Exhibit 10.7
WEBVALLEY, INC.
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE 1999 STOCK OPTION PLAN
This Incentive Stock Option Agreement (the "Agreement") is entered into
by and between WebValley, Inc. (the "Company") and Xxxxxx X. Xxxxxxxx (the
"Employee"), effective the 23rd day of March, 1999.
The Company hereby grants to the Employee an option (the "Option")
under the WebValley, Inc. 1999 Stock Option Plan (the "Plan") to purchase
120,000 shares of the Company's stock ("Stock") under the following terms and
conditions.
1. Incentive Stock Option. The Option shall be an Incentive Stock Option,
as defined in the Plan.
2. Purchase Price. The purchase price of the Stock is $5.00 per share
which is not less than the Fair Market Value of the Stock on the date
of this Agreement.
3. Period of Exercise. The Option will expire on the date (the "Expiration
Date") seven years from the date of this Agreement. The Option may be
exercised only while the Employee is actively employed by the Company
(or a Subsidiary Corporation or Parent Corporation, if any, of the
Company) and as provided in Section 7, relating to termination of
employment.
4. Vesting.
4.1 Vesting Schedule. The Option will vest as follows:
(a) Prior to the earlier of the date on which an initial
public offering of the Company's common stock becomes
effective ("IPO Date") or March 31, 2000, the option
may not be exercised;
(b) From the IPO Date through March 31, 2000, the option
may be exercised for up to 18,000 shares of Stock;
(c) From April 1, 2000 through March 31, 2001, the option
may be exercised for up to 39,000 shares of Stock;
(d) From April 1, 2001 through March 31, 2002, the option
may be exercised for up to an aggregate purchase
pursuant to the Option, including any purchases in
prior periods, of 63,000 shares of Stock;
(e) From April 1, 2002 through March 31, 2003, the option
may be exercised for up to an aggregate purchase
pursuant to the Option, including any purchases in
prior periods, of 90,000 shares of Stock;
(f) From April 1, 2003 through the Expiration Date, the
option may be exercised for up to an aggregate
purchase pursuant to the Option, including any
purchases in prior periods, of 120,000 shares of
Stock.
Notwithstanding the foregoing provisions of this Section 4.1
and subject to the following sentence, the Option granted
hereunder will become fully exercisable and vested in the
event of a "Change in Control." If the Company and the other
party to the transaction constituting a Change in Control
agree that the transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if the
transaction in fact is so treated, then the acceleration of
exercisability will not occur to the extent that the Company's
independent accountants and the other party's independent
accountants each determine in good faith that the acceleration
would preclude the use of "pooling of interests" accounting.
4.2 Definition of "Change In Control". For purposes of Section
4.1, a "Change in Control" means the happening of any of the
following:
(a) The consummation of a merger or consolidation of
the Company with or into another entity or any other
corporate reorganization, if more than 50% of the
combined voting power of the continuing or surviving
entity's securities outstanding immediately after
such merger, consolidation or other reorganization is
owned by persons who were not stockholders of the
Company immediately prior to such merger,
consolidation or other reorganization;
(b) When, during any period of 24 consecutive months
during the existence of the Plan, the individuals
who, at the beginning of such period, constitute the
Board ("Incumbent Directors") cease for any reason
other than death to constitute at least a majority
thereof; provided, however, that a Director who was
not a Director at the beginning of such 24-month
period will be deemed to have satisfied such 24-month
requirement (and be an Incumbent Director) if such
Director was elected by, or on the recommendation or,
or with the approval of, at least 60% of the
Directors who then qualified as Incumbent Directors
either actually (because they were Directors at the
beginning of such 24-month period) or by prior
operation of this Section 4.2(b); or
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(c) The approval by the shareholders of any sale,
lease, exchange, or other transfer (in one
transaction or a series of related transactions) of
all or substantially all of the assets of the Company
or the adoption of any plan or proposal for the
liquidation or dissolution of the Company.
(d) Any transaction as a result of which any person
is the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act of 1934 ("Exchange Act"),
directly or indirectly, of securities of the Company
representing at least 25% of the total voting power
represented by the Company's then outstanding voting
securities. For purposes of this section 4.2(d), the
term "person" shall have the same meaning as when
used in Section 13(d) and 14(d) of the Exchange Act
but excludes (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or of a Parent Corporation or Subsidiary
Corporation; (ii) a corporation owned directly or
indirectly by the shareholders of the Company in
substantially the same proportions as their ownership
of the Stock of the Company; and (iii) any person
having beneficial ownership of at least 25% of the
total voting power represented by the Company's then
outstanding voting securities on the date of the
Option.
5. $100,000 Limitation. Notwithstanding anything to the contrary contained
in this Agreement, to the extent that the total Fair Market Value
(determined as of the date of grant of an option) of shares of Stock
with respect to which the Option and any other incentive stock options
granted by the Company (or any Subsidiary Corporations or Parent
Corporation) becomes exercisable for the first time during any calendar
year exceeds $100,000, such option(s) shall be treated as a
Nonstatutory Option. The preceding sentence shall be applied by taking
options into account in the order in which they were granted.
6. Transferability. The Option is not transferable except by will or the
laws of descent and distribution and may be exercised during the
lifetime of the Employee only by the Employee.
7. Termination of Employment. Except as otherwise agreed to by the Company
or the Employee in writing, in the event that the employment of the
Employee with the Company (and any Parent Corporation or Subsidiary
Corporation is terminated, the Option may be exercised (to the extent
exercisable at the date of termination) by the Employee within three
months after the date of termination; provided, however, that:
(a) If the Employee's employment is terminated because the
Employee is disabled within the meaning of Code ss. 422, the
Employee shall have one
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year rather than three months to exercise the Option (to the
extent exercisable at the date of termination).
(b) If the Employee dies, the Option may be exercised (to the
extent exercisable by the Employee at the date of death) by
the legal representative of the Employee or by a person who
acquired the right to exercise the Option by bequest or
inheritance or by reason of the death of the Employee, but the
Option must be exercised within one year after the date of the
Employee's death.
(c) If the Employee's employment is terminated for cause (as
defined in Section 11.3 of the Plan), the Option and the
Employee's right to exercise the Option shall terminate
immediately.
(d) If the Employee's employment is terminated by the Company on
or before March 31, 2001 for other than cause (as defined in
Section 11.3 of the Plan), notwithstanding the provisions of
Section 4 hereof, the Option shall vest immediately and may be
exercised for up to an aggregate purchase pursuant to the
Option, including any purchases in prior periods, of 60,000
shares of Stock, but must be exercised within three months of
the date of termination.
(e) Notwithstanding the foregoing, in no event (including
disability or death of the Employee) may the Option be
exercised after the Expiration Date.
8. Leaves of Absences. For purposes of this Option, your service does not
terminate when you go on a military leave, a sick leave or another bona
fide leave of absence, if the leave was approved by the Company in
writing. But your service terminates when the approved leave ends,
unless you immediately return to active work. To the extent that your
leave of absence constitutes termination under the regulation of the
Code applicable to Incentive Stock Options, this Option will not
terminate, but will become a Nonstatutory Option.
9. No Guarantee of Employment. This Agreement shall in no way restrict the
right of the Company (or any Parent Corporation or Subsidiary
Corporation) to terminate the Employee's employment at any time.
10. Method of Exercise; Use of Company Stock. The Option may be exercised,
subject to the terms and conditions of this Agreement, by written
notice to the Company. The notice shall be in the form attached to this
Agreement and will be accompanied by payment (in such form as the
Company may specify) of the full purchase price of the shares to be
issued, and in the event of an exercise under the terms of paragraphs
7(a) and 7(b) hereof, appropriate proof of the right to exercise the
Option. The Company will issue and deliver certificates representing
the number of shares purchased under the
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Option, registered in the name of the Employee (or other purchaser
under paragraphs 7(a) and 7(b) hereof) as soon as practicable after
receipt of the notice.
When exercising the Option the Employee may make payment either in
money or by tendering shares of the Company Stock owned by the
Employee, or by a combination of the two. Where shares of Stock are
employed to pay all or part of the purchase price, the shares of Stock
shall be valued at their Fair Market Value at the time of payment.
11. Withholding. In any case where withholding is required or advisable
under federal, state or local law in connection with any exercise by
the Employee hereunder, the Company is authorized to withhold
appropriate amounts from amounts payable to the Employee, or may
require the Employee to remit to the Company an amount equal to such
appropriate amounts.
12. Changes in Capitalization, Dissolution, Liquidation and Reorganization.
The terms of this Agreement are subject to modification upon the
occurrence of certain events as described in Section 14 of the Plan.
13. Market Stand-Off. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as
amended ("Securities Act"), including the Company's initial public
offering, the Employee shall not directly or indirectly sell, make any
short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree
to engage in any of the foregoing transactions with respect to, any
Stock acquired under this Agreement without the prior written consent
of the Company or its underwriters. Such restriction (the "Market
Stand-Off") shall be in effect for such period of time following the
date of the final prospectus for the offering as may be requested by
the Company or such underwriters. In no event, however, shall such
period exceed 180 days. The Market Stand-Off shall in any event
terminate two years after the date of the Company's initial public
offering. In the event of the declaration of a stock dividend, a
spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's
outstanding securities without receipt of consideration, any new,
substituted or additional securities which are by reason of such
transaction distributed with respect to any Stock subject to the Market
Stand-Off, the Company may impose stop-transfer instructions with
respect to such new, substituted or additional securities until the end
of the applicable stand-off period. The Company's underwriters shall be
beneficiaries of the agreement set forth in this Section 12.
14. Incorporation of Plan. This Agreement is made pursuant to the
provisions of the Plan, which Plan is incorporated by reference herein.
Terms used herein shall have the meaning employed in the Plan unless
the context clearly requires otherwise. In the event of a conflict
between the provisions of the Plan and the provisions of this
Agreement, the provisions of the Plan shall govern.
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15. Severability. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.
16. Compliance with the Code. The Option is intended to qualify as an
"incentive stock option" under Code Section 422. If any provision of
this Agreement is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with the Option
being treated as an incentive stock option under the Code.
WEBVALLEY, INC.
By /s/ Xxxxx X. Xxxx
---------------------------------
Xxxxx X. Xxxx
Its President and CEO
EMPLOYEE: Xxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
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WEBVALLEY, INC.
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION ISSUED
UNDER THE 1999 STOCK OPTION PLAN
To: Stock Option Committee
WebValley, Inc.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx XX 00000
I hereby exercise my Option dated March 23, 1999 to purchase _______
shares of $0.01 par value common stock of the Company at the option purchase
price of $5.00 per share. Enclosed is a certified or cashier's check in the
total amount of $_________ , or payment in such other form as the Company has
specified.
I represent to you that I am acquiring said shares for investment
purposes and not with a view to any distribution thereof. I understand that my
Stock certificate may bear an appropriate legend restricting the transfer of my
shares and that a stop transfer order may be placed with the Company's transfer
agent with respect to such shares.
I request that my shares be issued to me as follows:
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(Print your name in the form in which you wish to have the shares registered)
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(Social Security Number)
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(Street and Number)
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(City) (State) (Zip Code)
_____ I intend to hold the stock at least one year. (But, if I do sell within
one year of exercise, I will give the Option Plan Administrator a copy
of the broker's confirmation of the sale as soon as I receive it.)
_____ I intend to sell the stock within one year of exercise, and will give
the Option Plan Administrator a copy of the broker's confirmation of
the sale as soon as I receive it.
Dated:_____________ , ______.
Signature:_____________________________
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