Exhibit
10.7


 


INCENTIVE
STOCK OPTION AGREEMENT


 


THIS INCENTIVE STOCK
OPTION AGREEMENT (the “Agreement”) entered into as of July 6, 2004
between IMPACT DIAGNOSTICS, INC., a Utah corporation (the “Company”),
and Stan Yakatan (“Optionee”).


 


RECITALS


 


A.                                   In
accordance with the allotment made by the Board of Directors of the Company or
the Committee of the Board of Directors designated to administer the Plan (the
“Administrators”) and subject to the terms and conditions of the 2004
Stock Incentive Plan of the Company (the “Plan”) the Company has agreed
to grant to the Optionee an option to purchase shares of Common Stock of the
Company, par value $.001 per share (the “Common Stock”) upon the terms
and conditions set forth herein.  This
option is intended to constitute an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),
although the Company makes no representation or warranty as to such
qualification.


 


NOW, THEREFORE, it is
hereby agreed as follows:


 


1.                                       The
Company hereby grants to the Optionee an option to purchase 2,868,254 shares of
Common Stock par value $0.001 per share (the “Common Stock”) at an
exercise price of $0.18 per Share.


 


2.                                       (a)                                  The
term of this option shall be ten (10) years from the date hereof, subject to
earlier termination as provided herein.


 


(b)                                 The
option may be exercised, in whole or in increments, in accordance with the
following schedule, provided, however,
if the Optionee meets the performance targets established by mutual agreement
of the Optionee and the Board of Directors (“Performance Plan”), the
vesting schedule shall be accelerated as provided in the Performance Plan:


 


	
   

  	
  On or
  After

  	
   

  	
  This Option Shall

  be Exercisable as to

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
  Date
  of Grant

  	
   

  	
  20

  	
  %

  
	
  (ii)

  	
  July 6,
  2005

  	
   

  	
  40

  	
  %

  
	
  (iii)

  	
  July 6,
  2006

  	
   

  	
  40

  	
  %

  



 


(c)                                  The
right to purchase shares of Common Stock under this option shall be cumulative,
so that if the full number of shares purchasable in a period shall not be
purchased, the balance may be purchased at any time or from time to time
thereafter, but not after the expiration of the option. Notwithstanding the
foregoing, in no event may a fraction of a share of Common Stock be purchased
under this option.


 
















 


3.                                       This
option shall be exercised by giving written notice to the Company at its then
principal office, Attention: President, stating that the Optionee is exercising
the option hereunder, specifying the number of shares being purchased and
accompanied by payment in full of the aggregate purchase price therefor in cash
or by certified check or in such other manner as the Administrators determine
are consistent with the purposes of the Plan and with applicable laws or
regulations, including, but not limited to, a cashless exercise.


 


4.                                       The
Company may withhold cash and/or shares of Common Stock to be issued to the
Optionee in the amount that the Company determines is necessary to satisfy its
obligation to withhold taxes or other amounts incurred by reason of the grants
exercised or disposition of this option or the disposition of the underlying
shares of Common Stock.  Alternatively,
the Company may require the Optionee to pay the Company such amount and the
Optionee agrees to pay such amount to the Company in cash, promptly upon
demand.


 


5.                                       Notwithstanding
the foregoing, this option shall not be exercisable by the Optionee unless (a)
a Registration Statement under the Securities Act of 1933, as amended (the “Securities
Act”) with respect to the shares of Common Stock to be received upon the
exercise of this option shall be effective and current at the time of exercise
or (b) there is an exemption from registration under the Securities Act for the
issuance of the shares of Common Stock upon such exercise.  The Optionee hereby represents and warrants
to the Company that, unless such a Registration Statement is effective and
current at the time of exercise of this option, the shares of Common Stock to
be issued upon the exercise of this option will be acquired by the Optionee for
his own account, for investment only and not with a view to the resale or
distribution thereof.  In any event, the
Optionee shall notify the Company of any proposed resale of the shares of
Common Stock issued to it upon exercise of this option. Any subsequent resale
or distribution of shares of Common Stock by the Optionee shall be made only
pursuant to (x) a Registration Statement under the Securities Act which is
effective and current with respect to the sale of shares of Common Stock being
sold or (y) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption, the Optionee shall, prior to
any offer of sale or sale of such shares of Common Stock, provide the Company
(unless waived by the Company) with a favorable written opinion of counsel, in
form and substance satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution. Such representations and
warranties shall also be deemed to be made by the Optionee upon each exercise
of this option.  Nothing herein shall be
construed as requiring the Company to register the shares subject to this
option under the Securities Act.


 


6.                                       The
Company may affix appropriate legends upon the certificates for shares of
Common Stock issued upon exercise of this option and may issue such “stop
transfer” instructions to its transfer agent in respect of such shares as it
determines, in its discretion, to be necessary or appropriate to (a) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (b) implement the provisions of this Agreement or any other
agreement between the Company and the Optionee with respect to such shares of
Common Stock, or (c) permit the Company to determine the occurrence of a
“disqualifying disposition,” as described in Section 421(b) of the Code,
of the shares of Common Stock transferred upon the exercise of this option.


 


2
















 


7.                                       Nothing
herein shall confer upon the Optionee any right to continue in the employ of
the Company or interfere in any way with any right of the Company to terminate
such employment.


 


8.                                       The
Optionee represents and agrees that it will comply with all applicable laws
relating to the grant and exercise of this option and the disposition of the
shares of Common Stock acquired upon exercise of the option, including without
limitation, federal and state securities and “blue sky” laws.


 


9.                                       This
Agreement shall be binding upon and inure to the benefit of any successor or
assign of the Company and the Optionee and to any heir, distribute or Legal
Representative entitled to the Optionee’s rights hereunder.


 


10.                                 This
option is not transferable by the Optionee otherwise by will or the laws of the
descent and distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee or the Optionee’s legal representative.


 


11.                                 This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Utah, without regard to the conflicts of law rules
thereof.


 


12.                                 The
invalidity or illegality of any provision herein shall not affect the validity
of any other provision.


 


13.                                 This
Agreement constitutes the entire agreement between the Company and Optionee
relating to the subject matter hereof and supersedes all prior agreements or
understandings relating thereto.


 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date set forth above.


 


	
   

  	
  IMPACT DIAGNOSTICS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stan Yakatan 

  



 


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