QuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.7    
  


 
 

TENFOLD CORPORATION
  
    1999 STOCK PLAN    
  


        1.    Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional incentive to the Employees and Consultants of the Company and to promote the success of the Company's business. Options
granted under the Plan may be either Incentive Stock Options (as defined under Section 422 of the Code) or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of
an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Stock Purchase Rights may also be granted under the Plan. 


        2.    Definitions. As used herein, the following definitions shall apply: 



	(a)
	"Administrator" means the Board or its Committee appointed pursuant to Section 4 of the Plan.



	(b)
	"Affiliate" means an entity other than a Subsidiary (as defined below) in which the
Company owns an equity interest or which, together with the Company, is under common control of a third person or entity.



	(c)
	"Applicable Laws" means the legal requirements relating to the administration of stock
option and restricted stock purchase plans under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to
time.



	(d)
	"Board" means the Board of Directors of the Company.



	(e)
	"Change of Control" means a sale of all or substantially all of the Company's assets,
or any merger or consolidation of the Company with or into another corporation other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either by the voting securities remaining outstanding or by their being converted into voting securities of the surviving entity)
more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such transaction.



	(f)
	"Code" means the Internal Revenue Code of 1986, as amended.



	(g)
	"Committee" means one or more committees or subcommittees of the Board appointed by the
Board to administer the Plan in accordance with Section 4 below.



	(h)
	"Common Stock" means the Common Stock of the Company.



	(i)
	"Company" means TenFold Corporation, a Delaware corporation.



	(j)
	"Consultant" means any person, including an advisor, who renders services to the
Company or any Parent, Subsidiary or Affiliate and is compensated for such services, and any Director of the Company whether compensated for such services or not.



	(k)
	"Continuous Service Status" means the absence of any interruption or termination of
service as an Employee or Consultant to the Company or a Parent, Subsidiary or Affiliate. Continuous Service Status shall not be considered interrupted in the case of (i) sick leave;
(ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than 90 days, unless reemployment upon
the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the case of transfers between
locations of the 






 


Company
or between the Company, its Parent(s), Subsidiaries, Affiliates or their respective successors. A change in status from an Employee to a Consultant or from a Consultant to an Employee will
not constitute a termination of Continuous Service Status. 



	(l)
	"Corporate Transaction" means a sale of all or substantially all of the Company's
assets, or a merger, consolidation or other capital reorganization of the Company with or into another corporation.



	(m)
	"Director" means a member of the Board.



	(n)
	"Employee" means any person (including, if appropriate, any Named Executive, Officer or
Director) employed by the Company or any Parent, Subsidiary or Affiliate of the Company. The payment by the Company of a director's fee to a Director shall not be sufficient to constitute "employment"
of such Director by the Company.



	(o)
	"Exchange Act" means the Securities Exchange Act of 1934, as amended.



	(p)
	"Fair Market Value" means, as of any date, the value of Common Stock determined as
follows:



	(i)
	If
the Common Stock is listed on any established stock exchange or a national market system including without limitation the National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such system or exchange on the date of determination (or if no trading or bids occurred on the date of determination, on the last trading day prior to the date
of determination), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;



	(ii)
	If
the Common Stock is quoted on the Nasdaq System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock for the date of determination (or if no bids occurred on the date of determination, on the last
trading day prior to the date of determination); or



	(iii)
	In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 









	(q)
	"Incentive Stock Option" means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.



	(r)
	"Listed Security" means any security of the Company that is listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.



	(s)
	"Named Executive" means any individual who, on the last day of the Company's fiscal
year, is the chief executive officer of the Company (or is acting in such capacity) or among the four most highly compensated officers of the Company (other than the chief executive officer). Such
officer status shall be determined pursuant to the executive compensation disclosure rules under the Exchange Act.



	(t)
	"Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive
Stock Option, as designated in the applicable Option Agreement.



	(u)
	"Officer" means a person who is an officer of the Company within the meaning of
Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. 



-2-





 



	(v)
	"Option" means a stock option granted pursuant to the Plan.



	(w)
	"Option Agreement" means a written document, the form(s) of which shall be approved
from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not
limited to, a notice of stock option grant and a form of exercise notice.



	(x)
	"Option Exchange Program" means a program approved by the Administrator whereby
outstanding Options are exchanged for Options with a lower exercise price.



	(y)
	"Optioned Stock" means the Common Stock subject to an Option.



	(z)
	"Optionee" means an Employee or Consultant who receives an Option.



	(aa)
	"Parent" means a "parent corporation," whether now or hereafter existing, as defined
in Section 424(e) of the Code.



	(bb)
	"Participant" means any holder of one or more Options or Stock Purchase Rights, or the
Shares issuable or issued upon exercise of such awards, under the Plan.



	(cc)
	"Plan" means this 1999 Stock Plan.



	(dd)
	"Reporting Person" means an Officer, Director or greater than 10% stockholder of the
Company within the meaning of Rule 16a-2 of the Exchange Act, who is required to file reports pursuant to Rule 16a-3 of the Exchange Act.



	(ee)
	"Restricted Stock" means shares of Common Stock acquired pursuant to a grant of a
Stock Purchase Right under Section 11 below.



	(ff)
	"Restricted Stock Purchase Agreement" means a written document, the form(s) of which
shall be approved from time to time by the Administrator, reflecting the terms of a Stock Purchase Right granted under the Plan and includes any documents attached to such agreement.



	(gg)
	"Rule 16b-3" means Rule 16b-3 promulgated under
the Exchange Act, as amended from time to time, or any successor provision.



	(hh)
	"Share" means a share of the Common Stock, as adjusted in accordance with
Section 14 of the Plan.



	(ii)
	"Stock Exchange" means any stock exchange or consolidated stock price reporting system
on which prices for the Common Stock are quoted at any given time.



	(jj)
	"Stock Purchase Right" means the right to purchase Common Stock pursuant to
Section 11 below.



	(kk)
	"Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as
defined in Section 424(f) of the Code.



	(ll)
	"Ten Percent Holder" means a person who owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary. 




        3.    Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum
aggregate number of shares that may be sold under the Plan is 6,500,000 Shares of Common Stock, plus an annual increase on the first day of each of the Company's fiscal years beginning in 2000, 2001,
2002, 2003 and 2004 equal to the lesser of (i) 1,000,000 Shares, (ii) three percent (3%) of the Shares outstanding on the last day of the immediately preceding fiscal year, or
(iii) such lesser number of Shares as the Board shall determine. The Shares may be authorized, but unissued, or reacquired Common Stock. 


-3-





 



        If
an Option expires or becomes unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that
were subject thereto shall, unless the Plan has been terminated, become available for future grant under the Plan. In addition, any Shares of Common Stock that are retained by the Company upon
exercise of an Option or Stock Purchase Right in order to satisfy the exercise or purchase price for such Option or Stock Purchase Right or any withholding taxes due with respect to such exercise or
purchase shall be treated as not issued and shall continue to be available under the Plan. Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right that the
Company may have shall not be available for future grant under the Plan. 


        4.    Administration of the Plan.



	(a)
	General. The Plan shall be administered by the Board or a Committee, or a combination thereof, as determined by
the Board. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by the Applicable Laws, the Board may authorize one or
more officers (who may (but need not) be Officers) to grant Options or Stock Purchase Rights to Employees and Consultants.



	(b)
	Administration with respect to Reporting Persons. With respect to Options granted to Reporting Persons and
Named Executives, the Plan may (but need not) be administered so as to permit such Options to qualify for the exemption set forth in Rule 16b-3 and to qualify as performance-based
compensation under Section 162(m) of the Code.



	(c)
	Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee
shall continue to serve in its designated capacity until otherwise directed by the Board.
From time to time the Board may increase the size of any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill
vacancies (however caused) and remove all members of a Committee and thereafter directly administer the Plan, all to the extent permitted by the Applicable Laws and, in the case of a Committee
administering the Plan pursuant to Section 4(b) above, to the extent permitted or required by Rule 16b-3 and Section 162(m) of the Code.



	(d)
	Powers of the Administrator. Subject to the provisions of the Plan and in the case of a Committee, the specific
duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:



	(i)
	to
determine the Fair Market Value of the Common Stock, in accordance with Section 2(p) of the Plan;



	(ii)
	to
select the Employees and Consultants to whom Options and Stock Purchase Rights or any combination thereof may from time to time be granted;



	(iii)
	to
determine whether and to what extent Options and Stock Purchase Rights or any combination thereof are granted;



	(iv)
	to
determine the number of Shares of Common Stock to be covered by each such award granted;



	(v)
	to
approve forms of agreement for use under the Plan;



	(vi)
	to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, which terms and conditions include but are not limited to the
exercise or purchase price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option, 






-4-





 



Optioned
Stock, Stock Purchase Right or Restricted Stock, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 



	(vii)
	to
determine whether and under what circumstances an Option may be settled in cash under Section 10(f) instead of Common Stock;



	(viii)
	to
reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the
date the Option was granted and to make any other amendments or adjustments to any Option that the Administrator determines, in its discretion and under the authority granted to it under the Plan, to
be necessary or advisable, provided however that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Optionee shall be made without the prior written
consent of the Optionee;



	(ix)
	to
determine the terms and restrictions applicable to Stock Purchase Rights and the Restricted Stock purchased by exercising such Stock Purchase Rights;



	(x)
	to
initiate an Option Exchange Program;



	(xi)
	to
construe and interpret the terms of the Plan and awards granted under the Plan; and



	(xii)
	in
order to fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options or Stock Purchase Rights to Participants who are foreign nationals or
employed outside of the United States in order to recognize differences in local law, tax policies or customs. 





	(e)
	Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator
shall be final and binding on all Participants. 




        5.    Eligibility.



	(a)
	Recipients of Grants. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees, provided however that Employees of Affiliates shall not be eligible to receive Incentive Stock Options. An Employee or Consultant
who has been granted an Option or Stock Option Right may, if he or she is otherwise eligible, be granted additional Options or Stock Purchase Rights.



	(b)
	Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or
a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares with respect to which Options are exercisable for the first time
by an Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes
of this Section 5(b), Incentive Stock Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of the Shares shall be determined as of the date of grant of such Option.



	(c)
	No Employment Rights. The Plan shall not confer upon any Participant any right with respect to continuation of
employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause. 




        6.    Term of Plan. The Plan shall become effective upon the effective date of the registration
statement on Form S-1 for the initial public offering of the Common Stock. It shall continue in effect for a term of ten (10) years unless sooner terminated under
Section 16 of the Plan. 


-5-





 



        7.    Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided
however that the term shall be no more than ten (10) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case
of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of such Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement. 



        8.    Limitation on Grants to Employees. Subject to adjustment as provided in Section 14 below,
the maximum number of Shares which may be subject to Options and Stock Purchase Rights granted to any one Employee under this Plan for any fiscal year of the Company shall be 1,000,000. 


        9.    Option Exercise Price and Consideration.



	(a)
	Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option
shall be such price as is determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:



	(i)
	In
the case of an Incentive Stock Option



	(A)
	granted
to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of
grant; or



	(B)
	granted
to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 









	(ii)
	In
the case of a Nonstatutory Stock Option



	(A)
	granted
to a person who, at the time of the grant of such Option, is a Named Executive of the Company, the per share Exercise Price shall be no less than 100% of the Fair Market Value
on the date of grant if such Option is intended to qualify as performance-based compensation under Section 162(m) of the Code; or



	(B)
	granted
to any person other than a Named Executive, the per Share exercise price shall be such price as is determined by the Administrator. 









	(iii)
	Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction. 









	(b)
	Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of
(1) cash; (2) check; (3) delivery of Optionee's promissory note with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate
(subject to the provisions of Section 153 of the Delaware General Corporation Law); (4) cancellation of indebtedness; (5) other Shares that (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for more than six months on the date of surrender (or such other period as may be required to avoid a charge to the Company's
earnings) or were not acquired, directly or indirectly, from the Company, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option is exercised; (6) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to
effect exercise of the Option and prompt delivery to the Company of the sale or loan proceeds required to pay the exercise price and any applicable withholding taxes; (7) any combination of the
foregoing methods of payment; or (8) such other consideration and method of payment for the issuance of Shares to 



-6-





 


the
extent permitted under the Applicable Laws. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company and the Administrator may refuse to accept a particular form of consideration at the time of any Option exercise if, in its sole discretion, acceptance of
such form of consideration is not in the best interests of the Company at such time. 





        10.    Exercise of Option.



	(a)
	Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator, consistent with the terms of the Plan, and reflected in the Option Agreement, including vesting requirements and/or performance
criteria with respect to the Company and/or the Optionee. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid
leave of absence; provided however that in the absence of such determination, vesting of Options shall be tolled during any such leave. 




        An
Option may not be exercised for a fraction of a Share. 


        An
Option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and the Company has received full payment for the Shares. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under
Section 9(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 14 of the Plan. 



        Exercise
of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised. 



	(b)
	Termination of Status as an Employee or Consultant. In the event of termination of an Optionee's Continuous
Service Status, such Optionee may, but only within three (3) months (or such other period of time, not less than thirty (30) days, as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of grant of the Option) after the date of such termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that he or she was vested in the Option Shares as of the date of such termination. To the extent that the
Optionee was not vested in the Option Shares as of the date of such termination, or if the Optionee does not exercise the Option to the extent so vested within the time specified above, the Option
shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. No termination shall be deemed to occur and this Section 10(b) shall not apply
if (i) the Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is an Employee who becomes a Consultant.



	(c)
	Disability of Optionee. Notwithstanding Section 10(b) above, in the event of termination of an
Optionee's Continuous Service Status as a result of his or her total and permanent disability (as defined in Section 22(e)(3) of the Code), such Optionee may, but only within twelve 



-7-





 


(12) months
(or such other period of time as is determined by the Administrator, with such determination in the case of an Incentive Stock Option made at the time of grant of the Option) from
the date of such termination (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent he or she was vested
in the Option Shares as of the date of such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of termination, or if the Optionee does not exercise the
Option to the extent so vested within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. 



	(d)
	Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status
since the date of grant of the Option, or within 30 days following termination of the Optionee's Continuous Service Status, the Option may be exercised at any time within twelve
(12) months following the date of death (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement) by such Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the Optionee was vested in the Option Shares as of the date of death or, if earlier, the date of
termination of the Optionee's Continuous Service Status. To the extent that the Optionee was not vested in the Option Shares as of the date of death or termination, as the case may be, or if the
Optionee does not exercise such Option to the extent so vested within the time specified above, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall
revert to the Plan.



	(e)
	Extension of Exercise Period. The Administrator shall have full power and authority to extend the period of
time for which an Option is to remain exercisable following termination of an Optionee's Continuous Service Status from the periods set forth in Sections 10(b), 10(c) and 10(d) above or in the Option
Agreement to such greater time as the Board shall deem appropriate, provided that in no event shall such Option be exercisable later than the date of expiration of the term of such Option as set forth
in the Option Agreement.



	(f)
	Buy-Out Provisions. The Administrator may at any time offer to buy out for a payment in cash or
Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time such offer is made. 




        11.    Stock Purchase Rights.



	(a)
	Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The purchase price of Shares subject to Stock Purchase Rights
shall be as determined by the Administrator. The offer to purchase Shares subject to Stock Purchase Rights shall be accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.



	(b)
	Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall
grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment with the Company for any reason (including death or disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original purchase price paid by the purchaser and may be paid by cash or cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine; 



-8-





 


provided
however that with respect to any Stock Purchase Right granted on any date on which the Common Stock is not a Listed Security to a purchaser who is not an officer, Director or Consultant of
the Company or of any Parent, Subsidiary or Affiliate of the Company, any applicable repurchase option shall lapse at a minimum rate of 20% per year if required by the Applicable Laws. 



	(c)
	Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same
with respect to each purchaser.



	(d)
	Rights as a Stockholder. Once a Stock Purchase Right is exercised, the purchaser shall have the rights
equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan. 




        12.    Taxes.



	(a)
	As
a condition of the exercise of an Option or Stock Purchase Right granted under the Plan, the Participant (or in the case of the Participant's death, the person exercising the
Option or Stock Purchase Right) shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that
may arise in connection with the exercise of Option or Stock Purchase Right and the issuance of Shares. The Company shall not be required to issue any Shares under the Plan until such obligations are
satisfied.



	(b)
	In
the case of an Employee and in the absence of any other arrangement, the Employee shall be deemed to have directed the Company to withhold or collect from his or her compensation
an amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable after the date of an exercise of the Option or Stock Purchase Right.



	(c)
	In
the case of a Participant other than an Employee (or in the case of an Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with respect to
any remaining tax obligations), in the absence of any other arrangement and to the extent permitted under the Applicable Laws, the Participant shall be deemed to have elected to have the Company
withhold from the Shares to be issued upon exercise of the Option or Stock Purchase Right that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, applicable to the exercise. For purposes of this Section, the Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Laws (the "Tax Date").



	(d)
	If
permitted by the Administrator, in its discretion, a Participant may satisfy his or her tax withholding obligations upon exercise of an Option or Stock Purchase Right by
surrendering to the Company Shares that (i) in the case of Shares previously acquired from the Company, have been owned by the Participant for more than six (6) months on the date of
surrender, and (ii) have a Fair Market Value determined as of the applicable Tax Date equal to the minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, applicable to the exercise.



	(e)
	Any
election or deemed election by a Participant to have Shares withheld to satisfy tax withholding obligations under Section 12(c) or (d) above shall be irrevocable as
to the particular Shares as to which the election is made and shall be subject to the consent or 



-9-





 


disapproval
of the Administrator. Any election by a Participant under Section 12(d) above must be made on or prior to the applicable Tax Date. 



	(f)
	In
the event an election to have Shares withheld is made by a Participant and the Tax Date is deferred under Section 83 of the Code because no election is filed under
Section 83(b) of the Code, the Participant shall receive the full number of Shares with respect to which the Option or Stock Purchase Right is exercised but such Participant shall be
unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date. 




        13.    Non-Transferability of Options and Stock Purchase Rights. Options and Stock Purchase
Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution; provided however that the Administrator
may in its discretion grant transferable Nonstatutory Stock Options pursuant to Option Agreements specifying (i) the manner in which such Nonstatutory Stock Options are transferable and
(ii) that any such transfer shall be subject to the Applicable Laws. The designation of a beneficiary by an Optionee will not constitute a
transfer. An Option or Stock Purchase Right may be exercised, during the lifetime of the holder of Option or Stock Purchase Right, only by such holder or a transferee permitted by this
Section 13. 


        14.    Adjustments Upon Changes in Capitalization, Corporate Transactions and Certain Other
Transactions.



	(a)
	Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of
shares of Common Stock covered by each outstanding Option or Stock Purchase Right, the number of Shares set forth in Sections 3(a)(i) and 8 above, and the number of shares of Common Stock that
have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or that have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per Share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of the Common Stock
(including any change in the number of Shares of Common Stock effected in connection with a change of domicile of the Company), or any other increase or decrease in the number of issued Shares of
Common Stock effected without receipt of consideration by the Company; provided however that conversion of any convertible securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares of Common Stock subject to an Option or Stock Purchase Right.



	(b)
	Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each outstanding
Option or Stock Purchase Right shall terminate immediately prior to the consummation of the transaction, unless otherwise provided by the Administrator.



	(c)
	Corporate Transactions; Change of Control. In the event of a Corporate Transaction, each outstanding Option and
Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of such successor corporation (such entity, the
"Successor Corporation"), unless the Successor Corporation does not agree to such assumption or substitution, in which case such Options and Stock
Purchase Rights shall terminate upon consummation of the transaction. Notwithstanding the preceding sentence, in the event of a Change of Control, each 



-10-





 


outstanding
Option and Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by the Successor Corporation, unless the Successor Corporation does not agree to
such assumption or substitution, in which case the vesting of each Option shall accelerate and the Options shall become exercisable in full (including with respect to Shares as to which an Option
would not otherwise be vested and exercisable), and any repurchase right in favor of the Company with respect to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse in
full, prior to consummation of the transaction at such time and on such conditions as the Administrator shall determine. To the extent an Option or Stock Purchase Right is not exercised prior to
consummation of a Change of Control in which the vesting of Options or the lapse of repurchase rights is being
accelerated, such Option or Stock Purchase Right shall terminate upon such consummation and the Administrator shall notify the Optionee or holder of the Stock Purchase Right of such fact at least five
(5) days prior to the date on which the Option or Stock Purchase Right terminates. 





        For
purposes of this Section 14(c), an Option or a Stock Purchase Right shall be considered assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction or a Change of Control, as the case may be, each holder of an Option or Stock Purchase Right would be entitled to receive upon exercise of the Option or
Stock Purchase Right the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the holder of the number of Shares of Common Stock covered by the Option or the Stock Purchase Right at such time (after
giving effect to any adjustments in the number of Shares covered by the Option or Stock Purchase Right as provided for in this Section 14); provided however that if the consideration received
in the transaction is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon
exercise of the Option or Stock Purchase Right to be solely common stock of the Successor Corporation equal to the Fair Market Value of the per Share consideration received by holders of Common Stock
in the transaction. 



	(d)
	Certain Distributions. In the event of any distribution to the Company's stockholders of securities of any
other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Administrator may, in its discretion, appropriately
adjust the price per Share of Common Stock covered by each outstanding Option or Stock Purchase Right to reflect the effect of such distribution. 




        15.    Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the
Administrator; provided however that in the case of an Incentive Stock Option, the grant date shall be the later of the date on which the Administrator makes the determination granting such Incentive
Stock Option or the date of commencement of the Optionee's employment relationship with the Company. Notice of the determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of such grant. 


        16.    Amendment and Termination of the Plan.



	(a)
	Amendment and Termination. The Board may at any time amend, alter, suspend, discontinue or terminate the Plan,
but no amendment, alteration, suspension, discontinuance or termination (other than an adjustment made pursuant to Section 14 above) shall be made that would materially and adversely affect the
rights of any Optionee or holder of Stock Purchase Rights under any outstanding grant, without his or her consent.



	(b)
	Effect of Amendment or Termination. No amendment or termination of the Plan shall materially and adversely
affect Options or Stock Purchase Rights already granted, unless mutually agreed 



-11-





 


otherwise
between the Optionee or holder of the Stock Purchase Rights and the Administrator, which agreement must be in writing and signed by such Optionee or holder and the Company. 





        17.    Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any
agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. 


        As
a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by law. 


        18.    Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 


        19.    Agreements. Options and Stock Purchase Rights shall be evidenced by Option Agreements and
Restricted Stock Purchase Agreements, respectively, in such form(s) as the Administrator shall from time to time approve. 


        20.    Stockholder Approval. If required by the Applicable Laws, continuance of the Plan shall be
subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to
the degree required under the Applicable Laws. 


        21.    Information. Plan participants shall receive Company financial statements at least annually, plus
such other documents if any as are required under applicable law. 


-12-











QuickLinks



EXHIBIT 10.7


TENFOLD CORPORATION 1999 STOCK PLAN