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EXHIBIT 10.7
1993 EMPLOYEE INCENTIVE STOCK OPTION PLAN
OF
PROMETRIX CORPORATION
1. PURPOSE OF THE PLAN.
The purposes of the 1993 Employee Incentive Stock Option
Plan(1) (the "Plan") of PROMETRIX CORPORATION, a California corporation (the
"Company") are to:
(a) furnish incentive to employees chosen to receive options
because they are considered capable of responding by improving operations and
increasing profits;
(b) encourage selected employees to accept or continue
employment with the Company or its subsidiaries; and
(c) increase the interest of employees chosen to receive
options in the Company's welfare by encouraging ownership of its Common Stock.
To accomplish the foregoing objectives, the Plan provides a
means whereby employees may receive stock options which qualify as "incentive
stock options" under Section 422(b) ("Section 422(b)") of the Internal Revenue
Code ("Code") as it may be amended from time to time.
2. ELIGIBLE PERSONS.
Every person who at the date of grant is an employee of the
Company or of any affiliate of the Company is eligible to receive an option or
options under the Plan; provided, however, that options may not be granted under
the Plan to any person who owns, directly or indirectly, stock of the Company
possessing more than 10% of the total combined voting power of all classes of
the Company's outstanding stock, or the stock of any affiliate of the Company,
unless (i) the exercise price of options granted to any such person under the
Plan, at the time such option is granted, is equal to at least 110% of the fair
market value of the stock subject to the option, and (ii) any such option is by
its terms not exercisable after the expiration of five years from the date of
grant. The term "affiliate," as used in the Plan, means a parent or subsidiary
corporation of the Company, as defined in the applicable provisions (currently
set forth in Section 424) of the Code. The term "employee" includes an officer
or a director who is an employee.
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(1) Approved by Board of Directors and by Shareholders on March 16, 1993.
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3. STOCK SUBJECT TO THE PLAN.
An aggregate of 400,000 authorized but unissued shares of the
Common Stock of the Company, or such number and class of securities as adjusted
to give effect to the antidilution provisions contained in Section 6(b) hereof,
may be sold upon the exercise of options granted under the Plan. In the event
that any option outstanding under the Plan expires, or is terminated for any
reason, unexercised in whole or in part, prior to the end of the period during
which options may be granted under the Plan, the shares of stock allocable to
the unexercised portion of such option may again be subjected to option under
the Plan.
4. ADMINISTRATION.
The Plan shall be administered by the Board of Directors or,
if established by the Board of Directors, by a committee (the "Committee")
consisting of not less than three persons, all of whom are and shall be
directors of the Company, to be appointed by the Company's Board of Directors.
Committee members shall serve for such term as the Board of Directors may in
each case determine, and shall be subject to removal at any time by the Board of
Directors. Vacancies on the Committee, however caused, may be filled by the
Board of Directors. The Committee may select one of its members as Chairman, and
may hold meetings at such times and places as it may determine. A majority of
the Committee shall constitute a quorum, and acts of the Committee approved at a
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee, shall be valid acts of the Committee. Subject to the
general purposes, terms and conditions of the Plan, and to the direction of the
Board of Directors, the Committee, if there be one, shall have full power to
implement and carry out the Plan in all ways permissible under the applicable
provisions of the Code including, but not limited to, the following: (i) to
construe and interpret the Plan, (ii) to prescribe, amend and rescind rules and
regulations relating to the Plan and (iii) to make all other determinations
necessary or advisable for the administration of the Plan. The Committee, if
there be one, shall submit to the Board of Directors the names of employees to
whom the Committee recommends that an option or options should be granted under
the Plan, the number of shares of stock to be covered by each option and the
terms and conditions of each option. Options shall be granted and optionees
shall be notified of such grant upon approval by the Board of Directors or, if
the Committee is given general or specific authority to do so by the Board of
Directors, to the extent so authorized, upon approval by the Committee without
submission to, and review by, the Board of Directors, except that the Committee
shall not have authority to approve the grant of options to members of the Board
of Directors without approval by the Board of Directors.
5. GRANTING OF OPTIONS.
No options shall be granted under the plan after the
expiration of ten (10) years from the date the Plan is adopted by the Board of
Directors, or the date the Plan is approved by the shareholders, whichever date
is earlier.
Each option shall be evidenced by a written stock option
agreement (the "Stock Option Agreement") executed by the Company and the
employee to whom such option is granted.
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In no event shall an option be granted to any employee
pursuant to the Plan if and to the extent that the aggregate fair market value
(determined at the time the option is granted) of all stock in the Company with
respect to which incentive stock options are exercisable for the first time by
said employee during any calendar year (under the Plan and under any and all
other similar employee incentive stock option plans qualifying under Section
422(b)) exceeds $100,000.
6. TERMS AND CONDITIONS OF OPTIONS.
Each option shall be subject to the following terms and
conditions:
(a) Option Exercise Price. The option exercise price, which
shall be approved by the Board of Directors (or the Committee, if authorized to
do so), shall be determined in accordance with the applicable provisions of the
Code and shall in no event be less than the fair market value of the Company's
capital stock at the time the option is granted. In the absence of an
established market for such stock, the fair market value thereof, for the
purposes of the Plan, shall be determined in good faith by the Committee or the
Board of Directors. If the stock of the Company is regularly quoted by a
recognized securities dealer (but is not reported on the NASDAQ - National
Market System), the fair market value thereof, for the purposes of the Plan,
shall be the mean between the high bid and low asked prices for such stock for
the date the option is granted (or if there are no quoted prices for such date
of grant, then for the last preceding business day on which there were quoted
prices). If the stock of the Company is listed on any stock exchange or is
reported on the NASDAQ - National Market System, the fair market value of such
stock, for the purposes of the Plan, shall be the mean between the highest and
lowest selling prices for such stock as quoted on such exchange or NASDAQ -
National Market System, as the case may be, for the date the option is granted
(or if there are no sales for such date of grant, then for the last preceding
business day on which there were sales).
(b) Adjustments. In the event that the stock of the Company is
changed by reason of any stock split, reverse stock split, recapitalization,
combination, reclassification or other change in the capital structure of the
Company, or converted into or exchanged for other securities as a result of any
merger, consolidation or reorganization, or in the event that the outstanding
number of shares of stock of the Company is increased through payment of a stock
dividend, appropriate proportionate adjustments shall be made in the number and
class of shares of stock subject to the Plan, the number and class of shares of
stock subject to any option outstanding under the Plan, and the exercise price
of any such outstanding option; provided, however, that the Company shall not be
required to issue fractional shares as a result of any such adjustment. Any such
adjustment shall be made upon approval by the Board of Directors, whose
determination shall be conclusive. If there is any other change in the number or
kind of the outstanding shares of stock of the Company, or of any other security
into which such stock shall have been changed or for which it shall have been
exchanged, and if the Board of Directors, in its sole discretion, determines
that such change equitably requires any adjustment in the options then
outstanding under the Plan, such adjustment shall be made in accordance with the
determination of the Board of Directors. No adjustments shall be required by
reason of the issuance or sale by the Company for cash or other consideration of
additional shares of its stock or securities convertible into or exchangeable
for shares of its stock. All adjustments shall be
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made in such a manner that each option which is adjusted will continue to
qualify under Section 422(b) as an "incentive stock option."
(c) Corporate Transactions. New option rights may be
substituted for the option rights granted under the Plan, or the Company's
duties as to options outstanding under the Plan may be assumed, by an employer
corporation other than the Company, or by a parent or subsidiary of such
employer corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved, in such a manner that will allow the then outstanding options to
continue to qualify as "incentive stock options" under Section 422(b) to the
full extent permitted thereby. Notwithstanding the foregoing or the provisions
of paragraph 6(b) hereof, in the event such employer corporation, or parent or
subsidiary of such employer corporation, does not substitute new option rights
for, and substantially equivalent to, the option rights granted hereunder, or
assume the option rights granted hereunder, or if the Company's Board of
Directors determines, in its sole discretion, that option rights outstanding
under the Plan shall not then continue to be outstanding, the option rights
granted hereunder shall terminate and thereupon become null and void (i) upon
dissolution or liquidation of the Company, or similar occurrence, or (ii) upon
any merger, consolidation, acquisition, separation, or similar occurrence, where
the Company will not be a surviving corporation; provided, however, that each
optionee shall be given notice of such dissolution, liquidation, merger,
consolidation, acquisition, separation or similar occurrence, and shall have the
right for a period of at least thirty (30) days after such notice is sent by the
Company, to exercise any exercisable and unexpired option rights granted
hereunder but in any event subject to those time limitations for exercise of
"incentive stock options" provided in Section 422(b) of the Code.
(d) Option Exercise Period. Each option granted under the Plan
shall become exercisable and shall expire on a date or in installments, and
shall contain such other terms as may be determined by the Committee or by the
Board of Directors and as set forth in the Stock Option Agreement, but (i) in no
event shall any option hereunder expire later than ten (10) years from the date
such option is granted, and (ii) all of the rights to purchase shares hereunder
must become exercisable at a rate not less than, and as of a date or dates not
later than, 20% per year commencing one year following the date of the grant
hereof.
(e) Change of Option Period. Except in the case of a
consolidation or merger of the Company into any other corporation, or any other
entity or person, other than a wholly-owned subsidiary, a parent corporation or
as part of a reincorporation, or the case of a reorganization of the Company as
defined in Section 368(a)(1)(B) of the Code or in any other transaction in which
more than fifty percent (50%) of the outstanding stock of the Company is
exchanged (other than a reincorporation) or sold, the Board of Directors or the
Committee may accelerate the earliest date or dates on which outstanding options
(or any installments thereof) are exercisable.
(f) Option Grant Date. The date of grant of an option granted
under the Plan shall be the date as of which the Board of Directors or the
Committee (if the option is granted by the Committee without review by the Board
of Directors) approves the grant. If for any reason, including a unilateral
decision by the Company not to execute an agreement evidencing such option, a
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written Stock Option Agreement evidencing the option is not executed within
sixty (60) days after the date of grant, such option shall be deemed null and
void. No option shall be exercisable until such a Stock Option Agreement is
executed by the Company and the optionee.
(g) Nonassignability of Option Rights. No option granted under
the Plan shall be assignable or otherwise transferable by the optionee except by
will or by the laws of descent and distribution. During the life of an optionee,
an option shall be exercisable only by the optionee.
(h) Payment. Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. Notwithstanding the preceding sentence,
the Board of Directors or the Committee may authorize any one or more of the
following in connection with the grant of any option, and any such payment
rights shall be set forth in the Stock Option Agreement:
(i) acceptance of the optionee's personal promissory note
for all or part of the option price, bearing such interest rate, if any, as
determined by the Board of Directors, which promissory note may be either
secured or unsecured in such manner as the Board of Directors shall approve
(including, without limitation, by a security interest in the shares of the
Company);
(ii) delivery by optionee of Common Stock of the Company
already owned by such optionee for all or part of the option price, provided the
value of such Common Stock (as determined by the Company pursuant to any
reasonable valuation method) is equal on the date of exercise to the option
price, or such portion thereof as the optionee is authorized to pay by delivery
of such stock;
(iii) a loan by the Company to the optionee of all or a
portion of the option price at such interest rate, if any, as determined by the
Board of Directors, and on an unsecured or secured basis as the Board of
Directors shall approve (including, without limitation, by a security interest
in the shares of the Company); and/or
(iv) a guaranty by the Company of a loan to the optionee
by a third party of all or part of the option price (but not more than the
option price), and such guaranty may be on an unsecured or secured basis as the
Board of Directors shall approve (including, without limitation, by a security
interest in the shares of the Company).
(i) Termination of Employment. Option rights granted under the
Plan, to the extent such rights have not then expired or been exercised, shall
terminate and become null and void on the date that an optionee ceases, for any
reason, to be an employee of the Company or any affiliate of the Company, and
shall not be exercisable on or after said date, except that the rights
exercisable upon said date may be exercised within thirty (30) days thereafter
and except further that:
(i) In the event of such a termination of employment due
to the death of the optionee, the personal representatives of the optionee or
any person or persons who acquire any
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such option rights from the optionee by will or the applicable laws of descent
and distribution may, at any time within a period of twelve (12) months after
the death of the optionee, exercise any or all of such option rights to the
extent such option rights were exercisable on the date of the death of the
optionee;
(ii) In the event of such a termination of employment by
reason of the permanent and total disability of the optionee (as defined in
Section 22(e)(3)of the Code), the optionee, or, if the optionee thereafter dies,
the personal representatives of the optionee or any person or persons who
acquired any such option rights from the optionee by will or the applicable laws
of descent and distribution may, at any time within a period of twelve (12)
months after said termination, exercise any or all of such option rights to the
extent such option rights were exercisable on the date of the termination of
employment;
(iii) For Plan purposes, a transfer of an optionee from
the Company to an affiliate or vice versa, or from one affiliate to another, or
leave of absence duly authorized by the Company, shall not be deemed a
termination of employment or a break in continuous employment to the extent that
such transfer or leave of absence is not deemed a termination or break in
continuous employment under the applicable provisions of the Code.
(j) Other Provisions. Each option granted under the Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Plan as may be determined by the Board of Directors or the Committee, and shall
include such provisions and conditions as are necessary to qualify the option
under Section 422(b) as an "incentive stock option."
7. MANNER OF EXERCISE.
An optionee wishing to exercise an option shall give written
notice to the Company at its principal executive office, to the attention of the
Secretary of the Company, accompanied by payment of the exercise price. The date
the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such option was
exercised. As soon as possible after receipt of such written notice, the Company
shall, without payment of stock issue or transfer taxes by the optionee or other
person entitled to exercise, deliver to the optionee or other person a
certificate or certificates for the requisite number of shares of stock. An
optionee or transferee of an option shall not have any privileges as a
shareholder with respect to any stock covered by the option until the date of
issuance of a stock certificate.
8. EMPLOYMENT RELATIONSHIP.
Nothing in the Plan or any option granted thereunder shall
interfere with or limit in any way the right of the Company or of any of its
subsidiaries to terminate any optionee's employment at any time, nor confer upon
any optionee any right to continue in the employ of the Company or any of its
subsidiaries.
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9. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
The Board of Directors may at any time amend, alter, suspend
or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any optionee
under any option theretofore granted, without his or her consent, or which,
without the approval of the shareholders would:
(a) except as is provided in Section 6 of the Plan, increase
the total number of shares of stock reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which options may be
exercised under the Plan; or
(d) change the class of persons eligible to receive options
granted hereunder.
Without limiting the foregoing, the Board of Directors may at any time
or from time to time authorize the Company, with the consent of the respective
optionees, to issue new options in exchange for the surrender and cancellation
of any or all outstanding options.
10. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective upon approval by the Board of
Directors, provided, however, that any option granted prior to approval by
shareholders of the Company holding a majority (or such greater number as may be
required by law or applicable governmental regulations or order) of the shares
of the Company's capital stock entitled to vote shall be subject to, and
conditioned upon, such shareholder approval, and shall not be exercisable until
such approval is obtained. Shareholder approval of the Plan must be obtained
within twelve (12) months before or after the date the Plan is adopted. Options
may be granted and exercised under the Plan only after there has been compliance
with all applicable federal and state securities laws.
11. INFORMATION RIGHTS.
The Company shall furnish and/or make available financial statements to
each optionee under the Plan on an annual basis.
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