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EXHIBIT 99.7
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 2~ (the
"Option Agreement") by and between TouchStone Software Corporation (the
"Corporation") and 1~ ("Optionee") evidencing the stock option (the "Option")
granted on such date 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.
LIMITED STOCK APPRECIATION RIGHT
1. Optionee is hereby granted a limited stock
appreciation right exercisable upon the following terms and conditions:
- 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 vested 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 which are at the time vested
under the surrendered Option (or surrendered portion) over (B) the aggregate
Exercise Price payable for such shares.
- 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, and neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such 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.
- 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 and the
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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.
2. For purposes of this Addendum, the following
definitions shall be in effect:
- 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 thirty-five percent (35%)
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.
- 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, TouchStone Software Corporation 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.
TOUCHSTONE SOFTWARE CORPORATION
By:
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Title:
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, OPTIONEE
EFFECTIVE DATE: , 199
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