CHEMBIO DIAGNOSTICS, INC. STOCK OPTION AGREEMENT (Incentive Option)
Exhibit
4.18
(Incentive
Option)
THIS
STOCK OPTION AGREEMENT (the “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 an incentive stock option to purchase shares of
the
Company’s 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
terms set forth in this Agreement;
WHEREAS,
the Company intends that the stock option granted pursuant to this Agreement
qualify as an incentive stock option pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”); 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, as a matter
of separate agreement and not in lieu of salary or any other compensation
for
services, the right and option (the “Option”) to purchase all or any part of an
aggregate of _____________________ (________________)
shares of the authorized and unissued $.01 par value common stock of the
Company
(the “Option Shares”) pursuant to the terms and conditions set forth in this
Agreement.
2. Option
Price. At any time when shares are to be purchased pursuant to
the Option, the purchase price for each Option Share shall be $_________
(the
“Option Price”).
3. Exercise
Period.
(a) The
Option may be exercised at any time after _____________ (the “Trigger
Date”).
(b) The
period for exercise of the Option shall terminate at 5:00 p.m., Eastern Standard
Time on _______________, unless terminated earlier as provided in this
Agreement, which date is the seventh anniversary of the date of this
Agreement.
4. 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 in cash 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.
(c) During
the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee; provided, however, that in the event of the legal disability of
an
Optionee, the guardian or personal representative of the Optionee may exercise
the Option if such guardian or personal representative obtains a ruling from
the
Internal Revenue Service or an opinion of counsel to the effect that neither
the
grant nor the exercise of such power is violative of Section 422(b)(5), or
its
successor provision, of the Internal Revenue Code of 1986, as amended (the
“Code”). Any opinion of counsel must be acceptable to the Option
Committee both with respect to the counsel rendering the opinion and with
respect to the form of opinion.
(d) If
for
any reason other than the termination of Optionee’s employment by the Company
for cause or other than the termination of Optionee’s employment by Optionee’s
resignation or other voluntary act, the Optionee ceases to be employed by
the
Company, any Option held by the Optionee at the time the Optionee’s employment
ceases may be exercised within thirty days after the date his employment
ceases,
but only to the extent that (i) the Option was exercisable according to its
terms on the date of termination of the Optionee’s employment, and (ii) the
period for exercise of the Option, as defined in Section 3 of this Agreement,
has not terminated as of the date of exercise. Upon termination of
the period ending thirty days after cessation of the Optionee’s employment for
any reason other than for cause and other than by Optionee’s voluntary act, any
unexercised portion of an Option shall expire. If the Optionee ceases to
be
employed by the Company because of termination by the Optionee by resignation
or
other voluntary act, any Option held by the Optionee at the time the Optionee’s
employment ceases shall terminate immediately upon the cessation of employment
and all rights to purchase shares pursuant to the Option shall terminate
immediately. If the Optionee’s employment by the Company is
terminated by the Company for cause, any Option held by the Optionee at the
time
Optionee’s employment is terminated shall expire upon delivery to the Optionee
of notice of termination, which may be oral or in writing, and all rights
to
purchase shares pursuant to the Option shall terminate
immediately. As used in this Section 4(d), termination “for cause”
means a discharge on account of dishonesty, disloyalty or insubordination
on the
part of the Optionee as determined by the Board Of Directors of the Corporation
or a Committee of the Board Of Directors.
5. 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.
6. Securities
Laws Requirements. The issuance of the Option has not been
registered under the 1933 Act, in reliance upon an exemption from
registration. In addition, no Option Shares shall be issued unless
and until, in the opinion of the Company, there has been full compliance
with
any applicable registration requirements of 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. Optionee hereby
acknowledges, represents, warrants and agrees as follows, and, 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, Optionee shall
acknowledge, represent, warrant and agree as follows:
(a) Optionee
is acquiring the Option and the Option Shares for investment purposes only
and
the Option 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
and 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 or 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 and the Option Shares;
(e) The
address set forth in 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 have been made available or delivered to
Optionee and Optionee has had the opportunity to discuss the acquisition
of the
Option and the Option Shares with the Company. Optionee also confirms that
Optionee has obtained or been given access to all information concerning
the
Company that Optionee has reasonably 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 and 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 Option has 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 issuance of
the
Option or the Option Shares;
(i) The
Option and 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; and
(j) Optionee
acknowledges and is aware of the following:
(i) The
Company has a history of losses. The Option and 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 and the Option
Shares.
(ii) There
are
substantial restrictions on the transferability of the Option and the Option
Shares. The Option is not transferable except as provided in Section
7 below. 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) 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 OR QUALIFIED
UNDER FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED
OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS
TO BE
ESTABLISHED BY AN OPINION OF COUNSEL (WHICH OPINION AND COUNSEL SHALL BOTH
BE
REASONABLY SATISFACTORY TO THE COMPANY).”
The
restrictions described above, 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.
7. Transferability
Of Option. The Option shall not be transferable except by will or
the laws of descent and distribution, and any attempt to do so shall void
the
Option.
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 increased, 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.
9. Common
Stock To Be Received Upon Exercise. Optionee understands that the
Company is under no obligation to register the issuance of the Option Shares,
the resale (by directors and officers) of the Option Shares, or the Option
Shares, under the Securities Act of 1933, as amended (the “1933 Act”), and that
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 such registration requirement,
including supplying the Optionee with any information necessary to permit
routine sales of the Stock under Rule 144 of the Securities and Exchange
Commission. Optionee also understands that with respect to Rule 144,
routine sales of securities made in reliance upon such Rule 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 either
Regulation A or another disclosure 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 may not
be
registered under the 1933 Act and that if their issuance is not registered,
they
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.
10. 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 such shares shall be delivered to
him
upon exercise of the Option.
11. Relationship
To Employment Or Position. Nothing contained in this Agreement
(i) shall confer upon the Optionee any right with respect to continuance of
Optionee’s employment by, or position 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.
12. 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 12. 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 personally, each such Notice shall be effective
when delivered to the address for the respective party set forth in this
Section
12, 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 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 Notice is sent. Each such Notice shall be addressed to the party
to be notified as shown below:
(a) if
to the
Company: Chembio
Diagnostics, Inc.
Attn:
President
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile
No. (▇▇▇)
▇▇▇-▇▇▇▇
(b) if
to the
Optionee: ________________________________
________________________________
________________________________
________________________________
Either
party may change its respective address for purposes of this Section 12 by
giving the other party Notice of the new address in the manner set forth
above.
13. 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 the State of New York, except where conflicts
of law rules require the application of Colorado law, 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.
Date:
__________
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
President
OPTIONEE
Date:
Name
EXHIBIT
A
(To
Chembio Diagnostic Systems Inc
NOTICE
AND AGREEMENT OF EXERCISE OF OPTION
I
hereby
exercise my Chembio Diagnostics, Inc. Stock Option dated as of _____________
as
to ________ shares of the $.01 par value common stock (the “Option Shares”) of
Chembio Diagnostics, Inc. (the “Company”) at a purchase price of $______ per
share. The total exercise price for these Option Shares is
$________. Enclosed is payment in the form of
___________________.
Enclosed
are the documents and payment specified in Paragraph 4 of my Option
Agreement.
I
understand that no Option Shares will be issued unless and until, in the
opinion
of the Company, there has been full compliance with any applicable registration
requirements of the Securities Act of 1933, as amended, 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. I hereby acknowledge,
represent, warrant and agree, to and with the Company as follows:
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a.
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The
Option Shares I am purchasing are being acquired for my own account
for
investment purposes only and with no view to their resale or other
distribution of any kind, and no other person (except, if I am
married, my
spouse) will own any interest therein. (Note: This
provision to be included only if issuance of Option Shares is not
registered at the time of
exercise.)
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b.
|
I
will not sell or dispose of my Option Shares in violation of the
Securities Act of 1933, as amended, or any other applicable federal
or
state securities laws.
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c.
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I
will report all sales of Option Shares to the Company in writing
on a form
prescribed by the Company.
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d.
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I
agree that the Company may, without liability for its good faith
actions,
place legend restrictions upon my Option Shares and issue “stop transfer”
instructions requiring compliance with applicable securities laws
and the
terms of my Option.
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e.
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[For
officers only.] If and so long as I am subject to reporting
requirements under Section 16(a) of the Securities Exchange Act
of 1934,
as amended (the “1934 Act”), I recognize that any sale by me or my
immediate family of the Company’s $.001 par value common stock may create
liability for me under Section 16(b) of the 1934 Act (“Section
16(b)”). Therefore, I have consulted with my counsel regarding
the application of Section 16(b) to this exercise of my
Option.
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f.
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[For
officers only.] I will consult with my counsel regarding the
application of Section 16(b) before I can make any sale of the
Company’s
$.01 par value common stock, including the Option Shares, and I
will
furnish the Company with a copy of each Form 4 filed by me and
will timely
file all reports that I may be required to file under the federal
securities laws.
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The
number of Option Shares specified above are to be issued in the name or names
set forth below in the left-hand column.
Name Signature
(Optionee
- Print Name of
Spouse Address
if
you
wish joint
registration)
City, State and Zip Code
*
* * *
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