EXHIBIT 99.5
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 SoftNet Systems, Inc. (the "Corporation") and
___________________("Optionee") evidencing the stock option (the "Option")
granted this day to Optionee under the terms of the Corporation's 1998 Stock
Incentive Plan, and such provisions are 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 unconditionaright, exercisable at any time
during the thirty (30)-day period immediately following a Hostile
Take-Over, to surrender the Option to the Corporation. 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 the time
subject to the surrendered option (whether or not the Option is
otherwise at the time exercisable for those shares) 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 pre-approved by the Plan
Administrator in advance of such exercise, and no further approval of
the Plan Administrator or the Board 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 for the balance of the Option Shares (if any) in
accordance with the terms of the Option Agreement, and the Corporation
shall issue a replacement 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 term 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 upon 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, 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.
(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, SoftNet Systems, Inc. has caused this Addendum to be
executed by its duly-authorized officer.
SOFTNET SYSTEMS, INC.
By: _______________________________________
Title:_____________________________________
EFFECTIVE DATE:_____________________________________
