CHEMBIO DIAGNOSTICS, INC. STOCK OPTION AGREEMENT (Incentive Option)
Exhibit
10.3 Form of Option (Incentive)
(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
0000
Xxxxxxxxxx Xxxx
Xxxxxxx,
Xxx Xxxx 00000
Facsimile
No. (000) 000-0000
(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:
__________
Xxxxxxxx
Xxxxxxx, 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:
|
a.
|
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.)
|
|
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.
|
|
c.
|
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.
|
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.
|
|
e.
|
[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.
|
[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.
|
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
*
* * *
*
