Omnibus 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.
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 further
approval of the Plan Administrator 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 new 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 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 in the event 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) directly or indirectly acquires 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.
(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, 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:
OPTIONEE
EFFECTIVE DATE: , 199
