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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 dated
___________________ (the "Option Agreement") by and between Credit Management
Solutions, Inc. (the "Corporation") and ______________________ ("Optionee")
evidencing the stock option (the "Option") granted on ___________________ 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:
(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 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.
(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. No further approval of the Plan Administrator shall
be required atthe 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
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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 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.
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.
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IN WITNESS WHEREOF, Credit Management Solutions, Inc. 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.
CREDIT MANAGEMENT SOLUTIONS, INC.
By: ___________________________________
Title: ________________________________
________________________________________
OPTIONEE
EFFECTIVE DATE: _______________, 199__
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