CHEMBIO DIAGNOSTICS, INC. STOCK OPTION AGREEMENT (Directors’ Non-Qualified Stock Option)
Exhibit
10.4 Form of option (Non-Qualified)
THE
SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933,
AS
AMENDED (THE “1933 ACT”), AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS
DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED
FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT.
(Directors’
Non-Qualified Stock Option)
THIS
STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of the
_____________ day
of
_____________, ______________
by and
between Chembio Diagnostics, Inc., a Nevada corporation (the “Company”), and
_________________
(the
“Optionee”).
WITNESSETH:
WHEREAS,
the Optionee has received a non-qualified option to purchase shares of the
Company’s common stock, par value $0.01 per share (the “Common Stock”), pursuant
to the Company’s 1999 Stock Option Plan (the “Plan”) in order to provide the
Optionee with an opportunity for investment in the Company and additional
incentive to pursue the success of the Company, and this option is to be
for the
number of shares, at the price per share and on the other terms and conditions
set forth in this Agreement; and
WHEREAS,
the Optionee desires to receive an option on the terms and conditions set
forth
in this Agreement.
NOW,
THEREFORE, the parties agree as follows:
1. Grant
Of Option.
The
Company hereby grants to the Optionee the right and option (the “Option”) to
purchase all or any part of an aggregate of ______________
(________________)
shares of the authorized and unissued Common Stock (the “Option Shares”)
pursuant to the terms and conditions set forth in this Agreement and the
Plan.
In the event that the terms and conditions in this Agreement are inconsistent
with the terms and conditions in the Plan, the terms and conditions in the
Plan
shall control.
2. Option
Price.
At any
time that shares are to be purchased pursuant to the Option, the purchase
price
for each Option Share shall be $________
(the
“Option Price”), subject to adjustment as provided in this
Agreement.
3. Exercise
Period.
Unless
terminated earlier as provided in this Agreement, each portion of the Option
will expire and terminate, if not exercised sooner, at 5:00pm, New York City,
New York time, on the date hereof. Notwithstanding the foregoing, to the
extent
not earlier terminated, the Option shall terminate three months after the
date
the Optionee no longer serves on the Board of Directors of the
Company.
4. Vesting
of Option. _________________
of the
Options (the right to purchase ________________ Option Shares) shall be
immediately exercisable and __________________
of the
Options shall become exercisable on _____________
of each
of __________ and _____________.
5. Exercise
Of Option.
(a) The
Option may be exercised in whole or in part by delivering to the Treasurer
of
the Company (i) a Notice And Agreement Of Exercise Of Option, substantially
in
the form attached hereto as Exhibit
A,
specifying the number of Option Shares with respect to which the Option is
exercised, and (ii) full payment of the Option Price for such shares.
Payment shall be made by certified check or cleared funds. The Option may
not be
exercised in part unless the purchase price for the Option Shares purchased
is
at least $1,000 or unless the entire remaining portion of the Option is being
exercised.
(b) Promptly
upon receipt of the Notice And Agreement Of Exercise Of Option together with
the
full payment of the Option Price, the Company shall deliver to the Optionee
a
properly executed certificate or certificates representing the Option Shares
being purchased.
6. Withholding
Taxes.
The
Company may take such steps as it deems necessary or appropriate for the
withholding of any taxes which the Company is required by any law or regulation
or any governmental authority, whether federal, state or local, domestic
or
foreign, to withhold in connection with the Option, including, but not limited
to, the withholding of all or any portion of any payment owed by the Company
to
the Optionee or the withholding of issuance of Option Shares to be issued
upon
the exercise of the Option.
7. Securities
Laws Requirements.
No
Option Shares shall be issued unless and until, in the opinion of the Company,
there has been full compliance with, or an exemption from, any applicable
registration requirements of the Securities Act of 1933, as amended (the
“1933
Act”), any applicable listing requirements of any securities exchange on which
stock of the same class has been listed, and any other requirements of law
or
any regulatory bodies having jurisdiction over such issuance and delivery,
or
applicable exemptions are available and have been complied with. Pursuant
to the
terms of the Notice And Agreement Of Exercise Of Option (Exhibit A) that
shall
be delivered to the Company upon each exercise of the Option, the Optionee
shall
acknowledge, represent, warrant and agree as follows:
(a) Optionee
is acquiring the Option Shares for investment purposes only and the Option
Shares that Optionee is acquiring will be held by Optionee without sale,
transfer or other disposition for an indefinite period unless the transfer
of
those securities is subsequently registered under the federal securities
laws or
unless exemptions from registration are available;
(b) Optionee’s
overall commitment to investments that are not readily marketable is not
disproportionate to Optionee’s net worth and Optionee’s investment in the Option
Shares will not cause such overall commitments to become excessive;
(c) Optionee’s
financial condition is such that Optionee is under no present or contemplated
future need to dispose of any portion of the Option Shares to satisfy any
existing or contemplated undertaking, need or indebtedness;
(d) Optionee
has sufficient knowledge and experience in business and financial matters
to
evaluate, and Optionee has evaluated, the merits and risks of an investment
in
the Option Shares;
(e) The
address set forth on the signature page to this Agreement is Optionee’s true and
correct residence, and Optionee has no present intention of becoming a resident
of any other state or jurisdiction;
(f) Optionee
confirms that all documents, records and books pertaining to an investment
in
the Option and the Option Shares that have been requested by Optionee have
been
made available or delivered to Optionee. Without limiting the foregoing,
Optionee has received and reviewed the Company’s periodic reports as filed with
the Securities and Exchange Commission, and Optionee has had the opportunity
to
discuss the acquisition of the Option and the Option Shares with the Company,
and Optionee has obtained or been given access to all information concerning
the
Company that Optionee has requested;
(g) Optionee
has had the opportunity to ask questions of, and receive the answers from,
the
Company concerning the terms of the investment in the Option Shares and to
receive additional information necessary to verify the accuracy of the
information delivered to Optionee, to the extent that the Company possesses
such
information or can acquire it without unreasonable effort or
expense;
(h) Optionee
understands that the Options have not been, and the Option Shares issuable
upon
exercise of the Options will not be, registered under the 1933 Act or any
state
securities laws in reliance on an exemption for private offerings, and no
federal or state agency has made any finding or determination as to the fairness
of this investment or any recommendation or endorsement of the sale of the
Option Shares;
(i) The
Option Shares that Optionee is acquiring will be solely for Optionee’s own
account, for investment, and are not being purchased with a view to or for
the
resale, distribution, subdivision or fractionalization thereof. Optionee
has no
agreement or arrangement for any such resale, distribution, subdivision or
fractionalization thereof;
(j) Optionee
acknowledges and is aware of the following:
(i) The
Company has a history of losses. The Option Shares constitute a speculative
investment and involve a high degree of risk of loss by Optionee of Optionee’s
total investment in the Option Shares.
(ii) There
are
substantial restrictions on the transferability of the Option Shares. The
Option
is not transferable except by will or the laws of descent and distribu-tion,
and
any attempt to do so shall void the Option. The Option Shares cannot be
transferred, pledged, hypothecated, sold or otherwise disposed of unless
they
are registered under the 1933 Act or an exemption from such registration
is
available and established to the satisfaction of the Company; investors in
the
Company have no rights to require that the Option Shares be registered; there
is
no right of presentment of the Option Shares and there is no obligation by
the
Company to repurchase any of the Option Shares; and, accordingly, Optionee
may
have to hold the Option Shares indefinitely and it may not be possible for
Optionee to liquidate Optionee’s investment in the Company.
(iii) Unless
the issuance of the Option Shares is registered, each certificate issued
representing the Option Shares shall be imprinted with a legend that sets
forth
a description of the restrictions on transferability of those securities,
which
legend will read substantially as follows:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES
ACT
OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT.”
The
restrictions described in this Section 6, or notice thereof, may be placed
on
the certificates representing the Option Shares purchased pursuant to the
Option, and the Company may refuse to issue the certificates or to transfer
the
shares on its books unless it is satisfied that no violation of such
restrictions will occur.
8. Adjustment
By Stock Split, Stock Dividend, Etc.
If at
any time the Company increases or decreases the number of its outstanding
shares
of common stock, or changes in any way the rights and privileges of such
shares,
by means of the payment of a stock dividend or the making of any other
distribution on such shares payable in its common stock, or through a stock
split or subdivision of shares, or a consolidation or combination of shares,
or
through a reclassification or recapitalization involving its common stock,
the
numbers, rights and privileges of the shares of common stock included in
the
Option shall be in-creased, decreased or changed in like manner as if such
shares had been issued and outstanding, fully paid and nonassessable at the
time
of such occurrence and the Option Price shall be correspondingly decreased,
increased or otherwise changed. Whenever the number or kind of shares comprising
the Option Shares or the Option Price is adjusted, the Company shall promptly
give written notice to each holder of record of the outstanding Options,
stating
that such an adjustment has been effected and setting forth the number and
kind
of shares purchasable and the amount of the then-current Option Price, and
stating in reasonable detail the facts requiring such adjustment and the
calculation of such adjustment.
9. Reorganization
And Reclassification.
In case
of any capital reorganization or any reclassification of the capital stock
of
the Company while the Options remain outstanding, the holder of the Options
shall thereafter be entitled to purchase pursuant to the Options (in lieu
of the
kind and number of shares of Common Stock comprising Option Shares that such
holder would have been entitled to purchase or acquire immediately before
such
reorganization or reclassification) the kind and number of shares of stock
of
any class or classes or other securities or property for or into which such
shares of Common Stock would have been exchanged, converted, or reclassified
if
the Option Shares had been purchased immediately before such reorganization
or
reclassification. In case of any such reorganization or reclassification,
appropriate provision (as determined by resolutions of the Board of Directors
of
the Company) shall be made with respect to the rights and interest thereafter
of
the holder of the Options, to the end that all the provisions of this Option
Agreement (including adjustment provisions) shall thereafter be applicable,
as
nearly as reasonably practicable, in relation to such stock or other securities
or property.
10. Registration
Rights.
Optionee shall have no registration rights unless otherwise agreed by the
Company.
11. Common
Stock To Be Received Upon Exercise.
Optionee understands that (a) the Company is under no obligation to register
the
issuance of the Option Shares, and (b) in the absence of any such registration,
the Option Shares cannot be sold unless they are sold pursuant to an exemption
from registration under the 1933 Act. The Company is under no obligation
to
comply, or to assist the Optionee in complying, with any exemption from the
registration requirement of the 1933 Act, including supplying the Optionee
with
any information necessary to permit routine sales of the Common Stock under
Rule 144 of the Securities and Exchange Commission. Optionee also
understands that routine sales of securities made in reliance upon Rule 144
can
be made only in limited amounts in accordance with the terms and conditions
of
the Rule, and that in cases in which the Rule is inapplicable, compliance
with
another exemption under the 1933 Act will be required. Thus, the Option Shares
will have to be held indefinitely in the absence of registration under the
1933
Act or an exemption from registration.
Furthermore,
the Optionee fully understands that issuance of the Option Shares will not
be
registered under the 1933 Act and that, because the issuance of the Option
Shares will not be registered, the Option Shares will be issued in reliance
upon
an exemption which is available only if Optionee acquires such shares for
investment and not with a view to distribution. Optionee is familiar with
the
phrase “acquired for investment and not with a view to distribution” as it
relates to the 1933 Act and the special meaning given to such term in various
releases of the Securities and Exchange Commission.
12. Privilege
Of Ownership.
Optionee shall not have any of the rights of a stockholder with respect to
the
shares covered by the Option except to the extent that one or more certificates
for those shares shall be delivered to him upon exercise of the
Option.
13. Relationship
To Employment.
Nothing
contained in this Agreement (i) shall confer upon the Optionee any right
with
respect to continuance of Optionee’s employment by, or affiliation with, or
relationship to, the Company, or (ii) shall interfere in any way with the
right
of the Company at any time to terminate the Optionee’s employment by, position
or affiliation with, or relationship to, the Company.
14. Notices.
All
notices, requests, demands, directions and other communications (“Notices”)
concerning this Agreement shall be in writing and shall be mailed or delivered
personally or sent by telecopier or facsimile to the applicable party at
the
address of such party set forth below in this Section 13. When mailed, each
such
Notice shall be sent by first class, certified mail, return receipt requested,
enclosed in a postage prepaid wrapper, and shall be effective on the fifth
business day after it has been deposited in the mail. When delivered
personal-ly, each such Notice shall be effective when delivered to the address
for the respective party set forth in this Section 13, provided that it is
delivered on a business day and further provided that it is delivered prior
to
5:00 p.m., local time of the party to whom the notice is being delivered,
on
that business day; otherwise, each such Notice shall be effective on the
first
business day occurring after the date on which the Notice is delivered. When
sent by telecopier or facsimile, each such Notice shall be effective on the
day
on which it is sent provided that it is sent on a business day and further
provided that it is sent prior to 5:00 p.m., local time of the party to
whom the Notice is being sent, on that business day; otherwise, each such
Notice
shall be effective on the first business day occurring after the date on
which
the Notice is sent. Each Notice shall be addressed to the party to be notified
as shown below:
(a) if
to the
Company: Chembio
Diagnostics, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Facsimile
No. (▇▇▇)
▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇
(b) if
to the
Optionee: ______________________
______________________
______________________
Either
party may change its respective address for purposes of this Section 13 by
giving the other party Notice of the new address in the manner set forth
above.
15. General
Provisions. This
instrument (a) contains the entire agreement between the parties, (b) may
not be
amended nor may any rights hereunder be waived except by an instrument in
writing signed by the party sought to be charged with such amendment or waiver,
(c) shall be construed in accordance with, and governed by the laws of New
York,
and (d) shall be binding upon and shall inure to the benefit of the parties
and
their respective personal representatives and assigns, except as above set
forth. All pronouns contained herein and any variations thereof shall be
deemed
to refer to the masculine, feminine or neuter, singular or plural as the
identity of the parties hereto may require.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the dates set
forth
below to be effective on the date set forth in the first paragraph of this
Agreement.
Date:
____________________ By:
___________________________
______________________________
Name
and
Title
OPTIONEE
Date:
____________________ ______________________________
Signature
______________________________
Name
and
Title
______________________________
Address
______________________________
City,
State and Zip Code
EXHIBIT
A
NOTICE
AND AGREEMENT OF EXERCISE OF OPTION
The
undersigned, ________________
(the
“Optionee”), hereby exercises the Optionee’s Option pursuant to the Stock Option
Agreement (the “Option Agreement”) dated as of _________________
between
Optionee and Chembio Diagnostics, Inc. (the “Company”) as to ________ shares of
the $.01 par value common stock (the “Option Shares”) of the Company at a
purchase price of $_________
per
share. The total exercise price for these Option Shares is
$________.
Enclosed
is the payment specified in Section 4 of the Option Agreement.
The
Optionee understands that no Option Shares will be issued unless and until,
in
the opinion of the Company, there has been full compli-ance with, or an
exemption from, any applicable registration requirements of the Securities
Act
of 1933, as amended (the “1933 Act”), any applicable listing requirements of any
securities exchange on which stock of the same class is then listed, and
any
other requirements of law or any regulatory bodies having jurisdiction over
such
issuance and delivery. The undersigned Optionee hereby acknowledges represents
warrants and agrees to and with the Company as follows:
(a) The
Optionee is acquiring the Option Shares for investment purposes only and
the
Option Shares that Optionee is acquiring will be held by Optionee without
sale,
transfer or other disposition for an indefinite period unless the transfer
of
those securities is subsequently registered under the federal securities
laws or
unless exemptions from registration are available;
(b) Optionee’s
overall commitment to investments that are not readily marketable is not
disproportionate to Optionee’s net worth and Optionee’s investment in the Option
Shares will not cause such overall commitments to become excessive;
(c) Optionee’s
financial condition is such that Optionee is under no present or contemplated
future need to dispose of any portion of the Option Shares to satisfy any
existing or contemplated undertaking, need or indebtedness;
(d) Optionee
has sufficient knowledge and experience in business and financial matters
to
evaluate, and Optionee has evaluated, the merits and risks of an investment
in
the Option Shares;
(e) The
address set forth on the signature page of this Notice is Optionee’s true and
correct residence, and Optionee has no present intention of becoming a resident
of any other state or jurisdiction;
(f) Optionee
confirms that all documents, records and books pertaining to an investment
in
the Option Shares that have been requested by Optionee have been made available
or delivered to Optionee. Without limiting the foregoing, Optionee has received
and reviewed the Company’s periodic reports as filed with the Securities and
Exchange Commission, and Optionee has had the opportunity to discuss the
acquisition of the Option and the Option Shares with the Company, and Optionee
has obtained or been given access to all information concerning the Company
that
Optionee has requested;
(g) Optionee
has had the opportunity to ask questions of, and receive the answers from,
the
Company concerning the terms of the investment in the Option Shares and to
receive additional information necessary to verify the accuracy of the
information delivered to Optionee, to the extent that the Company possesses
such
information or can acquire it without unreasonable effort or
expense;
(h) Optionee
understands that the Options have not been, and the Option Shares issuable
upon
exercise of the Options will not be, registered under the 1933 Act or any
state
securities laws in reliance on an exemption for private offerings, and no
federal or state agency has made any finding or determination as to the fairness
of this investment or any recommendation or endorsement of the sale of the
Option Shares;
(i) The
Option Shares that Optionee is acquiring will be solely for Optionee’s own
account, for investment, and are not being purchased with a view to or for
the
resale, distribution, subdivision or fractionalization thereof. Optionee
has no
agreement or arrangement for any such resale, distribution, subdivision or
fractionalization thereof;
(j) Optionee
acknowledges and is aware of the following:
(i) The
Company has a history of losses. The Option Shares constitute a speculative
investment and involve a high degree of risk of loss by Optionee of Optionee’s
total investment in the Option Shares.
(ii) There
are
substantial restrictions on the transferability of the Option Shares. The
Option
Shares cannot be transferred, pledged, hypothecated, sold or otherwise disposed
of unless they are registered under the 1933 Act or an exemption from such
registration is available and established to the satisfaction of the Company;
investors in the Company have no rights to require that the Option Shares
be
registered; there is no right of presentment of the Option Shares and there
is
no obligation by the Company to repurchase any of the Option Shares; and,
accordingly, Optionee may have to hold the Option Shares indefinitely and
it may
not be possible for Optionee to liquidate Optionee’s investment in the
Company.
(iii) Unless
the issuance of the Option Shares is registered, each certificate issued
representing the Option Shares shall be imprinted with a legend that sets
forth
a description of the restrictions on transferability of those securities,
which
legend will read substantially as follows:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES
ACT
OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT.”
(k) The
Optionee shall report all sales of Option Shares to the Company in writing
on a
form prescribed by the Company;
(l) The
Optionee will not sell or dispose of Optionee’s Option Shares in violation of
the 1933 Act, or of any other applicable federal or state securities laws;
and
(m) The
Optionee agrees that the Company may, without liability for its good faith
actions, place legend restrictions upon Optionee’s Option Shares and issue “stop
transfer” instructions requiring compliance with applicable securities laws and
the terms of the Option Agreement.
(n) If
and so
long as Optionee is subject to reporting requirements under Section 16(a)
of the
Securities Exchange Act of 1934, as amended (the “1934 Act”), Optionee
recognizes that any sale by Optionee or Optionee’s immediate family of the
Company’s $.01 par value common stock may create liability for Optionee under
Section 16(b) of the 1934 Act (“Section 16(b)”). Therefore, Optionee has
consulted with Optionee’s counsel regarding the application of Section 16(b) to
this exercise of Optionee’s Option.
(o) Optionee
will consult with Optionee’s counsel regarding the application of
Section 16(b) before Optionee can make any sale of the Company’s $.01 par
value common stock, including the Option Shares, and Optionee will furnish
the
Company with a copy of each Form 4 filed by Optionee and will timely file
all
reports that Optionee may be required to file under the federal securities
laws.
The
number of Option Shares specified above are to be issued in the name or names
set forth below in the left-hand column.
(Print
Your Name) Signature
of
Optionee
(Optionee
- Print Name of Spouse Address
if
you
wish joint registration)
City, State and Zip Code