Exhibit 99.3
FORM OF 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 Advanced Tissue Sciences, Inc. (the "Corporation")
and ______________ ("Optionee") evidencing the stock option (the "Option")
granted to Optionee under the terms of the Corporation's 1997 Stock 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 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 such 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:
- Optionee's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or
- Optionee's voluntary resignation following
(A) a change in Optionee's position with the Corporation (or
Parent or Subsidiary employing Optionee) which materially reduces
Optionee's level of responsibility, (B) a reduction in Optionee's
level of compensation (including base salary, fringe benefits and
target bonus under any corporate-performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) 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, and
(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:
- 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
-2-
- a change in the composition of the Board
over a period of twenty-four (24) 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 3 of this Addendum shall govern
the period for which the Option is to remain exercisable following the
Involuntary Termination of Optionee's Service within eighteen (18) 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, Advanced Tissue Sciences, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective
Date specified below.
ADVANCED TISSUE SCIENCES, INC.
By:____________________________
Title:_________________________
EFFECTIVE DATE: ____________, 199_
-3-