EXHIBIT 99.5
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
1. 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-five percent (25%) 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 continue to remain outstanding and
exercisable for any or all Option Shares for which the Option is exercisable
on the Date of Termination, including the Option Shares for which the Option
becomes exercisable on an accelerated basis at that time pursuant to this
Special Addendum, 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 a 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. However, the Option shall
immediately terminate on the Date of Termination with respect to any other
Option Shares for which the Option is not exercisable and vested at that
time.
2. 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.
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 for the Option Shares 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.
3. 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.
4. 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___
2
