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EXHIBIT 99.4
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 ISS Group, Inc. (the "Corporation") and
_______ ("Optionee") evidencing the stock option granted on such date to
Optionee under the terms of the Corporation's Restated 1995 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
in tandem with the option, exercisable upon the terms set forth below:
(i) Optionee shall have the unconditional right, exercisable
at any time during the thirty (30)-day period following a Hostile
Take-Over, to surrender the option to the Corporation, to the extent the
option is at the time exercisable for one or more 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 for which the
surrendered option (or surrendered portion) is at the time exercisable
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) days following such delivery date. The
exercise of the limited stock appreciation right in accordance with
terms of this Addendum is hereby approved by the Plan Administrator in
advance of such exercise, and no further approval of the Plan
Administrator 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 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
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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 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 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, ISS Group, 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.
ISS GROUP, INC.
By:
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Title:
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OPTIONEE
EFFECTIVE DATE: , 199
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