Exhibit 10.6
Valley Financial
Corporation
Incentive Stock Option
Agreement
THIS AGREEMENT is between Valley
Financial Corporation (the “Company”) and Ellis L.
Gutshall (the “Optionee”), and is dated as of
July 5, 2005 (the “Date of Grant”).
The Company hereby grants the
Optionee an option to purchase Shares of the Stock of the Company,
subject to the terms and conditions of this Agreement.
The grant of this option is made
pursuant to the Valley Financial Corporation 2005 Key Employee
Equity Award Plan (the “Plan”), a copy of which has
been provided to the Optionee, receipt of which is hereby
acknowledged. The terms of the Plan are incorporated into this
Agreement by reference. In the case of any inconsistency between
the Plan and this Agreement, the terms of the Plan shall control.
Any term used in this Agreement that is defined in the Plan shall
have the same meaning given to that term in the Plan.
1. Grant of Option . The
Company grants the Optionee an Incentive Stock Option (the
“Option”) to purchase from the Company 10,000
Shares at $ 13.00 per Share (the “Exercise
Price”). The Exercise Price is not less than 100% of the Fair
Market Value per Share on the Date of Grant. The Option is intended
to be a stock option that receives special tax treatment under
Section 422 of the Internal Revenue Code (the
“Code”).
2. Entitlement to Exercise
Option .
(a) The Optionee will become vested
in and entitled to exercise the Option as follows:
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Number of Shares
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Total Vested Shares
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July 5, 2006
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2,000
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2,000
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July 5, 2007
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2,000
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4,000
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July 5, 2008
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2,000
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6,000
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July 5, 2009
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2,000
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8,000
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July 5, 2010
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2,000
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10,000
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This Option shall not vest as to any
Shares if Optionee is not an employee of the Company on the
respective Vesting Date.
(b) Except as otherwise stated in
this paragraph, the Option may be exercised to the extent it is
vested only while the Optionee is employed by the
Company.
(i) If the Optionee retires or
ceases to be employed by the Company for any reason other than his
or her death or Disability and at a time when all or a portion of
this Option was vested and exercisable pursuant to paragraph
(a) above, the Optionee may exercise any or all of his vested
Option within three months after he or she terminates employment.
“Disability” or “Disabled” means a
condition resulting from bodily injury or disease that renders
Optionee unable to perform any and every duty pertaining to
Optionee’s employment with the Company. The Board of
Directors of the Company, in its sole discretion, will determine
whether Optionee is Disabled based on medical evidence and
Optionee’s eligibility for benefits under the long-term
disability plan maintained by the Company, if any. The date the
Board makes this determination will be considered the date of
Disability for purposes of this Agreement.
(ii) If the Optionee terminates
employment because of a Disability, he or she may exercise any or
all of a portion of the vested Option (determined as of the
Optionee’s termination date) within one year after the
Disability termination date.
(iii) If the Optionee dies while he
or she is employed by the Company or within three months after he
or she terminates employment because of a Disability, the
Optionee’s beneficiary may exercise this Option within one
year after the Optionee’s death, but only to the extent the
Option was vested and exercisable immediately before the
Optionee’s death.
(c) The aggregate Fair Market Value
(determined by reference to the Option Price on the Date of Grant)
of the Option shares exercisable by the Optionee for the first time
during a calendar year may not exceed $100,000 (the
“Limitation Amount”). Incentive Stock Options granted
under this agreement and any other incentive stock option
agreements between the Optionee and the Company shall be aggregated
for purposes of the Limitation Amount. The portion of the Option
that fails to become exercisable because of the Limitation Amount
shall be exercisable (to the extent otherwise exercisable) as a
Non-Qualified Stock Option.
(d) In no event may this Option be
exercised after July 5, 2015.
3. Method of Exercise and
Payment .
(a) The Optionee may exercise his
Option by delivering a written notice to the Company in the form
attached as Exhibit A. The exercise date will be (i) in the
case of notice by mail, the date of postmark; or (ii) if
delivered in person, the date of delivery. The notice must be
signed and state the number of Shares the Optionee has elected to
purchase. The Optionee may exercise the Option in whole or in part,
but only with respect to whole Shares.
(b) The exercise notice must be
accompanied by payment of the Exercise Price in full by cash (which
shall include payment by check, bank draft or money order payable
to the C
