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 ENCAD, Inc. (the "Corporation") and
________________________________________ ("Optionee") evidencing the stock
option (the "Option") granted this day to Optionee under the terms of the
Corporation's 1999 Stock Option/Stock Issuance 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:
(a) 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. 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.
(b) 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.
(c) 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:
(a) 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.
(b) 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, ENCAD, Inc. has caused this Addendum
to be executed by its duly-authorized officer.
ENCAD, INC.
By:
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Title:
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EFFECTIVE DATE:
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