CREDIT MANAGEMENT SOLUTIONS INC, S-8, 1997-10-03

CREDIT MANAGEMENT SOLUTIONS INC
S-8, 1997-10-03
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1
As filed with the Securities and Exchange Commission on October 3, 1997
Registration No.333-____________
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933

CREDIT MANAGEMENT SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 52-1549401
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

5950 SYMPHONY WOODS ROAD
COLUMBIA, MARYLAND 21044
(410) 740-1000
(Address of principal executive offices) (Zip Code)
----------------
CREDIT MANAGEMENT SOLUTIONS, INC.
1997 STOCK INCENTIVE PLAN
(Full title of the Plan)
----------------
JAMES R. DEFRANCESCO
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
CREDIT MANAGEMENT SOLUTIONS, INC.
5950 SYMPHONY WOODS ROAD
COLUMBIA, MARYLAND 21044

(Name and address, including zip code, of agent for service)
(410) 740-1000
(Phone number, including area code, of agent for service)

----------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(3) Fee(3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 STOCK INCENTIVE PLAN

Options to purchase Common Stock 3,400,000 N/A N/A N/A

Common Stock, $0.01 par value 3,400,000 shares $18.125 $11,781,250 $3,570
=========================================================================================================================
</TABLE>

(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1997 Stock Incentive Plan by
reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the outstanding shares of Common
Stock of Credit Management Solutions, Inc.

(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of Common Stock of Credit Management
Solutions, Inc. on September 30, 1997, as reported by the Nasdaq National
Market.

(3) Under General Instruction E, the Registration Fee is calculated solely on
the basis of the additional 650,000 shares of Common Stock authorized for
issuance under the 1997 Stock Incentive Plan. The applicable filing fees
have been paid for the remaining 2,750,000 shares in connection with their
registration on Registrant's Form S-8 Registration Statement, File Number
333-25969.

<PAGE> 2
PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference

Credit Management Solutions, Inc. (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"SEC"):

(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, filed with the SEC on March 31, 1996;

(b) The Registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997, filed with the SEC on May
15, 1997 and August 15, 1997, respectively; and

(c) The Registrant's Registration Statement No. 00-21735 on Form 8-A
filed with the SEC on November 15, 1996 pursuant to Section 12 of
the 1934 Act in which there is described the terms, rights and
provisions applicable to the Registrant's outstanding Common Stock.

All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4. Description of Securities

Not Applicable.

Item 5. Interests of Named Experts and Counsel

Not Applicable.

Item 6. Indemnification of Directors and Officers

The Registrant's Certificate of Incorporation, together with its
Bylaws, provide that the Registrant shall indemnify officers and directors, and
may indemnify other employees and agents, to the fullest extent permitted by
law. The laws of the State of Delaware permit, and in some cases require,
corporations to indemnify officers, directors, agents and employees who are or
have been a party to or are threatened to be made a party to litigation against
judgments, fines, settlements and reasonable expenses under certain
circumstances.

The Registrant's Certificate of Incorporation also limits the liability
of directors and officers to the fullest extent permitted by law. Under the
Registrant's Certificate of Incorporation, as permitted by the laws of the State
of Delaware, a director or officer will not be liable to the Registrant or its
stockholders for damages for breach of fiduciary duty. Such limitation of
liability does not affect liability for (i) breach of a director's duty of
loyalty to the corporation or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (iii) any transaction from which the director derived an improper personal
benefit, or (iv) the payment of any unlawful distribution.

II-1.
<PAGE> 3
The Registrant has also purchased a general liability insurance policy
that covers certain liabilities of directors and officers arising out of claims
based on acts or omissions in their capacity as directors and officers.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "1933 Act") may be permitted to directors, officers or
controlling persons of the Corporation pursuant to the foregoing provisions,
Registrant has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
1933 Act and is therefore unenforceable.

Item 7. Exemption from Registration Claimed

Not Applicable.

Item 8. Exhibits

<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4 Instruments Defining the Rights of Stockholders. Reference
is made to the Registrant's Registration Statement No.
00-21735 on Form 8-A which is incorporated herein by
reference pursuant to Item 3(c) of this Registration
Statement.
5 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Credit Management Solutions, Inc. 1997 Stock Incentive Plan.
99.2 Notice of Grant.
99.3 Stock Option Agreement.
99.4 Addendum to Stock Option Agreement (LSAR's).
99.5 Addendum to Stock Option Agreement (Corporate
Transaction/Change in Control).
99.6 Stock Issuance Agreement.
99.7 Addendum to Stock Issuance Agreement (Corporate
Transaction/Change in Control).
99.8 Notice of Grant of Non-Employee Director Automatic Stock
Option.
99.9 Automatic Stock Option Agreement.
99.10 Director Fee Option Grant Election.
99.11 Notice of Grant under Director Fee Option Grant Program.
99.12 Director Fee Stock Option Agreement.
</TABLE>

Item 9. Undertakings

A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1997
Stock Incentive Plan.

II-2.

<PAGE> 4
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

II-3.

<PAGE> 5
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbia, State of Maryland on this 2nd day of
October, 1997.

CREDIT MANAGEMENT SOLUTIONS, INC.

By: /s/ JAMES R. DEFRANCESCO
--------------------------------------------------
James R. DeFrancesco
President, Chief Executive Officer and Chairman of
of the Board (Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned officers and directors of Credit Management
Solutions, Inc., a Delaware corporation, do hereby constitute and appoint James
R. DeFrancesco the lawful attorney-in-fact and agent with full power and
authority to do any and all acts and things and to execute any and all
instruments which said attorney and agent determine may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms that the said attorney and agent shall
do or cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----

<S> <C> <C>
/s/ James R. DeFrancesco President, Chief Executive Officer October 2, 1997
- ------------------------------- and Chairman of the Board
James R. DeFrancesco (Principal Executive Officer)

/s/ Robert P. Vollono Senior Vice President, Treasurer, October 2, 1997
- ------------------------------- Chief Financial Officer and Director
Robert P. Vollono (Principal Financial and Accounting Officer)
</TABLE>

II-4.
<PAGE> 6
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>

/s/ Scott L. Freiman Executive Vice President and Director October 2, 1997
- -------------------------------
Scott L. Freiman

/s/ Miles H. Grody Senior Vice President, Secretary, October 2, 1997
- ------------------------------- General Counsel and Director
Miles H. Grody

/s/ Stephen X. Graham Director October 2, 1997
- -------------------------------
Stephen X. Graham

/s/ John J. McDonnell Director October 2, 1997
- -------------------------------
John J. McDonnell, Jr.

/s/ Peter M. Leger Director October 2, 1997
- -------------------------------
Peter M. Leger
</TABLE>

II-5.
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

EXHIBITS

FORM S-8

UNDER

SECURITIES ACT OF 1933

CREDIT MANAGEMENT SOLUTIONS, INC.

II-1.
<PAGE> 8
EXHIBIT INDEX

<PAGE> 1
EXHIBIT 5

Opinion and Consent of Brobeck, Phleger & Harrison LLP

October 2, 1997

Credit Management Solutions, Inc.
5950 Symphony Woods Road
Columbia, Maryland 21044

Re: Registration Statement for Offering of
3,400,000 Shares of Common Stock

Ladies and Gentlemen:

We refer to your registration statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 3,400,000 shares of
Common Stock under the 1997 Stock Incentive Plan (the "Plan"). We advise you
that, in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Plan and in accordance with the Registration
Statement, such shares will be duly authorized, validly issued, fully paid and
non-assessable shares of the Company's Common Stock.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------------
BROBECK, PHLEGER & HARRISON LLP

<PAGE> 1
Exhibit 23.1

Consent of Ernst & Young LLP, Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-_____) pertaining to the Credit Management Solutions, Inc. 1997
Stock Incentive Plan of our report dated January 24, 1997, with respect to the
consolidated financial statements of Credit Management Solutions, Inc. included
in it's Annual Report (Form 10-K) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Baltimore, Maryland
October 1, 1997

<PAGE> 1
EXHIBIT 99.1

CREDIT MANAGEMENT SOLUTIONS, INC.
1997 STOCK INCENTIVE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1997 Stock Incentive Plan is intended to promote the
interests of Credit Management Solutions, Inc., a Delaware corporation, by
providing eligible persons with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into five separate equity
programs:

(i) the Discretionary Option Grant
Program under which eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common
Stock,

(ii) the Salary Investment Option Grant
Program under which eligible employees may elect to have a portion of
their base salary invested each year in options to purchase shares of
Common Stock,

(iii) the Stock Issuance Program under
which eligible persons may, at the discretion of the Plan
Administrator, be issued shares of Common Stock directly, either
through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary),

(iv) the Automatic Option Grant Program
under which Eligible Directors shall automatically receive option
grants at periodic intervals to purchase shares of Common Stock, and
<PAGE> 2
(v) the Director Fee Option Grant
Program under which non-employee Board members may elect to have all or any
portion of their annual retainer fee otherwise payable in cash applied to a
special option grant.

B. The provisions of Articles One and Seven shall apply
to all equity programs under the Plan and shall accordingly govern the
interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Primary Committee shall have sole and exclusive
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders and shall have sole and exclusive
authority to administer the Salary Investment Option Grant Program with respect
to all eligible individuals.

B. Administration of the Discretionary Option Grant and
Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power
to administer those programs with respect to all such persons.

C. Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time. The Board may also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

D. Each Plan Administrator shall, within the scope of
its administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant and Stock Issuance Programs
and to make such determinations under, and issue such interpretations of, the
provisions of such programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any option or stock issuance thereunder.

E. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

F. Administration of the Automatic Option Grant and
Director Fee Option Grant Programs shall be self-executing in accordance with
the terms of those programs, and no

2.
<PAGE> 3
Plan Administrator shall exercise any discretionary functions with respect to
option grants made under those programs.

IV. ELIGIBILITY

A. The persons eligible to participate in the
Discretionary Option Grant and Stock Issuance Programs are as follows:

(i) Employees,

(ii) non-employee members of the Board or
the board of directors of any Parent or Subsidiary, and

(iii) consultants and other independent
advisors who provide services to the Corporation (or any Parent or
Subsidiary).

B. Only Employees who are Section 16 Insiders or other
highly compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.

C. Each Plan Administrator shall, within the scope of
its administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine, (i) with respect to the option grants
under the Discretionary Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of the
granted option as either an Incentive Option or a Non-Statutory Option, the
time or times at which each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares and the maximum term for
which the option is to remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to
receive stock issuances, the time or times when such issuances are to be made,
the number of shares to be issued to each Participant, the vesting schedule (if
any) applicable to the issued shares and the consideration to be paid for such
shares.

D. The Plan Administrator shall have the absolute
discretion either to grant options in accordance with the Discretionary Option
Grant Program or to effect stock issuances in accordance with the Stock
Issuance Program.

E. The individuals eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
are serving as non-employee Board members on the Underwriting Date, (ii) those
individuals who first become non-employee Board members on or after the
Underwriting Date, whether through appointment by the Board or election by the
Corporation's stockholders, and (iii) those individuals who are to continue to
serve as non-employee Board members after one or more Annual Stockholders
Meetings held after the Underwriting Date. A non-employee Board member who has
previously been in the employ of the Corporation (or any Parent or Subsidiary)
shall not be eligible to receive an initial option

3.
<PAGE> 4
grant under the Automatic Option Grant Program on the Underwriting Date or (if
later) at the time he or she first becomes a non-employee Board member, but
such individual shall be eligible to receive periodic option grants under the
Automatic Option Grant Program upon his or her continued service as a
non-employee Board member after one or more Annual Stockholders Meetings.

F. All non-employee Board members shall be eligible to
participate in the Director Fee Option Grant Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock initially reserved for issuance over the term of the
Plan shall not exceed 3,400,000 shares. Such authorized share reserve is the
number of shares which remain available for issuance, as of the Plan Effective
Date, under the Predecessor Plans as last approved by the Corporation's
shareholders, including the shares subject to the outstanding options to be
incorporated into the Plan and the additional shares which would otherwise be
available for future grant.

B. The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the first trading day
of each fiscal year during the term of the Plan, beginning with the 1998 fiscal
year, by an amount equal to one percent (1%) of the shares of Common Stock
outstanding on the last trading day of the immediately preceding fiscal year.
No Incentive Options may be granted on the basis of the additional shares of
Common Stock resulting from such annual increases.

C. No one person participating in the Plan may receive
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 100,000 shares of Common Stock per calendar year
beginning with the 1997 calendar year.

D. Shares of Common Stock subject to outstanding options
shall be available for subsequent issuance under the Plan to the extent (i) the
options expire or terminate for any reason prior to exercise in full or (ii)
the options are cancelled in accordance with the cancellation-regrant
provisions of Article Two. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the original issue price paid
per share pursuant to the Corporation's repurchase rights under the Plan shall
be added back to the number of shares of Common Stock reserved for issuance
under the Plan and shall accordingly be available for reissuance through one or
more subsequent option grants or direct stock issuances under the Plan.
However, should the exercise price of an option under the Plan be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option or the
vesting of a stock issuance under the Plan, then the number of shares of

4.
<PAGE> 5
Common Stock available for issuance under the Plan shall be reduced by the
gross number of shares for which the option is exercised or which vest under
the stock issuance, and not by the net number of shares of Common Stock issued
to the holder of such option or stock issuance.

E. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
for which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances per calendar year, (iii) the
number and/or class of securities for which automatic option grants are to be
made subsequently per Eligible Director under the Automatic Option Grant
Program and (iv) the number and/or class of securities and the exercise price
per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.

5.
<PAGE> 6
ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the
Plan applicable to such options.

A. Exercise Price.

1. The exercise price per share shall not be
less than eighty-five percent (85%) of the Fair Market Value per share of
Common Stock on the option grant date unless otherwise determined by the Plan
Administrator.

2. The exercise price shall become immediately
due upon exercise of the option and shall, subject to the provisions of Section
I of Article Seven and the documents evidencing the option, be payable in one
or more of the forms specified below:

(i) cash or check made payable to the
Corporation,

(ii) in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date, or

(iii) to the extent the option is
exercised for vested shares, through a special sale and remittance
procedure pursuant to which the Optionee shall concurrently provide
irrevocable written instructions to (a) a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (b) the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

6.
<PAGE> 7
B. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in
excess of ten (10) years measured from the option grant date.

C. Effect of Termination of Service.

1. The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of
Service or death:

(i) Any option outstanding at the time
of the Optionee's cessation of Service for any reason shall remain
exercisable for such period of time thereafter as shall be determined
by the Plan Administrator and set forth in the documents evidencing
the option, but no such option shall be exercisable after the
expiration of the option term. If such period is not specified in the
documents evidencing the option, then the option shall remain
exercisable for a period of ninety (90) days following the Optionee's
cessation of Service.

(ii) Any option exercisable in whole or
in part by the Optionee at the time of death may be exercised
subsequently by the personal representative of the Optionee's estate
or by the person or persons to whom the option is transferred pursuant
to the Optionee's will or in accordance with the laws of descent and
distribution.

(iii) During the applicable post-Service
exercise period, the option may not be exercised in the aggregate for
more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service. Upon
the expiration of the applicable exercise period or (if earlier) upon
the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has
not been exercised. However, the option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be outstanding
to the extent the option is not otherwise at that time exercisable for
vested shares.

(iv) Should the Optionee's Service be
terminated for Misconduct, then all outstanding options held by the
Optionee shall terminate immediately and cease to be outstanding.

2. The Plan Administrator shall have the
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:

(i) extend the period of time for which
the option is to remain exercisable following the Optionee's cessation
of Service from the period otherwise in effect for that option to such
greater period of time as the Plan

7.
<PAGE> 8
Administrator shall deem appropriate, but in no event beyond the
expiration of the option term, and/or

(ii) permit the option to be exercised,
during the applicable post-Service exercise period, not only with
respect to the number of vested shares of Common Stock for which such
option is exercisable at the time of the Optionee's cessation of
Service but also with respect to one or more additional installments
in which the Optionee would have vested under the option had the
Optionee continued in Service.

D. Stockholder Rights. The holder of an option shall
have no stockholder rights with respect to the shares subject to the option
until such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

E. Repurchase Rights. The Plan Administrator shall have
the discretion to grant options which are exercisable for unvested shares of
Common Stock. Should the Optionee cease Service while holding such unvested
shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.

F. Limited Transferability of Options. During the
lifetime of the Optionee, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Optionee's death. However,
a Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established
exclusively for the benefit of one or more such family members. The assigned
portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Five shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section
II.

A. Eligibility. Incentive Options may only be granted
to Employees.

8.
<PAGE> 9
B. Exercise Price. The exercise price per share shall
not be less than one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the option grant date.

C. Dollar Limitation. The aggregate Fair Market Value
of the shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any Employee under the Plan (or
any other option plan of the Corporation or any Parent or Subsidiary) may for
the first time become exercisable as Incentive Options during any one (1)
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are granted.

D. 10% Stockholder. If any Employee to whom an
Incentive Option is granted is a 10% Stockholder, then the exercise price per
share shall not be less than one hundred ten percent (110%) of the Fair Market
Value per share of Common Stock on the option grant date, and the option term
shall not exceed five (5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each
outstanding option shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. However, an outstanding option shall NOT
so accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation (or
parent thereof) or to be replaced with a comparable option to purchase shares
of the capital stock of the successor corporation (or parent thereof), (ii)
such option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.

B. All outstanding repurchase rights shall also
terminate automatically, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

9.
<PAGE> 10
C. Notwithstanding Section III.A. and Section III.B. of
this Article Two, the Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Corporate Transaction,
whether or not those options are to be assumed or replaced (or those repurchase
rights are to be assigned) in the Corporate Transaction. The Plan
Administrator shall also have the discretion to grant options which do not
accelerate whether or not such options are assumed (and to provide for
repurchase rights that do not terminate whether or not such rights are
assigned) in connection with a Corporate Transaction.

D. Immediately following the consummation of the
Corporate Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

E. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction, (ii) the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same and (iii) the maximum number
of securities and/or class of securities for which any one person may be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan.

F. The Plan Administrator shall have the discretion,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of any options
which are assumed or replaced in a Corporate Transaction and do not otherwise
accelerate at that time (and the termination of any of the Corporation's
outstanding repurchase rights which do not otherwise terminate at the time of
the Corporate Transaction) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of such Corporate Transaction. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1)-year period measured from
the effective date of the Involuntary Termination.

G. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of
one or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of
Common Stock subject to those rights) upon the occurrence of a Change in
Control or (ii) condition any such option acceleration (and the termination of
any outstanding repurchase rights) upon the

10.
<PAGE> 11
subsequent Involuntary Termination of the Optionee's Service within a
designated period (not to exceed eighteen (18) months) following the effective
date of such Change in Control. Any options accelerated in connection with a
Change in Control shall remain fully exercisable until the expiration or sooner
termination of the option term.

H. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent
such dollar limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Non-Statutory Option under the Federal tax laws.

I. The grant of options under the Discretionary Option
Grant Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option
holders, the cancellation of any or all outstanding options under the
Discretionary Option Grant Program and to grant in substitution new options
covering the same or different number of shares of Common Stock but with an
exercise price per share based on the Fair Market Value per share of Common
Stock on the new grant date.

V. STOCK APPRECIATION RIGHTS

A. The Plan Administrator shall have full power and
authority to grant to selected Optionees tandem stock appreciation rights
and/or limited stock appreciation rights.

B. The following terms shall govern the grant and
exercise of tandem stock appreciation rights:

(i) One or more Optionees may be granted
the right, exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option for
shares of Common Stock and the surrender of that option in exchange
for a distribution from the Corporation in an amount equal to the
excess of (a) the Fair Market Value (on the option surrender date) of
the number of shares in which the Optionee is at the time vested under
the surrendered option (or surrendered portion thereof) over (b) the
aggregate exercise price payable for such shares.

(ii) No such option surrender shall be
effective unless it is approved by the Plan Administrator, either at
the time of the actual option

11.
<PAGE> 12
surrender or at any earlier time. If the surrender is so approved,
then the distribution to which the Optionee shall be entitled may be
made in shares of Common Stock valued at Fair Market Value on the
option surrender date, in cash, or partly in shares and partly in
cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

(iii) If the surrender of an option is
rejected by the Plan Administrator, then the Optionee shall retain
whatever rights the Optionee had under the surrendered option (or
surrendered portion thereof) on the option surrender date and may
exercise such rights at any time prior to the later of (a) five (5)
business days after the receipt of the rejection notice or (b) the
last day on which the option is otherwise exercisable in accordance
with the terms of the documents evidencing such option, but in no
event may such rights be exercised more than ten (10) years after the
option grant date.

C. The following terms shall govern the grant and
exercise of limited stock appreciation rights:

(i) One or more Section 16 Insiders may
be granted limited stock appreciation rights with respect to their
outstanding options.

(ii) Upon the occurrence of a Hostile
Take-Over, each such individual holding one or more options with such
a limited stock appreciation right shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile
Take-Over) to surrender each such 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, the 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 each surrendered option (or
surrendered portion thereof) over (b) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within
five (5) days following the option surrender date.

(iii) Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in
connection with such option surrender and cash distribution.

(iv) The balance of the option (if any)
shall continue in full force and effect in accordance with the
documents evidencing such option.

12.
<PAGE> 13
ARTICLE THREE

SALARY INVESTMENT OPTION GRANT PROGRAM

I. OPTION GRANTS

The Primary Committee shall have the sole and exclusive
authority to determine the calendar year or years (if any) for which the Salary
Investment Option Program is to be in effect and to select the Employees
eligible to participate in the Salary Investment Option Grant Program for those
calendar year or years. Each selected Employee who elects to participate in
the Salary Investment Option Grant Program must, prior to the start of each
calendar year of participation, file with the Plan Administrator (or its
designate) an irrevocable authorization directing the Corporation to reduce his
or her base salary for that calendar year by a designated percentage (in
multiples of one percent (1%)). However, the amount of such salary reduction
must be not less than Ten Thousand Dollars ($10,000.00) and must not be more
than Seventy-Five Thousand Dollars ($75,000.00). Each individual who files a
proper salary reduction authorization shall automatically be granted an option
under this Salary Investment Option Grant Program on or before the last trading
day in January of the calendar year for which that salary reduction is to be in
effect.

II. OPTION TERMS

Each option shall be a Non-Statutory Option evidenced by one
or more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below.

A. EXERCISE PRICE.

1. The exercise price per share shall be
thirty-three and one-third percent (33-1/3%) of the Fair Market Value per share
of Common Stock on the option grant date.

2. The exercise price shall become immediately
due upon exercise of the option and shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

B. NUMBER OF OPTION SHARES. The number of shares of
Common Stock subject to the option shall be determined pursuant to the
following formula (rounded down to the nearest whole number):

13.
<PAGE> 14
X = A / (B x 66-2/3%), where

X is the number of option shares,

A is the dollar amount of the Optionee's base salary
reduction for the calendar year, and

B is the Fair Market Value per share of Common Stock
on the option grant date.

C. EXERCISE AND TERM OF OPTIONS. The option shall
become exercisable in a series of twelve (12) successive equal monthly
installments upon the Optionee's completion of each calendar month of Service
in the calendar year for which the salary reduction is in effect. Each option
shall have a maximum term of ten (10) years measured from the option grant
date.

D. EFFECT OF TERMINATION OF SERVICE. Should the
Optionee cease Service for any reason while holding one or more options under
this Article Three, then each such option shall remain exercisable, for any or
all of the shares for which the option is exercisable at the time of such
cessation of Service, until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Service. Should the Optionee die
while holding one or more options under this Article Three, then each such
option may be exercised, for any or all of the shares for which the option is
exercisable at the time of the Optionee's cessation of Service (less any shares
subsequently purchased by the Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. Such right of exercise shall lapse, and the
option shall terminate, upon the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the three (3)-year period measured from the date
of the Optionee's cessation of Service. However, the option shall, immediately
upon the Optionee's cessation of Service for any reason, terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.

III . CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction while the
Optionee remains in Service, each outstanding option held by such Optionee
under this Salary Investment Option Grant Program shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of the Corporate Transaction, become fully exercisable for all of the
shares of Common Stock at the time subject to such option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. Each
such outstanding option shall be assumed by the successor corporation (or
parent thereof) in the Corporate Transaction and shall remain exercisable for
the fully-vested shares until the earlier of (i) the expiration of the option
term or (ii) the expiration of the three (3)-year period measured from the date
of Optionee's cessation of Service.

14.
<PAGE> 15
B. In the event of a Change in Control while the
Optionee remains in Service, each outstanding option held by such Optionee
under this Salary Investment Option Grant Program shall automatically
accelerate so that each such option shall immediately become fully exercisable
for all of the shares of Common Stock at the time subject to such option and
may be exercised for any or all of such shares as fully-vested shares of Common
Stock. The option shall remain so exercisable until the earlier of (i) the
expiration of the option term or (ii) the expiration of the three (3)-year
period measured from the date of Optionee's cessation of Service.

C. The grant of options under the Salary Investment
Option Grant Program shall in no way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

III. REMAINING TERMS

The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.

15.
<PAGE> 16
ARTICLE FOUR

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.

A. PURCHASE PRICE.

1. The purchase price per share shall be fixed
by the Plan Administrator, but shall not be less than eighty-five percent (85%)
of the Fair Market Value per share of Common Stock on the issuance date.

2. Subject to the provisions of Section I of
Article Seven, shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the
Corporation (or any Parent or Subsidiary).

B. VESTING PROVISIONS.

1. Shares of Common Stock issued under the Stock
Issuance Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement.

2. Any new, substituted or additional securities
or other property (including money paid other than as a regular cash dividend)
which the Participant may have the right to receive with respect to the
Participant's unvested shares of Common Stock by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the

16.
<PAGE> 17
Participant's unvested shares of Common Stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.

3. The Participant shall have full shareholder
rights with respect to any shares of Common Stock issued to the Participant
under the Stock Issuance Program, whether or not the Participant's interest in
those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock issued under
the Stock Issuance Program or should the performance objectives not be attained
with respect to one or more such unvested shares of Common Stock, then those
shares shall be immediately surrendered to the Corporation for cancellation,
and the Participant shall have no further shareholder rights with respect to
those shares. To the extent the surrendered shares were previously issued to
the Participant for consideration paid in cash or cash equivalent (including
the Participant's purchase-money indebtedness), the Corporation shall repay to
the Participant the cash consideration paid for the surrendered shares and
shall cancel the unpaid principal balance of any outstanding purchase- money
note of the Participant attributable to the surrendered shares.

5. The Plan Administrator may in its discretion
waive the surrender and cancellation of one or more unvested shares of Common
Stock which would otherwise occur upon the cessation of the Participant's
Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant's
interest in the shares as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. All of the Corporation's outstanding
repurchase/cancellation rights under the Stock Issuance Program shall terminate
automatically, and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent (i) those repurchase/cancellation rights are
to be assigned to the successor corporation (or parent thereof) in connection
with such Corporate Transaction or (ii) such accelerated vesting is precluded
by other limitations imposed in the Stock Issuance Agreement.

B. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or any
time while the Corporation's repurchase/cancellation rights remain outstanding
under the Stock Issuance Program, to provide that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock
subject to those terminated rights shall immediately vest, in the event the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any

17.
<PAGE> 18
Corporate Transaction in which those repurchase/cancellation rights are
assigned to the successor corporation (or parent thereof).

C. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or any
time while the Corporation's repurchase/cancellation rights remain outstanding
under the Stock Issuance Program, to provide that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock
subject to those terminated rights shall immediately vest, upon the occurrence
of a Change in Control or condition any such termination of the
repurchase/cancellation rights upon the subsequent Involuntary Termination of
the Participant's Service within a designated period (not to exceed eighteen
(18) months) following the effective date of such Change in Control.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.

18.
<PAGE> 19
ARTICLE FIVE

AUTOMATIC OPTION GRANT PROGRAM

I. OPTION TERMS

A. GRANT DATES. Option grants shall be made on the
dates specified below:

1. Each individual who is first elected or
appointed as a non-employee Board member on or after the date of the 1997
Annual Stockholders Meeting shall automatically be granted, on the date of such
initial election or appointment, a Non-Statutory Option to purchase 5,000
shares of Common Stock.

2. Each individual who continues to serve as an
Eligible Director, shall automatically be granted, each year (beginning with
1997) on the anniversary of the date such individual first joined the Board, a
Non-Statutory Option to purchase an additional 5,000 shares of Common Stock.
There shall be no limit on the number of such 5,000-share option grants any one
Eligible Director may receive over his or her period of Board service.

B. EXERCISE PRICE.

1. The exercise price per share shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

2. The exercise price shall be payable in one or
more of the alternative forms authorized under the Discretionary Option Grant
Program. Except to the extent the sale and remittance procedure specified
thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

C. OPTION TERM. Each option shall have a term of ten
(10) years measured from the option grant date.

D. EXERCISE AND VESTING OF OPTIONS. Each option shall
become exercisable with respect to fifty percent (50%) of the option shares
upon completion of six (6) months of Board service measured from the option
grant date and with respect to the balance of the shares in a series of six (6)
successive equal monthly installments over the Optionee's completion of each
additional month of Board service thereafter.

E. EFFECT OF TERMINATION OF BOARD SERVICE. The
following provisions shall govern the exercise of any options held by the
Optionee at the time the Optionee ceases to serve as a Board member:

19.
<PAGE> 20
(i) The Optionee (or, in the event of Optionee's
death, the personal representative of the Optionee's estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option.

(ii) During the twelve (12)-month exercise period,
the option may not be exercised in the aggregate for more than the
number of vested shares of Common Stock for which the option is
exercisable at the time of the Optionee's cessation of Board service.

(iii) Should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following
such cessation of Board service, be exercised for all or any portion
of those shares as fully-vested shares of Common Stock.

(iv) In no event shall the option remain
exercisable after the expiration of the option term. Upon the
expiration of the twelve (12)-month exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has
not been exercised. However, the option shall, immediately upon the
Optionee's cessation of Board service for any reason other than death
or Permanent Disability, terminate and cease to be outstanding to the
extent the option is not otherwise at that time exercisable for vested
shares.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

A. Each option outstanding at the time of any Corporate
Transaction, to the extent not otherwise fully exercisable, shall automatically
accelerate in full so that each such option shall, immediately prior to the
effective date of the Corporate Transaction, become fully exercisable for all
of the shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock. Immediately following the consummation of the Corporate
Transaction, each automatic option grant shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

B. In connection with any Change in Control, each
outstanding option shall, to the extent not otherwise fully exercisable,
automatically accelerate in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become fully exercisable
for all of the shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of those shares as fully-vested shares
of Common Stock. Each

20.
<PAGE> 21
such option shall remain exercisable for such fully-vested option shares until
the expiration or sooner termination of the option term or the surrender of the
option in connection with a Hostile Take-Over.

C. Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the
Corporation each of his or her outstanding automatic option grants. The
Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to each surrendered option (whether
or not the option is otherwise at the time exercisable for those shares) over
(ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. No approval or consent of the Board or any Plan
Administrator shall be required in connection with such option surrender and
cash distribution.

D. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.

E. The grant of options under the Automatic Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

III. REMAINING TERMS

The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.

21.
<PAGE> 22
ARTICLE SIX

DIRECTOR FEE OPTION GRANT PROGRAM

I. OPTION GRANTS

Each non-employee Board member may elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board to the acquisition of a special option grant under this
Director Fee Option Grant Program. Such election must be filed with the
Corporation's Chief Financial Officer prior to the first day of the calendar
year for which the annual retainer fee which is the subject of that election is
otherwise payable. Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee
Option Grant Program on the first trading day in January in the calendar year
for which the annual retainer fee which is the subject of that election would
otherwise be payable.

II. OPTION TERMS

Each option shall be a Non-Statutory Option governed by the
terms and conditions specified below.

A. EXERCISE PRICE.

1. The exercise price per share shall be equal
to thirty-three and one-third percent (33-1/3%) of the Fair Market Value per
share of Common Stock on the option grant date.

B. NUMBER OF OPTION SHARES. The number of shares of
Common Stock subject to the option shall be determined pursuant to the
following formula (rounded down to the nearest whole number):

X = A / (B x 66-2/3%), where

X is the number of option shares,

A is the portion of the annual retainer fee subject
to the non-employee Board member's election, and

22.
<PAGE> 23
B is the Fair Market Value per share of Common Stock
on the option grant date.

C. EXERCISE AND TERM OF OPTIONS. The option shall
become exercisable for fifty percent (50%) of the option shares upon the
Optionee's completion of the first six (6) months of Board service in the
calendar year for which his or her election under this Director Fee Option
Grant Program is in effect, and the balance of the option shares shall become
exercisable in a series of six (6) successive equal monthly installments upon
the Optionee's completion of each additional month of Board service during that
calendar year. Each option shall have a maximum term of ten (10) years
measured from the option grant date.

D. TERMINATION OF BOARD SERVICE. Should the Optionee
cease Board service for any reason (other than death or Permanent Disability)
while holding one or more options under this Director Fee Option Grant Program,
then each such option shall remain exercisable, for any or all of the shares
for which the option is exercisable at the time of such cessation of Board
service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Board service. However, each option held by the Optionee
under this Director Fee Option Grant Program at the time of his or her
cessation of Board service shall immediately terminate and cease to remain
outstanding with respect to any and all shares of Common Stock for which the
option is not otherwise at that time exercisable.

E. DEATH OR PERMANENT DISABILITY. Should the Optionee's
service as a Board member cease by reason of death or Permanent Disability,
then each option held by such Optionee under this Director Fee Option Grant
Program shall immediately become exercisable for all the shares of Common Stock
at the time subject to that option, and the option may be exercised for any or
all of those shares as fully-vested shares until the earlier of (i) the
expiration of the ten (10)-year option term or (ii) the expiration of the three
(3)-year period measured from the date of such cessation of Board service.

Should the Optionee die after cessation of Board service but
while holding one or more options under this Director Fee Option Grant Program,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's cessation of Board
service (less any shares subsequently purchased by Optionee prior to death), by
the personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution. Such right of exercise
shall lapse, and the option shall terminate, upon the earlier of (i) the
expiration of the ten (10)-year option term or (ii) the three (3)-year period
measured from the date of the Optionee's cessation of Board service.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction while the
Optionee remains a Board member, each outstanding option held by such Optionee
under this Director Fee Option

23.
<PAGE> 24
Grant Program shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. Each such outstanding option
shall be assumed by the successor corporation (or parent thereof) in the
Corporate Transaction and shall remain exercisable for the fully-vested shares
until the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service.

B. In the event of a Change in Control while the
Optionee remains in Service, each outstanding option held by such Optionee
under this Director Fee Option Grant Program shall automatically accelerate so
that each such option shall immediately become fully exercisable with respect
to the total number of shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. The option shall remain so exercisable until the
earlier or (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Service.

C. Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the
Corporation each of his or her outstanding option grants. The Optionee shall
in return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to each surrendered option (whether or not the Optionee is
otherwise at the time vested in those shares) over (ii) the aggregate exercise
price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. No
approval or consent of the Board or any Plan Administrator shall be required in
connection with such option surrender and cash distribution.

D. The grant of options under the Director Fee Option
Grant Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

IV. REMAINING TERMS

The remaining terms of each option granted under this Director
Fee Option Grant Program shall be the same as the terms in effect for option
grants made under the Discretionary Option Grant Program.

24.
<PAGE> 25
ARTICLE SEVEN

MISCELLANEOUS

I. FINANCING

A. The Plan Administrator may permit any Optionee or
Participant to pay the option exercise price under the Discretionary Option
Grant Program or the purchase price for shares issued under the Stock Issuance
Program by delivering a full-recourse, interest bearing promissory note payable
in one or more installments. The terms of any such promissory note (including
the interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. In all events, the maximum credit
available to the Optionee or Participant may not exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased
shares plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

B. The Plan Administrator may, in its discretion,
determine that one or more such promissory notes shall be subject to
forgiveness by the Corporation in whole or in part upon such terms as the Plan
Administrator may deem appropriate.

II. TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of
Common Stock upon the exercise of options or upon the issuance or vesting of
such shares under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

B. The Plan Administrator may, in its discretion,
provide any or all holders of Non-Statutory Options or unvested shares of
Common Stock under the Plan (other than the options granted or the shares
issued under the Automatic Option Grant or Director Fee Option Grant Program)
with the right to use shares of Common Stock in satisfaction of all or part of
the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:

(i) Stock Withholding: The election to
have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option or
the vesting of such shares, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Taxes (not
to exceed one hundred percent (100%)) designated by the holder.

25.
<PAGE> 26
(ii) Stock Delivery: The election to
deliver to the Corporation, at the time the Non-Statutory Option is
exercised or the shares vest, one or more shares of Common Stock
previously acquired by such holder (other than in connection with the
option exercise or share vesting triggering the Taxes) with an
aggregate Fair Market Value equal to the percentage of the Taxes (not
to exceed one hundred percent (100%)) designated by the holder.

III. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan was adopted by the Board on April 9, 1997.
The Plan shall become effective upon stockholder approval of the Plan at the
1997 Annual Stockholders Meeting. If such stockholder approval is not
obtained, the Plan shall terminate.

B. The Plan shall serve as the successor to the
Predecessor Plans, and no further option grants or direct stock issuances shall
be made under the Predecessor Plans after the date of the 1997 Annual
Stockholders Meeting. All options outstanding under the Predecessor Plans on
that date shall be incorporated into the Plan at that time and shall be treated
as outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.

C. The Plan shall terminate upon the earliest of (i)
April 8, 2007, (ii) the date on which all shares available for issuance under
the Plan shall have been issued as fully-vested shares or (iii) the termination
of all outstanding options in connection with a Corporate Transaction. Upon
such Plan termination, all outstanding options and unvested stock issuances
shall continue to have force and effect in accordance with the provisions of
the documents evidencing such options or issuances.

IV. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect any rights and obligations
with respect to options, stock appreciation rights or unvested stock issuances
at the time outstanding under the Plan unless the Optionee or the Participant
consents to such amendment or modification. In addition, amendments to the
Plan shall be subject to approval of the Corporation's stockholders to the
extent required by applicable laws or regulations.

B. Options to purchase shares of Common Stock may be
granted under the Discretionary Option Grant Program and shares of Common Stock
may be issued under the Stock Issuance Program that are in each instance in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs are held

26.
<PAGE> 27
in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess grants or issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation
shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.

V. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

VI. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any
option or stock appreciation right under the Plan and the issuance of any
shares of Common Stock (i) upon the exercise of any option or stock
appreciation right or (ii) under the Stock Issuance Program shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the shares of Common Stock issued
pursuant to it.

B. No shares of Common Stock or other assets shall be
issued or delivered under the Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws and all applicable listing requirements of any stock exchange (or the
Nasdaq National Market, if applicable) on which Common Stock is then listed for
trading.

VII. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining such person) or
of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person's Service at any time for any reason, with or
without cause.

27.
<PAGE> 28
APPENDIX

The following definitions shall be in effect under the Plan:

A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.

B. BOARD shall mean the Corporation's Board of Directors.

C. CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:

(i) 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 1934 Act) 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

(ii) 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 (A) have been Board members continuously since
the beginning of such period or (B) 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 (A) who were still in office at
the time the Board approved such election or nomination.

D. CODE shall mean the Internal Revenue Code of 1986, as amended.

E. COMMON STOCK shall mean the Corporation's common stock.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or

A1.
<PAGE> 29
(ii) the sale, transfer or other disposition of
all or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.

G. CORPORATION shall mean Credit Management Solutions, Inc., a
Delaware corporation, and any corporate successor to all or substantially all
of the assets or voting stock of Credit Management Solutions, Inc. which shall
by appropriate action adopt the Plan.

H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.

I. DIRECTOR FEE OPTION GRANT PROGRAM shall mean the special stock
option grant in effect for non-employee Board members under Article Five of the
Plan.

J. ELIGIBLE DIRECTOR shall mean a non-employee Board member
eligible to participate in the Automatic Option Grant Program in accordance
with the eligibility provisions of Article One.

K. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

L. EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.

M. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on
the Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

(ii) If the Common Stock is at the time listed on
any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

A2.
<PAGE> 30
N. HOSTILE TAKE-OVER shall mean 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 1934 Act) 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.

O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

P. INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:

(i) such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or

(ii) such individual's voluntary resignation
following (A) a change in his or her position with the Corporation
which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary,
fringe benefits and participation in corporate-performance based bonus
or incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual'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 the individual's consent.

Q. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

R. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

S. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

T. OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant, Automatic Option Grant or Director Fee
Option Grant Program.

A3.
<PAGE> 31
U. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

V. PARTICIPANT shall mean any person who is issued shares of
Common Stock under the Stock Issuance Program.

W. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more. However, solely for the purposes of the Automatic
Option Grant and Director Fee Option Grant Programs, Permanent Disability or
Permanently Disabled shall mean the inability of the non-employee Board member
to perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

X. PLAN shall mean the Corporation's 1997 Stock Incentive Plan,
as set forth in this document.

Y. PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.

Z. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders.

AA. SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment grant program in effect under the Plan.

AB. SECONDARY COMMITTEE shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.

AC. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

AD. SERVICE shall mean the performance of services to the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board

A4.
<PAGE> 32

of directors or a consultant or independent advisor, except to the extent
otherwise specifically provided in the documents evidencing the option grant or
stock issuance.

AE. STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.

AF. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into
by the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.

AG. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect
under the Plan.

AH. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

AI. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

AJ. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those
options or the vesting of those shares.

AK. 10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

A5.

<PAGE> 1
EXHIBIT 99.2

CREDIT MANAGEMENT SOLUTIONS, INC.
NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Credit Management
Solutions, Inc. (the "Corporation"):

Optionee:_____________________________________________________
Grant Date:___________________________________________________
Vesting Commencement Date:____________________________________
Exercise Price: $__________________________________ per share
Number of Option Shares:_______________________________ shares
Expiration Date:______________________________________________
Type of Option: ______ Incentive Stock Option
______ Non-Statutory Stock Option

Exercise Schedule: The Option shall become exercisable with
respect to the Option Shares in five (5) successive equal
annual installments upon Optionee's completion of each year of
Service over the five (5) year period measured from the
Vesting Commencement Date. In no event shall the Option
become exercisable for any additional Option Shares after
Optionee's cessation of Service.

Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the Credit Management Solutions,
Inc. 1997 Stock Incentive Plan (the "Plan"). Optionee further agrees to be
bound by the terms of the Plan and the terms of the Option as set forth in the
Stock Option Agreement and any Addenda to such Stock Option Agreement attached
hereto as Exhibit A. A copy of the Plan is available upon request made to the
Corporate Secretary at the Corporation's principal offices.

No Employment or Service Contract. Nothing in this Notice or
in the attached Stock Option Agreement or in the Plan shall confer upon
Optionee any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of
Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason, with or without cause.
<PAGE> 2
Definitions. All capitalized terms in this Notice shall have
the meaning assigned to them in this Notice or in the attached Stock Option
Agreement.

DATED: _________________, 199 ___

CREDIT MANAGEMENT SOLUTIONS, INC.

By: _________________________________

Title: _________________________________

________________________________________
OPTIONEE

Address: _______________________________

_______________________________________

ATTACHMENTS
EXHIBIT A - STOCK OPTION AGREEMENT AND ADDENDA

<PAGE> 3
EXHIBIT A

STOCK OPTION AGREEMENT

<PAGE> 1
EXHIBIT 99.3

CREDIT MANAGEMENT SOLUTIONS, INC.
STOCK OPTION AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining
the services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).

B. Optionee is to render valuable services to the Corporation (or
a Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to
Optionee, as of the Grant Date, an option to purchase up to the number of
Option Shares specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term specified in Paragraph 2
at the Exercise Price.

2. OPTION TERM. This option shall have a maximum term
of ten (10) years measured from the Grant Date and shall accordingly expire at
the close of business on the Expiration Date, unless sooner terminated in
accordance with Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. This option shall be
neither transferable nor assignable by Optionee other than by will or by the
laws of descent and distribution following Optionee's death and may be
exercised, during Optionee's lifetime, only by Optionee. However, if this
option is designated a Non-Statutory Option in the Grant Notice, then this
option may, in connection with the Optionee's estate plan, be assigned in whole
or in part during Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established for the exclusive benefit of one or
more such family members. The assigned portion shall be exercisable only by
the person or persons who acquire a proprietary interest in the option pursuant
to such assignment. The terms applicable to the assigned portion shall be the
same as those in effect for this option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.
<PAGE> 2
4. DATES OF EXERCISE. This option shall become
exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments,
those installments shall accumulate and the option shall remain exercisable for
the accumulated installments until the Expiration Date or sooner termination of
the option term under Paragraph 5 or 6.

5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:

(i) Should Optionee cease to
remain in Service for any reason (other than death, Permanent
Disability or Misconduct) while this option is outstanding, then
Optionee shall have a period of three (3) months (commencing with the
date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any time
after the Expiration Date.

(ii) If Optionee dies while this
option is outstanding, then the personal representative of Optionee's
estate or the person or persons to whom the option is transferred
pursuant to Optionee's will or in accordance with the laws of descent
and distribution shall have the right to exercise this option. Such
right shall lapse, and this option shall cease to be outstanding, upon
the earlier of (A) the expiration of the twelve (12)- month period
measured from the date of Optionee's death or (B) the Expiration Date.

(iii) Should Optionee cease
Service by reason of Permanent Disability while this option is
outstanding, then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service) during which
to exercise this option. In no event shall this option be exercisable
at any time after the Expiration Date.

(iv) During the limited period of
post-Service exercisability, this option may not be exercised in the
aggregate for more than the number of vested Option Shares for which
the option is exercisable at the time of Optionee's cessation of
Service. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and
cease to be outstanding for any vested Option Shares for which the
option has not been exercised. However, this option shall,
immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any Option
Shares in which Optionee is not otherwise at that time vested or for
which this option is not otherwise at that time exercisable.

(v) Should Optionee's Service be
terminated for Misconduct, then this option shall terminate
immediately and cease to remain

2.
<PAGE> 3
outstanding.

6. SPECIAL ACCELERATION OF OPTION.

(a) This option, to the extent outstanding at the
time of a Corporate Transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of the Corporate Transaction, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any
or all of those Option Shares as fully-vested shares of Common Stock. No such
acceleration of this option, however, shall occur if and to the extent: (i)
this option is, in connection with the Corporate Transaction, to be assumed by
the successor corporation (or parent thereof) or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof) or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing on the unvested Option Shares at the time of the Corporate Transaction
(the excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent pay-out in
accordance with the same option exercise/vesting schedule set forth in the
Grant Notice.

(b) Immediately following the Corporate
Transaction, this option shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.

(c) If this option is assumed in connection with
a Corporate Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable to Optionee in consummation of
such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall also be made to
the Exercise Price, provided the aggregate Exercise Price shall remain the
same.

(d) This Agreement shall not in any way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

7. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
total number and/or class of securities subject to this option and (ii) the
Exercise Price in order to reflect such change and thereby preclude a dilution
or enlargement of benefits hereunder.

8. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares until such
person shall have exercised the

3.
<PAGE> 4
option, paid the Exercise Price and become a holder of record of the purchased
shares.

9. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option with respect
to all or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:

(i) Execute and deliver to the
Corporation a Notice of Exercise for the Option Shares for which the
option is exercised.

(ii) Pay the aggregate Exercise
Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to
the Corporation;

(B) a promissory note payable to
the Corporation, but only to the extent authorized by the Plan
Administrator in accordance with Paragraph 13;

(C) shares of Common Stock held by
Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date; or

(D) to the extent the option is
exercised for vested Option Shares, through a special
sale and remittance procedure pursuant to which
Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable
written instructions (I) to a Corporation-designated
brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of
the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise
Price payable for the purchased shares plus all
applicable Federal, state and local income and
employment taxes required to be withheld by the
Corporation by reason of such exercise and (II) to
the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in
order to complete the sale transaction.

Except to the extent the sale and remittance
procedure is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the
option exercise.

4.
<PAGE> 5
(iii) Furnish to the Corporation
appropriate documentation that the person or persons exercising the
option (if other than Optionee) have the right to exercise this
option.

(iv) Make appropriate
arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all Federal, state and
local income and employment tax withholding requirements applicable to
the option exercise.

(b) As soon as practical after the Exercise Date,
the Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.

10. COMPLIANCE WITH LAWS AND REGULATIONS.

(a) The exercise of this option and the issuance
of the Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the
Nasdaq National Market, if applicable) on which the Common Stock may be listed
for trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.

11. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and Optionee, Optionee's assigns and the legal
representatives, heirs and legatees of Optionee's estate.

12. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.

13. FINANCING. The Plan Administrator may, in its
absolute discretion and without any obligation to do so, permit Optionee to pay
the Exercise Price for the purchased

5.
<PAGE> 6
Option Shares by delivering a full-recourse promissory note payable to the
Corporation. The terms of any such promissory note (including the interest
rate, the requirements for collateral and the terms of repayment) shall be
established by the Plan Administrator in its sole discretion.

14. CONSTRUCTION. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the terms of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.

15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Maryland without resort to that State's conflict-of-laws rules.

16. EXCESS SHARES. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to those excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION.
In the event this option is designated an Incentive Option in the Grant Notice,
the following terms and conditions shall also apply to the grant:

(i) This option shall cease to
qualify for favorable tax treatment as an Incentive Option if (and to
the extent) this option is exercised for one or more Option Shares:
(A) more than three (3) months after the date Optionee ceases to be an
Employee for any reason other than death or Permanent Disability or
(B) more than twelve (12) months after the date Optionee ceases to be
an Employee by reason of Permanent Disability.

(ii) No installment under this
option shall qualify for favorable tax treatment as an Incentive
Option if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such
installment first becomes exercisable hereunder would, when added to
the aggregate value (determined as of the respective date or dates of
grant) of the Common Stock or other securities for which this option
or any other Incentive Options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate. Should such One Hundred Thousand Dollar
($100,000) limitation be exceeded in any calendar year, this option
shall nevertheless become exercisable for the excess shares in such
calendar year as a

6.
<PAGE> 7
Non-Statutory Option.

18. Should the exercisability of this option be
accelerated upon a Corporate Transaction, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the
extent the aggregate Fair Market Value (determined at the Grant Date)
of the Common Stock for which this option first becomes exercisable in
the calendar year in which the Corporate Transaction occurs does not,
when added to the aggregate value (determined as of the respective
date or dates of grant) of the Common Stock or other securities for
which this option or one or more other Incentive Options granted to
Optionee prior to the Grant Date (whether under the Plan or any other
option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the applicable
One Hundred Thousand Dollar ($100,000) limitation be exceeded in the
calendar year of such Corporate Transaction, the option may
nevertheless be exercised for the excess shares in such calendar year
as a Non-Statutory Option.

(i) Should Optionee hold, in
addition to this option, one or more other options to purchase Common
Stock which become exercisable for the first time in the same calendar
year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied
on the basis of the order in which such options are granted.

19. LEAVE OF ABSENCE. The following provisions shall
apply upon the Optionee's commencement of an authorized leave of absence:

(i) The exercise schedule in
effect under the Grant Notice shall be frozen as of the first day of
the authorized leave, and this option shall not become exercisable for
any additional installments of the Option Shares during the period
Optionee remains on such leave.

(ii) Should Optionee resume
active Employee status within sixty (60) days after the start date of
the authorized leave, Optionee shall, for purposes of the exercise
schedule set forth in the Grant Notice, receive Service credit for the
entire period of such leave. If Optionee does not resume active
Employee status within such sixty (60)-day period, then no Service
credit shall be given for the period of such leave.

(iii) If the option is designated
as an Incentive Option in the Grant Notice, then the following
additional provision shall apply:

(A) If the leave of absence
continues for more than three (3) months, then this option
shall automatically convert to a

7.
<PAGE> 8
Non-Statutory Option under the Federal tax laws at the end of
such three (3)-month period, unless the Optionee's
reemployment rights are guaranteed by statute or by written
agreement. Following any such conversion of the option, all
subsequent exercises of such option, whether effected before
or after Optionee's return to active Employee status, shall
result in an immediate taxable event, and the Corporation
shall be required to collect from Optionee the Federal, state
and local income and employment withholding taxes applicable
to such exercise.

(iv) In no event shall this
option become exercisable for any additional Option Shares or
otherwise remain outstanding if Optionee does not resume Employee
status prior to the Expiration Date of the option term.

8.
<PAGE> 9
EXHIBIT I
NOTICE OF EXERCISE

I hereby notify Credit Management Solutions, Inc. (the
"Corporation") that I elect to purchase ________________ shares of the
Corporation's Common Stock (the "Purchased Shares") at the option exercise
price of $ _________________________ per share (the "Exercise Price") pursuant
to that certain option (the "Option") granted to me under the Corporation's
1997 Stock Incentive Plan on ______________________, 199___.

Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the
Exercise Price.

_________________________, 199__
Date

_______________________________________
Optionee

Address: ______________________________

_______________________________________

Print name in exact manner
it is to appear on the
stock certificate: ________________________________________

Address to which certificate
is to be sent, if different
from address above: ________________________________________

________________________________________

Social Security Number: ________________________________________

Employee Number: ________________________________________

<PAGE> 10
APPENDIX

The following definitions shall be in effect under the
Agreement:

A. AGREEMENT shall mean this Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

F. CORPORATION shall mean Credit Management Solutions, Inc., a
Delaware corporation.

G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

H. EXERCISE DATE shall mean the date on which the option shall
have been exercised in accordance with Paragraph 9 of the Agreement.

I. EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.

J. EXPIRATION DATE shall mean the date on which the option
expires as specified in the Grant Notice.

K. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of

A-1.
<PAGE> 11
Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date
for which such quotation exists.

(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

L. GRANT DATE shall mean the date of grant of the option as
specified in the Grant Notice.

M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

N. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

O. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by Optionee
adversely affecting the business or affairs of the Corporation (or any Parent
or Subsidiary) in a material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or
discharge of Optionee or any other individual in the Service of the Corporation
(or any Parent or Subsidiary).

P. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

Q. NOTICE OF EXERCISE shall mean the notice of exercise in the
form attached hereto as Exhibit I.

R. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.

A-2.
<PAGE> 12
S. OPTIONEE shall mean the person to whom the option is granted
as specified in the Grant Notice.

T. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

U. PERMANENT DISABILITY shall mean the inability of Optionee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.

V. PLAN shall mean the Corporation's 1997 Stock Incentive Plan.

W. PLAN ADMINISTRATOR shall mean either the Board or a committee
of the Board acting in its administrative capacity under the Plan.

X. SERVICE shall mean the Optionee's performance of services for
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.

Y. STOCK EXCHANGE shall mean the American Stock Exchange or the
New York Stock Exchange.

Z. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

A-3.

<PAGE> 1
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 (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.

INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION/CHANGE IN CONTROL

1. To the extent the Option is, in connection with a
Corporate Transaction, to be assumed by the successor entity (or its parent
company), 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.
<PAGE> 2
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 target bonus under 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.

5. The provisions of Paragraph 1 of this Addendum shall
govern the period

2.
<PAGE> 3
for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) 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, 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__

<PAGE> 1
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
<PAGE> 2
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.

2.
<PAGE> 3
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__

<PAGE> 1
EXHIBIT 99.6

CREDIT MANAGEMENT SOLUTIONS, INC.

STOCK ISSUANCE AGREEMENT

AGREEMENT made this _____ day of ___________________ 19____,
by and between Credit Management Solutions, Inc., a Delaware corporation, and
__________________________________________________, a Participant in the
Corporation's 1997 Stock Incentive Plan.

All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.

A. PURCHASE OF SHARES

1. PURCHASE. Participant hereby purchases _____________
shares of Common Stock (the "Purchased Shares") pursuant to the provisions of
the Stock Issuance Program at the purchase price of $______ per share (the
"Purchase Price").

2. PAYMENT. Concurrently with the delivery of this
Agreement to the Corporation, Participant shall pay the Purchase Price for the
Purchased Shares in cash or check payable to the Corporation and shall deliver
a duly-executed blank Assignment Separate from Certificate (in the form
attached hereto as Exhibit I) with respect to the Purchased Shares.

3. STOCKHOLDER RIGHTS. Until such time as the
Corporation exercises the Repurchase Right, Participant (or any successor in
interest) shall have all the rights of a stockholder (including voting,
dividend and liquidation rights) with respect to the Purchased Shares, subject,
however, to the transfer restrictions of this Agreement.

4. ESCROW. The Corporation shall have the right to hold
the Purchased Shares in escrow until those shares have vested in accordance
with the Vesting Schedule.

5. COMPLIANCE WITH LAW. Under no circumstances shall
shares of Common Stock or other assets be issued or delivered to Participant
pursuant to the provisions of this Agreement unless, in the opinion of counsel
for the Corporation or its successors, there shall have been compliance with
all applicable requirements of Federal and state securities laws, all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is at the time listed for
trading and all other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery.

B. TRANSFER RESTRICTIONS

1. RESTRICTION ON TRANSFER. Except for any Permitted
Transfer, Participant shall not transfer, assign, encumber or otherwise dispose
of any of the Purchased Shares which
<PAGE> 2
are subject to the Repurchase Right.

2. RESTRICTIVE LEGEND. The stock certificate for the
Purchased Shares shall be endorsed with the following restrictive legend:

"The shares represented by this certificate are
unvested and subject to certain repurchase rights granted to the
Corporation and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the
terms of a written agreement dated ____________, 199__ between the
Corporation and the registered holder of the shares (or the
predecessor in interest to the shares). A copy of such agreement is
maintained at the Corporation's principal corporate offices."

3. TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of a
Permitted Transfer must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that such person is bound
by the provisions of this Agreement and that the transferred shares are subject
to the Repurchase Right to the same extent such shares would be so subject if
retained by Participant.

C. REPURCHASE RIGHT

1. GRANT. The Corporation is hereby granted the right
(the "Repurchase Right"), exercisable at any time during the ninety (90)-day
period following the date Participant ceases for any reason to remain in
Service, to repurchase at the Purchase Price all or any portion of the
Purchased Shares in which Participant is not, at the time of his or her
cessation of Service, vested in accordance with the Vesting Schedule (such
shares to be hereinafter referred to as the "Unvested Shares").

2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase
Right shall be exercisable by written notice delivered to each Owner of the
Unvested Shares prior to the expiration of the ninety (90)-day exercise period.
The notice shall indicate the number of Unvested Shares to be repurchased and
the date on which the repurchase is to be effected, such date to be not more
than thirty (30) days after the date of such notice. The certificates
representing the Unvested Shares to be repurchased shall be delivered to the
Corporation prior to the close of business on the date specified for the
repurchase. Concurrently with the receipt of such stock certificates, the
Corporation shall pay to Owner, in cash or cash equivalent (including the
cancellation of any purchase-money indebtedness), an amount equal to the
Purchase Price previously paid for the Unvested Shares to be repurchased from
Owner.

3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase
Right shall terminate with respect to any Unvested Shares for which it is not
timely exercised under Paragraph C.2. In addition, the Repurchase Right shall
terminate and cease to be exercisable with respect to any and all Purchased
Shares in which Participant vests in accordance with the following Vesting
Schedule:

2.
<PAGE> 3
Participant shall acquire a vested interest in, and the
Repurchase Right shall lapse with respect to, the Purchased Shares in
a series of five (5) successive equal annual installments upon
Participant's completion of each year of Service over the five
(5)-year period measured from _______________, 199__.

4. RECAPITALIZATION. Any new, substituted or additional
securities or other property (including cash paid other than as a regular cash
dividend) which is by reason of any Recapitalization distributed with respect
to the Purchased Shares shall be immediately subject to the Repurchase Right,
but only to the extent the Purchased Shares are at the time covered by such
right. Appropriate adjustments to reflect such distribution shall be made to
the number and/or class of securities subject to this Agreement and to the
price per share to be paid upon the exercise of the Repurchase Right in order
to reflect the effect of any such Recapitalization upon the Corporation's
capital structure; provided, however, that the aggregate purchase price shall
remain the same.

5. CORPORATE TRANSACTION.

(a) Immediately prior to the consummation of any
Corporate Transaction, the Repurchase Right shall automatically lapse in its
entirety and the Purchased Shares shall vest in full, except to the extent the
Repurchase Right is to be assigned to the successor corporation (or parent
thereof) in connection with the Corporate Transaction.

(b) To the extent the Repurchase Right remains in
effect following a Corporate Transaction, such right shall apply to the new
capital stock or other property (including any cash payments) received in
exchange for the Purchased Shares in consummation of the Corporate Transaction,
but only to the extent the Purchased Shares are at the time covered by such
right. Appropriate adjustments shall be made to the price per share payable
upon exercise of the Repurchase Right to reflect the effect of the Corporate
Transaction upon the Corporation's capital structure; provided, however, that
the aggregate purchase price shall remain the same. The new securities or
other property (including cash payments) issued or distributed with respect to
the Purchased Shares in consummation of the Corporate Transaction shall
immediately be deposited in escrow with the Corporation (or the successor
entity) and shall not be released from escrow until Participant vests in such
securities or other property in accordance with the same Vesting Schedule in
effect for the Purchased Shares.

(c) The Repurchase Right may also be subject to
termination in whole or in part on an accelerated basis, and the Purchased
Shares subject to immediate vesting, in accordance with the terms of any
special Addendum attached to this Agreement.

D. SPECIAL TAX ELECTION

1. SECTION 83(b) ELECTION. Under Code Section 83, the
excess of the fair market value of the Purchased Shares on the date any
forfeiture restrictions applicable to such shares lapse over the Purchase Price
paid for such shares will be reportable as ordinary income

3.
<PAGE> 4
on the lapse date. For this purpose, the term "forfeiture restrictions"
includes the right of the Corporation to repurchase the Purchased Shares
pursuant to the Repurchase Right. Participant may elect under Code Section
83(b) to be taxed at the time the Purchased Shares are acquired, rather than
when and as such Purchased Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Purchased Shares on the date of this Agreement equals the
Purchase Price paid (and thus no tax is payable), the election must be made to
avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS
ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS THAT
FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL
RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS
LAPSE.

2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT
IT IS PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A
TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE
CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

E. GENERAL PROVISIONS

1. ASSIGNMENT. The Corporation may assign the
Repurchase Right to any person or entity selected by the Board, including
(without limitation) one or more stockholders of the Corporation.

2. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement or in the Plan shall confer upon Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Participant) or of Participant, which rights are hereby
expressly reserved by each, to terminate Participant's Service at any time for
any reason, with or without cause.

3. NOTICES. Any notice required to be given under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, registered or certified, postage
prepaid and properly addressed to the party entitled to such notice at the
address indicated below such party's signature line on this Agreement or at
such other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.

4. NO WAIVER. The failure of the Corporation in any
instance to exercise the Repurchase Right shall not constitute a waiver of any
other repurchase rights that may subsequently arise under the provisions of
this Agreement or any other agreement between the Corporation and Participant.
No waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or

4.
<PAGE> 5
different nature.

5. CANCELLATION OF SHARES. If the Corporation shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such
time, the person from whom such shares are to be repurchased shall no longer
have any rights as a holder of such shares (other than the right to receive
payment of such consideration in accordance with this Agreement). Such shares
shall be deemed purchased in accordance with the applicable provisions hereof,
and the Corporation shall be deemed the owner and holder of such shares,
whether or not the certificates therefor have been delivered as required by
this Agreement.

6. PARTICIPANT UNDERTAKING. Participant hereby agrees
to take whatever additional action and execute whatever additional documents
the Corporation may deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on either Participant or
the Purchased Shares pursuant to the provisions of this Agreement.

7. AGREEMENT IS ENTIRE CONTRACT. This Agreement
constitutes the entire contract between the parties hereto with regard to the
subject matter hereof. This Agreement is made pursuant to the provisions of
the Plan and shall in all respects be construed in conformity with the terms of
the Plan.

8. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Maryland without
resort to that State's conflict-of-laws rules.

9. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

10. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and upon Participant, Participant's assigns and
the legal representatives, heirs and legatees of Participant's estate, whether
or not any such person shall have become a party to this Agreement and have
agreed in writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first indicated above.

CREDIT MANAGEMENT SOLUTIONS, INC.

By: ____________________________________

5.
<PAGE> 6
Title: _________________________________

Address: _______________________________

________________________________________
PARTICIPANT

Address: _______________________________

________________________________________

<PAGE> 7
EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED ______________________ hereby sell(s),
assign(s) and transfer(s) unto Credit Management Solutions, Inc. (the
"Corporation"), ___________________(_______) shares of the Common Stock of the
Corporation standing in his or her name on the books of the Corporation
represented by Certificate No. ___________________ herewith and do(es) hereby
irrevocably constitute and appoint ___________________ ___________ Attorney to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises. Dated: ________________, 199__.

Signature ______________________________

INSTRUCTION: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
exercise the Repurchase Right without requiring additional signatures on the
part of Participant.

<PAGE> 8
EXHIBIT II

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:
Address:
Taxpayer Ident. No.:

(2) The property with respect to which the election is being made is
____________ shares of the common stock of Credit Management
Solutions, Inc.

(3) The property was issued on _____________, 199___.

(4) The taxable year in which the election is being made is the calendar
year 199__.

(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of
installments over a five (5)-year period ending on
____________________________________________.

(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $_____________per share.

(7) The amount paid for such property is $____________ per share.

(8) A copy of this statement was furnished to Credit Management Solutions,
Inc. for whom taxpayer rendered the services underlying the transfer
of property.

(9) This statement is executed on ________________________, 199__.

_________________________________ _______________________________________
Spouse (if any) Taxpayer

This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement.
This filing should be made by registered or certified mail, return receipt
requested. Participant must retain two (2) copies of the completed form for
filing with his or her Federal and state tax returns for the current tax year
and an additional copy for his or her records.

<PAGE> 9
APPENDIX

The following definitions shall be in effect under the
Agreement:

A. AGREEMENT shall mean this Stock Issuance Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions:

(i) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or

(ii) the sale, transfer or other
disposition of all or substantially all of the Corporation's assets in
complete liquidation or dissolution of the Corporation.

F. CORPORATION shall mean Credit Management Solutions, Inc., a
Delaware corporation.

G. OWNER shall mean Participant and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Participant.

H. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

I. PARTICIPANT shall mean the person to whom the Purchased Shares
are issued under the Stock Issuance Program.

A-1.
<PAGE> 10
J. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Participant obtains the Corporation's
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Participant's will or the laws of
intestate succession following Participant's death or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares.

K. PLAN shall mean the Corporation's 1997 Stock Incentive Plan.

L. PLAN ADMINISTRATOR shall mean either the Board or a committee
of the Board acting in its administrative capacity under the Plan.

M. PURCHASE PRICE shall have the meaning assigned to such term in
Paragraph A.1.

N. PURCHASED SHARES shall have the meaning assigned to such term
in Paragraph A.1.

O. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.

P. REORGANIZATION shall mean any of the following transactions:

(i) a merger or consolidation in which the
Corporation is not the surviving entity,

(ii) a sale, transfer or other
disposition of all or substantially all of the Corporation's assets,

(iii) a reverse merger in which the
Corporation is the surviving entity but in which the Corporation's
outstanding voting securities are transferred in whole or in part to a
person or persons different from the persons holding those securities
immediately prior to the merger, or

(iv) any transaction effected primarily
to change the state in which the Corporation is incorporated or to
create a holding company structure.

Q. REPURCHASE RIGHT shall mean the right granted to the
Corporation in accordance with Article C.

R. SERVICE shall mean the Participant's performance of services
for the Corporation (or any Parent or Subsidiary) in the capacity of an
employee, subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of performance, a
non-employee member of the board of directors or a consultant.

A-2.
<PAGE> 11
S. STOCK ISSUANCE PROGRAM shall mean the Stock Issuance Program
under the Plan.

T. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

U. VESTING SCHEDULE shall mean the vesting schedule specified in
Paragraph C.3, subject to the acceleration provisions of Paragraph C.5.

V. UNVESTED SHARES shall have the meaning assigned to such term
in Paragraph C.1.

A-3.

<PAGE> 1
EXHIBIT 99.7

ADDENDUM
TO
STOCK ISSUANCE AGREEMENT

The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Issuance Agreement dated 2~ (the
"Issuance Agreement") by and between Credit Management Solutions, Inc. (the
"Corporation") and 1~ ("Participant") evidencing the stock issuance on such
date to Participant 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 such terms in the Issuance Agreement.

INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION/CHANGE IN CONTROL

1. To the extent the Repurchase Right is assigned to the
successor entity (or parent company) in connection with a Corporate
Transaction, no accelerated vesting of the Purchased Shares shall occur upon
such Corporate Transaction, and the Repurchase Right shall continue to remain
in full force and effect in accordance with the provisions of the Issuance
Agreement. The Participant shall, over Participant's period of Service
following the Corporate Transaction, continue to vest in the Purchased Shares
in one or more installments in accordance with the provisions of the Issuance
Agreement.

2. No accelerated vesting of the Purchased Shares shall
occur upon a Change in Control, and the Repurchase Right shall continue to
remain in full force and effect in accordance with the provisions of the
Issuance Agreement. Accordingly, the Participant shall, over Participant's
period of Service following the Change in Control, continue to vest in the
Purchased Shares in one or more installments in accordance with the provisions
of the Issuance Agreement.

3. Immediately upon an Involuntary Termination of
Participant's Service within eighteen (18) months following the Corporate
Transaction or Change in Control, the Repurchase Right shall terminate
automatically and all the Purchased Shares shall vest in full.

4. For purposes of this Addendum, the following
definitions shall be in effect:

An INVOLUNTARY TERMINATION shall mean the termination
of Participant's Service by reason of:

(i) Participant's involuntary dismissal
or discharge by the Corporation for reasons other than Misconduct, or

(ii) Participant's voluntary resignation
following (A) a
<PAGE> 2
change in Participant's position with the Corporation (or Parent or
Subsidiary employing Participant) which materially reduces
Participant's level of responsibility, (B) a reduction in Participant'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
Participant'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 Participant's consent.

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:

(i) 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, or

(ii) 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 (A) have been Board members continuously since
the beginning of such period or (B) 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 (A) who were still in office at
the time such election or nomination was approved by the Board.

MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Participant, any unauthorized use or
disclosure by the Participant of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by the Participant adversely affecting the business or affairs of
the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of the Participant or other person in
the Service of the Corporation (or any Parent or Subsidiary).

IN WITNESS WHEREOF, Credit Management Solutions, Inc. has
caused this Addendum to be executed by its duly-authorized officer as of the
Effective Date specified below.

2.
<PAGE> 3
CREDIT MANAGEMENT SOLUTIONS, INC.

By: ____________________________________

Title: _________________________________

EFFECTIVE DATE: _____________, 199__

<PAGE> 1
EXHIBIT 99.8

CREDIT MANAGEMENT SOLUTIONS, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION

Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Credit Management
Solutions, Inc. (the "Corporation"):

Optionee: ____________________________________________________
Grant Date: __________________________________________________
Exercise Price: $__________________________________ per share
Number of Option Shares: 5,000 shares
Expiration Date: _____________________________________________
Type of Option: Non-Statutory Stock Option

Exercise Schedule: The Option shall become exercisable with
respect to (i) fifty percent (50%) of the Option Shares upon
Optionee's completion of six (6) months of service as a member
of the Corporation's Board of Directors (the "Board") measured
from the Grant Date and (ii) the remaining Option Shares in a
series of six (6) successive equal monthly installments upon
Optionee's completion of each six (6) months of Board service
thereafter. In no event shall any additional Option Shares
vest after Optionee's cessation of Board service.

Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the automatic option grant
program under the Credit Management Solutions, Inc. 1997 Stock Incentive Plan
(the "Plan"). Optionee further agrees to be bound by the terms of the Plan and
the terms of the Option as set forth in the Automatic Stock Option Agreement
attached hereto as Exhibit A. A copy of the Plan is available upon request
made to the Corporate Secretary at the Corporation's principal offices.

No Impairment of Rights. Nothing in this Notice or in the
attached Automatic Stock Option Agreement or the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation or the
Corporation's stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
<PAGE> 2
Definitions. All capitalized terms in this Notice shall have
the meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.

DATED: __________________, 199__

CREDIT MANAGEMENT SOLUTIONS, INC.

By: ____________________________________

Title: _________________________________

________________________________
OPTIONEE

Address: _______________________________

________________________________________

ATTACHMENTS
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT

2.
<PAGE> 3
EXHIBIT A

AUTOMATIC STOCK OPTION AGREEMENT

<PAGE> 1
EXHIBIT 99.9

CREDIT MANAGEMENT SOLUTIONS, INC.
AUTOMATIC STOCK OPTION AGREEMENT

RECITALS

A. Credit Management Solutions, Inc. has implemented an automatic
option grant program under the Corporation's 1997 Stock Incentive Plan pursuant
to which eligible non-employee members of the Corporation's Board will
automatically receive special option grants at designated intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as a member of the Board.

B. Optionee is an eligible non-employee Board member, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of a stock option to purchase
shares of the Corporation's Common Stock under the Plan.

C. The granted option is intended to be a non-statutory option which
does not meet the requirements of Section 422 of the Internal Revenue Code.

D. All capitalized terms in this Agreement, to the extent not otherwise
defined in the Agreement, shall have the meaning assigned to them in the
attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to Optionee,
as of the Grant Date, a Non-Statutory Option to purchase up to the number of
Option Shares specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term specified in Paragraph 2 at
the Exercise Price.

2. OPTION TERM. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in accordance
with Paragraph 5, 6 or 7.

<PAGE> 2

4. EXERCISABILITY/VESTING.

(a) This option shall become exercisable in
accordance with the exercise schedule set forth in the Grant Notice.
Exercisability of the option may be accelerated pursuant to the provisions of
Paragraph 5, 6 or 7. In no event, however, shall any additional Option Shares
become exercisable following Optionee's cessation of service as a Board member.

5. CESSATION OF BOARD SERVICE. Should Optionee's service as a
Board member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:

(i) Should Optionee cease to serve as a
Board member for any reason (other than death or Permanent Disability)
while holding this option, then the period for exercising this option
shall be reduced to a twelve (12)-month period commencing with the date
of such cessation of Board service, but in no event shall this option
be exercisable at any time after the Expiration Date. During such
limited period of exercisability, this option may not be exercised in
the aggregate for more than the number of Option Shares (if any) for
which the option is exercisable on the date of Optionee's cessation of
Board service. Upon the earlier of (i) the expiration of such twelve
(12)-month period or (ii) the specified Expiration Date, the option
shall terminate and cease to be exercisable with respect to any such
Option Shares for which the option has not been exercised.

(ii) Should Optionee die during the twelve
(12)-month period following his or her cessation of Board service, then
the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will
or in accordance with the laws of descent and distribution shall have
the right to exercise this option for any or all of the Option Shares
for which the ooption is exercisable at the time of Optionee's
cessation of Board service (less any Option Shares purchased by
Optionee after such cessation of Board service but prior to death).
Such right of exercise shall terminate, and this option shall
accordingly cease to be exercisable for those vested Option Shares,
upon the earlier of (i) the expiration of the twelve (12)-month period
measured from the date of Optionee's cessation of Board service or (ii)
the specified Expiration Date of the option term.

(iii) Should Optionee cease service as a Board
member by reason of death or Permanent Disability, then all Option
Shares at the time subject to this option but not otherwise vested
shall immediately vest in full so that Optionee (or the personal
representative of Optionee's estate or the person or persons to whom
the option is transferred upon Optionee's death) shall have the right
to exercise this option for any or all of the Option Shares as
fully-vested shares of Common Stock at any time prior to the earlier of
(i) the expiration of the twelve (12)-month period measured from the
date of Optionee's cessation of Board service or (ii) the specified
Expiration Date.

<PAGE> 3

(iv) Upon Optionee's cessation of Board service
for any reason other than death or Permanent Disability, this option
shall immediately terminate and cease to be outstanding with respect to
any and all Option Shares for which this option is not otherwise at
that time exercisable in accordance with the normal exercise schedule
set forth in the Grant Notice or the special vesting acceleration
provisions of Paragraph 6 or 7 below.

6. CORPORATE TRANSACTION.

(a) In the event of a Corporate Transaction, all Option
Shares at the time subject to this option but not otherwise fully exercisable
shall automatically vest so that this option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation or its parent company.

(b) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the
Exercise Price, provided the aggregate Exercise Price shall remain the same.

7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.

(a) All Option Shares subject to this option at the time
of a Change in Control but not otherwise fully exercisable shall automatically
accelerate in full so that this option shall, immediately prior to the effective
date of such Change in Control, become fully exercisable for all of the Option
Shares at the time subject to this option and may be exercised for all or any
portion of such shares as fully-vested shares of Common Stock. This option shall
remain exercisable for such fully-vested Option Shares until the earliest to
occur of (i) the specified Expiration Date, (ii) the sooner termination of this
option in accordance with Paragraph 5 or 6 or (iii) the surrender of this option
under Paragraph 7(b).

(b) Optionee shall have an unconditional right
(exercisable during the thirty (30)-day period immediately following the
consummation of a Hostile Take-Over) to surrender this option to the Corporation
in exchange for a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the Option Shares at the time subject
to the surrendered option (whether or not those Option Shares are otherwise at
the time vested) over (ii) the aggregate Exercise Price payable for such shares.
This Paragraph 7(b) 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.

<PAGE> 4

(c) To exercise the Paragraph 7(b) 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 this 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, and neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option surrender and cash distribution. Upon receipt of such cash
distribution, this option shall be cancelled with respect to the shares subject
to the surrendered option (or the surrendered portion), and Optionee shall cease
to have any further right to acquire those Option Shares under this Agreement.
The option shall, however, remain outstanding for the balance of the Option
Shares (if any) in accordance with the terms and provisions of this Agreement,
and the Corporation shall accordingly issue a new stock option agreement
(substantially in the same form as this Agreement) for those remaining Option
Shares.

8. ADJUSTMENT IN OPTION SHARES. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this option and (ii) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder; provided, however, that the aggregate Exercise Price shall
remain the same.

9. STOCKHOLDER RIGHTS. The holder of this option shall not
have any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.

10. MANNER OF EXERCISING OPTION.

(a) In order to exercise this option for all or any
part of the Option Shares for which the option is at the time exercisable,
Optionee or, in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be, must take the
following actions:

(i) Execute and deliver to the Corporatiom
a Notice of Exercise for the Option Shares for which the option is
issued.

(ii) Pay the aggregate Exercise Price for
the purchased shares shall be paid in one or more of the following
alternative forms:

(A) cash or check made payable to the
Corporation's order; or

<PAGE> 5

(B) shares of Common Stock held by
Optionee for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date; or

(C) through a special sale and
remittance procedure pursuant to which Optionee shall provide
irrevocable written instructions (A) to a
Corporationdesignated brokerage firm to effect the immediate
sale of the vested shares purchased under the option and remit
to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
Exercise Price payable for those shares plus the applicable
Federal, state and local income taxes required to be withheld
by the Corporation by reason of such exercise and (B) to the
Corporation to deliver the certificates for the purchased
shares directly to suchbrokerage firm in order to complete the
sale.

(i) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) has the right to exercise this option.

(iv) Make appropriate arrangement must
be made with the Corporation for the satisfaction of all Federal, state
and local income tax withholding requirements applicable to the option
exercise.

(b) Except to the extent the sale and remittance
procedure specified above is utilized in connection with the option exercise,
payment of the Exercise Price for the purchased shares must accompany the
Exercise Notice delivered to the Corporation in connection with the option
exercise.

(c) As soon as practical after the Exercise
Date, the Corporation shall issue to or on behalf of Optionee (or any other
person or persons exercising this option) a certificate or certificates
representing the purchased Option Shares. To the extent any such Option Shares

are unvested, the certificates for
those Option Shares shall be endorsed with an appropriate legend evidencing the
Corporation's repurchase rights and may be held in escrow with the Corporation
until such shares vest.

(d) In no event may this option be exercised for
fractional shares.

11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any
way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the

5.
<PAGE> 6

stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.

12. COMPLIANCE WITH LAWS AND REGULATIONS.

(a) The exercise of this option and the issuance of
the Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to
this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. However, the Corporation shall use its best efforts to
obtain all such applicable approvals.

13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraph 3 or 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.

14. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
evidenced hereby are made and granted pursuant to the automatic option grant
program in effect under the Plan and are in all respects limited by and subject
to the express terms and provisions of that program. The interpretation,
performance, and enforcement of this Agreement shall be governed by the laws of
the State of Maryland without resort to that State's conflict-of-laws rules.

15. NOTICES. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on the
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.

<PAGE> 7

EXHIBIT I

NOTICE OF EXERCISE

I hereby notify Credit Management Solutions, Inc. (the
"Corporation") that I elect to purchase shares of the Corporation's Common Stock
(the "Purchased Shares") at the option exercise price of $ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
pursuant to the automatic option grant program under the Corporation's 1997
Stock Incentive Plan on , 199 .

Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.

__________________________ , 199__
Date __________________________
Optionee

Address: __________________

___________________________

Print name in exact manner
it is to appear on the ____________________________
stock certificate:
Address to which certificate ____________________________
is to be sent, if different
from address above: ____________________________
Social Security Number:

<PAGE> 8

APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Automatic Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

(i) 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 1934 Act) 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

(ii) 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 (A) have
been Board members continuously since the beginning of such period or
(B) 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 (A) who were still in office at the time the Board approved such
election or nomination.

D. CODE shall mean the Internal Revenue Code of 1986, as amended.

E. COMMON STOCK shall mean the Corporation's common stock.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

A-1.

<PAGE> 9

G. CORPORATION shall mean Credit Management Solutions, Inc., a Delaware
corporation.

H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 10 of the Agreement.

I. EXERCISE PRICE shall mean the exercise price payable per share as
specified in the Grant Notice.

J. EXERCISE SCHEDULE shall mean the exercise schedule specified in the
Grant Notice, pursuant to which Optionee will vest in the Option Shares in one
or more installments over his or her period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.

K. EXPIRATION DATE shall mean the date on which the option term expires
as specified in the Grant Notice.

L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.

M. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.

N. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock
Option accompanying this Agreement, pursuant to which Optionee has been informed
of the basic terms of the option evidenced hereby.

A-2.

<PAGE> 10

O. HOSTILE TAKE-OVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than Credit
Management Solutions, Inc. or a person that directly or indirectly controls, is
controlled by, or is under common control with, Credit Management Solutions,
Inc.) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of Credit Management Solutions, Inc.'s outstanding securities
pursuant to a tender or exchange offer made directly to Credit Management
Solutions, Inc.'s stockholders which the Board does not recommend such
stockholders to accept.

P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

R. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.

S. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option.

T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.

U. PERMANENT DISABILITY shall mean the inability of Optionee to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.

V.PLAN shall mean Corporation's 1997 Stock Incentive Plan.

W. STOCK EXCHANGE shall mean the American Stock Exchange or the
New York Stock Exchange.

X. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting the
Hostile Take-Over.

A-3.

<PAGE> 1
EXHIBIT 99.10

CREDIT MANAGEMENT SOLUTIONS, INC.
DIRECTOR FEE OPTION GRANT ELECTION

Pursuant to the Director Fee Option Grant Program in effect
under the Corporation's 1997 Stock Incentive Plan (the "Plan"), I hereby elect
to apply a portion of my annual retainer fee for the 1998 calendar year to the
acquisition of a special option grant to purchase shares of the Corporation's
common stock (the "Common Stock"). The percentage of my retainer fee to be so
applied is as follows:

_______% of the annual retainer fee.

I hereby acknowledge and agree that this election shall be
irrevocable and that the option to be granted pursuant to such election will be
subject to the following terms:

1. The option will be granted on January 2, 1998.

2. The exercise price per share will be equal to
thirty-three and one-third percent (33-1/3%) of the Fair Market Value
per share of Common Stock (the closing selling price per share on the
Nasdaq National Market, as defined in the Plan) on the option grant
date.

3. The number of shares of Common Stock subject to the
option will be determined by dividing (i) the portion of the 1998
retainer fee I have elected to apply to the acquisition of the option
by (ii) sixty-six and two-thirds percent (66- 2/3%) of the fair market
value per share of Common Stock on the option grant date.

4. The option will become exercisable for fifty percent
(50%) of the option shares upon my completion of six (6) months of
Board service in the 1998 calendar year, and the balance of the
option shares will become exercisable in a series of six (6)
successive equal monthly installments upon my completion of each
additional month of Board service through December 31, 1998.

5. The remaining terms of the option will be as set
forth in the Director Fee Option Grant Program in effect under the
Plan.

Signature:________________________________

Dated: _____________________________, 1997

<PAGE> 1
EXHIBIT 99.11

CREDIT MANAGEMENT SOLUTIONS, INC.

DIRECTOR FEE OPTION GRANT PROGRAM
NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the "Option") to
purchase shares of Common Stock of Credit Management Solutions, Inc. (the
"Corporation"):

Optionee:
------------------------------------------------------------

Grant Date:
-----------------------------------

Exercise Price: $ per share
--------------------

Number of Option Shares: shares
---------------

Expiration Date:
------------------------------

Type of Option: Non-Qualified Stock Option

EXERCISE SCHEDULE: The Option shall become exercisable for fifty percent
(50%) of the option shares upon the Optionee's completion of six (6) months
of continued service as a member of the Corporation's Board of Directors
(the "Board") during the 1998 calendar year, and the balance of the option
shares shall become exercisable in a series of six (6) successive equal
monthly installments upon the Optionee's completion of each additional
month of Board service through December 31, 1998. In no event shall the
Option become exercisable for any additional Option Shares after Optionee's
cessation of Board service.

Optionee understands and agrees that the Option is granted subject to and
in accordance with the terms of the Director Fee Option Grant Program under the
Credit Management Solutions, Inc. 1997 Stock Incentive Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of
the Option as set forth in the Director Fee Stock Option Agreement attached
hereto as Exhibit A.

Optionee hereby acknowledges receipt of copy of the official prospectus
for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is
available upon request made to the Corporate Secretary at the Corporation's
principal offices.

<PAGE> 2
NO IMPAIRMENT OF RIGHTS. Nothing in this Notice or in the Plan or in the
attached Director Fee Stock Option Agreement shall interfere with or otherwise
restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.

DEFINITIONS. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Director Fee Stock Option
Agreement.

______________________, 199_
Date

CREDIT MANAGEMENT SOLUTIONS, INC.

By:
-----------------------------

Title:
--------------------------

---------------------------------
OPTIONEE

Address:
------------------------

---------------------------------

ATTACHMENTS
- -----------
Exhibit A - Director Fee Stock Option Agreement
Exhibit B - Plan Summary and Prospectus
<PAGE> 3

EXHIBIT A

DIRECTOR FEE STOCK OPTION AGREEMENT
<PAGE> 4

EXHIBIT B

PLAN SUMMARY AND PROSPECTUS

<PAGE> 1
EXHIBIT 99.12

CREDIT MANAGEMENT SOLUTIONS, INC.
DIRECTOR FEE STOCK OPTION AGREEMENT

RECITALS

A. The Corporation has implemented a special director fee stock
option program under the Plan pursuant to which non-employee Board members may,
by prior irrevocable election, apply all or any portion of the annual retainer
fee otherwise payable to them in cash to the acquisition of a special stock
option grant.

B. Optionee is a non-employee Board member who made the requisite
election to apply a portion of his retainer fee to the acquisition of the
special option, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the grant of such
special option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. GRANT OF OPTION. The Corporation hereby grants to
Optionee, as of the Grant Date, a Non-Qualified Option to purchase up to the
number of Option Shares specified in the Grant Notice. The Option Shares shall
be purchasable from time to time during the option term specified in Paragraph
2 at the Exercise Price.

2. OPTION TERM. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in
accordance with Paragraph 5 or 6.

3. LIMITED TRANSFERABILITY. This option may, in
connection with the Optionee's estate plan, be assigned in whole or in part
during Optionee's lifetime to one or more members of the Optionee's immediate
family or to a trust established for the exclusive benefit of one or more such
family members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Corporation may
deem appropriate. Should the Optionee die while holding this option, then this
option shall be transferred in accordance with Optionee's will or the laws of
descent and distribution.
<PAGE> 2
4. EXERCISABILITY. This option shall become exercisable
for the Option Shares in installments as specified in the Grant Notice. As the
option becomes exercisable for those installments, the installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

5. CESSATION OF BOARD SERVICE. Should Optionee's
service as a Board member cease while this option remains outstanding, then the
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date in accordance with the
following provisions:

(i) Should Optionee cease to serve as a
Board member for any reason (other than death or Permanent Disability) while
holding this option, then the period for exercising this option shall be
reduced to a three (3)-year period (commencing with the date of such cessation
of Board service), but in no event shall this option be exercisable at any time
after the Expiration Date. During such limited exercise period, this option
may not be exercised in the aggregate for more than the number of Option Shares
(if any) for which the option is exercisable on the date of Optionee's
cessation of Board service. Upon the earlier of (A) the expiration of such
three (3)-year period or (B) the specified Expiration Date, the option shall
terminate and cease to be exercisable with respect to any exercisable Option
Shares for which the option has not been exercised.

(ii) Should Optionee cease service as a
Board member by reason of death or Permanent Disability, then this option shall
automatically accelerate and become immediately exercisable for all the Option
Shares at the time subject to this option so that Optionee (or the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred upon Optionee's death) shall have the right to exercise this
option for any or all of those Option Shares as fully-vested shares of Common
Stock. Such right shall lapse upon the earlier of (A) the expiration of the
three (3)-year period measured from the date of Optionee's cessation of Board
service or (B) the specified Expiration Date.

(iii) Upon Optionee's cessation of Board
service for any reason other than death or Permanent Disability, this option
shall immediately terminate and cease to be outstanding with respect to any and
all Option Shares for which the option is not otherwise at that time
exercisable.

(iv) In the event of a Corporate
Transaction or Change in Control, the provisions of Paragraph 6 or Paragraph 7
shall govern the period for which this option is to remain exercisable
following Optionee's cessation of Board service and shall supersede any
provisions to the contrary in this Paragraph 5.

2.
<PAGE> 3
6. CORPORATE TRANSACTION.

(a) This option, to the extent outstanding at the
time of a Corporate Transaction but not otherwise fully exercisable for all the
Option Shares, shall automatically accelerate so that this option shall,
immediately prior to the effective date of such Corporate Transaction, become
exercisable for all the Option Shares at the time subject to this option and
may be exercised for any or all of those Option Shares as fully-vested shares
of Common Stock.

(b) This option shall be assumed by the successor
corporation (or parent thereof) in connection with such Corporate Transaction
and shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.

(c) This option, as so accelerated and assumed,
shall remain exercisable until the earlier of (i) the expiration of the three
(3)-year period measured from the date of Optionee's cessation of Board service
or (ii) the specified Expiration Date.

7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.

(a) All Option Shares subject to this option at
the time of a Change in Control but not otherwise vested shall automatically
vest so that this option shall, immediately prior to the effective date of such
Change in Control, become fully exercisable for all of the Option Shares at the
time subject to this option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. This option shall remain
exercisable for such fully-vested Option Shares until the earliest to occur of
(i) the specified Expiration Date, (ii) the sooner termination of this option
in accordance with Paragraph 5 or 6 or (iii) the surrender of this option under
Paragraph 7(b).

(b) Optionee shall have an unconditional right
(exercisable during the thirty (30)-day period immediately following the
consummation of a Hostile Take-Over) to surrender this option to the
Corporation in exchange for a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the Option Shares at
the time subject to the surrendered option (whether or not those Option Shares
are otherwise at the time vested) over (ii) the aggregate Exercise Price
payable for such shares. This Paragraph 7(b)

3.
<PAGE> 4
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.

(c) To exercise the Paragraph 7(b) 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 this 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, and neither the approval of the
Plan Administrator nor the consent of the Board shall be required in connection
with such option surrender and cash distribution. Upon receipt of such cash
distribution, this option shall be cancelled with respect to the shares subject
to the surrendered option (or the surrendered portion), and Optionee shall
cease to have any further right to acquire those Option Shares under this
Agreement. The option shall, however, remain outstanding for the balance of
the Option Shares (if any) in accordance with the terms and provisions of this
Agreement, and the Corporation shall accordingly issue a new stock option
agreement (substantially in the same form as this Agreement) for those
remaining Option Shares.

8. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares until such
person shall have exercised the option, paid the Exercise Price and become a
holder of record of the purchased shares.

9. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

10. MANNER OF EXERCISING OPTION.

(i) Execute and deliver to the
Corporation a Notice of Exercise for the Option Shares for which the
option is exercised.

(ii) Pay the aggregate Exercise
Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to
the Corporation,

4.
<PAGE> 5
(B) shares of Common Stock held by
Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date, or

(C) through a special sale and
remittance procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall concurrently
provide irrevocable written instructions (I) to a
Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out
of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable Federal, state
and local income taxes required to be withheld by the
Corporation by reason of such exercise and (II) to the
Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete
the sale.

Except to the extent the sale and remittance
procedure is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the Notice of
Exercise.

(iii) Furnish to the Corporation
appropriate documentation that the person or persons exercising the
option (if other than Optionee) have the right to exercise this
option.

(b) As soon after the Exercise Date as practical,
the Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.

11. COMPLIANCE WITH LAWS AND REGULATIONS.

5.
<PAGE> 6
approval shall not have been obtained. The Corporation, however, shall use its
best efforts to obtain all such approvals.

12. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3, the provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.

13. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.

14. CONSTRUCTION. This Agreement and the option
evidenced hereby are made and granted pursuant to the director fee option grant
program in effect under the Plan and are in all respects limited by and subject
to the terms of that program.

15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Maryland without resort to that State's conflict-of-laws rules.

6.
<PAGE> 7
APPENDIX

The following definitions shall be in effect under the Agreement:

A. AGREEMENT shall mean this Director Fee Stock Option Agreement.

B. BOARD shall mean the Corporation's Board of Directors.

C. CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:

(i) 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 1934 Act) 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

(ii) 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 (a) have been Board members continuously since
the beginning of such period or (b) 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 (a) who were still in office at
the time the Board approved such election or nomination.

D. CODE shall mean the Internal Revenue Code of 1986, as amended.

E. COMMON STOCK shall mean the Corporation's common stock.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.

A-1.
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G. CORPORATION shall mean Credit Management Solutions, Inc., a
Delaware corporation.

H. EXERCISE DATE shall mean the date on which the option shall
have been exercised in accordance with Paragraph 10 of the Agreement.

I. EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.

J. EXPIRATION DATE shall mean the date on which the option
expires as specified in the Grant Notice.

K. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there are no selling prices quoted for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange serving as the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions
on such exchange. If there are no selling prices quoted for the
Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.

L. GRANT DATE shall mean the date of grant of the option as
specified in the Grant Notice.

M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
Under Director Fee Option Grant Program accompanying the Agreement, pursuant to
which Optionee has been informed of the basic terms of the option evidenced
hereby.

N. HOSTILE TAKE-OVER shall mean 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 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities

A-2.
<PAGE> 9
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to accept.

O. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

P. NON-QUALIFIED OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

Q. NOTICE OF EXERCISE shall mean the written notice of the option
exercise on the form provided by the Corporation for such purpose.

R. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.

S. OPTIONEE shall mean the person to whom the option is granted
as specified in the Grant Notice.

T. PERMANENT DISABILITY shall mean the inability of Optionee to
perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

U. PLAN shall mean the Corporation's 1997 Stock Incentive Plan.

V. STOCK EXCHANGE shall mean the American Stock Exchange or the
New York Stock Exchange.

A-3.