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 PSW Technologies, Inc. (the "Corporation") and
____________________________________________________________ ("Optionee")
evidencing the stock option (the "Option") granted on ___________________ to
Optionee under the terms of the Corporation's 1996 Stock Option/Stock
Issuance 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 or replaced with a comparable option in accordance
with Paragraph 6 of the Option Agreement, 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:
(A) Optionee's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(B) 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
participation in 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:
(A) 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
(B) a change in the composition of the Board over a
period of thirty-six (36) 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.
2.
5. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within twelve (12) months after the Corporate
Transaction or Change in Control and shall supersede any provisions to the
contrary in Paragraph 6 of the Option Agreement.
IN WITNESS WHEREOF, PSW Technologies, 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.
PSW TECHNOLOGIES, INC.
By:
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Title:
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1~, OPTIONEE
EFFECTIVE DATE: _________________, 199___
3.
