Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on this 6th day of
June, 2014, to be effective as of June 1, 2014 (the “Effective Date”), by and
between ERBA Diagnostics, Inc., a Delaware corporation (the “Company”), and
Prakash Patel (the “Executive”).

 

RECITALS

 

WHEREAS, the Company wishes to employ the Executive as Controller of the Company
upon the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the Executive is willing to accept such employment on such terms and
conditions.

 

NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations and covenants herein contained, the Company and the Executive
hereby agree as follows:

 

AGREEMENT

 

1.            Scope of Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company, as
Controller of the Company. The Executive shall have the customary
responsibilities and authority of such position and shall perform such duties
consistent with the responsibilities of such position as may be determined and
assigned to the Executive by the Chief Executive Officer, the Chief Financial
Officer, the Executive Chairman of the Company’s Board of Directors (the
“Board”) and the Audit Committee of the Board (the “Audit Committee”). The
Executive shall devote his best efforts and his full business time, attention
and energies to Company affairs as are necessary to fully perform his duties for
the Company.

 

2.            At-Will Employment. The Executive acknowledges and agrees that
there is no fixed duration for the Executive’s employment as Controller of the
Company and that the Executive’s employment as Controller of the Company is
“at-will” and may be terminated by the Company in accordance with Section 5.
Nothing in this Agreement should be construed as creating a contract of
employment or in any way altering the Executive’s status as an “at-will”
employee.

 

3.            Compensation.

 

(a)          Base Salary. The Company agrees to pay the Executive, and the
Executive agrees to accept, in payment for services to be rendered by the
Executive hereunder, an aggregate base salary of $105,000 per annum (the “Base
Salary”). The Base Salary shall be paid in approximately equal installments in
accordance with the Company’s customary payroll practices. For all purposes
under this Agreement, the term “Base Salary” shall refer to the Executive’s base
salary as in effect from time to time in accordance with this Section 3(a).

 

 

 

 

(b)          Annual Bonus. In addition to the Base Salary, the Executive shall
also be eligible to receive an annual cash bonus of up to fifteen percent (15%)
of the Base Salary (the “Annual Bonus”) upon the achievement of Company-wide
financial performance targets and personal performance goals as jointly
determined by the Chief Executive Officer and the Executive Chairman of the
Board. The Company shall pay the Annual Bonus, if any, in accordance with the
terms of the particular bonus, but in no event later than ninety (90) days after
the end of the fiscal year to which the Annual Bonus relates.

 

(c)          Equity Compensation. The Executive shall be eligible to receive any
grants of awards by the Company under and in accordance with the Company’s
equity incentive compensation plans, subject to and in compliance with all
applicable laws, rules and regulations, including, without limitation, the
Delaware General Corporation Law. Without limiting the generality of the
foregoing, the Company hereby agrees that it will cause its duly authorized
representative to execute that certain Nonqualified Stock Option Agreement,
dated as of the date hereof, the form of which is attached hereto as Exhibit A,
pursuant to which the Company shall grant to the Executive a nonqualified stock
option under the Company’s 2009 Equity Incentive Plan to purchase 10,000 shares
of the Company’s common stock, at an exercise price per share equal to the
closing price of a share of the Company’s common stock on the NYSE MKT on the
date hereof, which options shall fully vest after three (3) years after the
Effective Date, and which options shall expire on the tenth anniversary of the
Effective Date.

 

4.            Reimbursement of Expenses, Fringe Benefits, Etc.

 

(a)          Business Expenses. The Company shall pay, or promptly reimburse the
Executive for, all reasonable expenses incurred by the Executive in performing
his duties for the Company upon the presentation of reasonably itemized
statements of such expenses in accordance with the Company’s policies and
procedures now in effect or as such policies and procedures may be modified from
time to time.

 

(b)          Vacation; Illness. The Executive shall be entitled to paid
vacation, holidays, and sick leave benefits in accordance with the Company’s
policies.

 

(c)          Welfare, Pension and Incentive Benefit Plans. The Executive shall
be entitled to participate in and be covered under all the welfare benefit plans
or programs maintained by the Company from time to time, including, without
limitation, all medical, hospitalization, dental, disability, accidental death
and dismemberment and travel accident insurance plans and programs, in each
case, subject to and in compliance with the terms and conditions of such plans
and programs. In addition, the Executive shall be eligible to participate in and
be covered under all pension, retirement, savings and other employee benefit and
perquisite plans and programs maintained from time to time by the Company, in
each case, subject to and in compliance with the terms and conditions of such
plans and programs.

 

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5.            Termination. This Agreement, and the Executive’s employment
hereunder, may be terminated under the circumstances set forth below.

 

(a)          Death. This Agreement, and the Executive’s employment hereunder,
shall terminate upon the Executive’s death.

 

(b)          Disability. If, as a result of the Executive’s incapacity due to
physical or mental illness, the Executive shall have been substantially unable
to perform his duties hereunder for an entire period in excess of one hundred
twenty (120) days in any twelve (12) month period despite any reasonable
accommodation available from the Company, then the Company shall have the right
to terminate this Agreement, and the Executive’s employment hereunder, for
“Disability.” The Disability of the Executive shall be determined by a medical
doctor approved by the Company. The Executive shall submit to a reasonable
number of examinations by the medical doctor making the determination of
Disability, and the Executive hereby authorizes the disclosure and release to
the medical doctor of all supporting medical records.

 

(c)          For Any Reason or For No Reason. Each of the Executive and the
Company shall have the right to terminate this Agreement, and the Executive’s
employment hereunder, for any reason or for no reason, by providing the other
with at least sixty (60) days prior written notice. Only if the Executive
delivers such notice, then the Company may waive its right to such notice period
and cause the effective date of termination of this Agreement, and Executive’s
employment hereunder, to be a date that is earlier than the date specified by
the Executive in such written notice, and the Company shall not be obligated to
provide the Executive any compensation or benefits in connection with such
waiver of such notice period. In any event, regardless of which party delivers
such notice, during any such notice period, the Company may bar the Executive
from the premises of the Company and otherwise instruct the Executive to not
perform the Executive’s duties with the Company.

 

(d)          By the Company with Cause. The Company shall have the right to
terminate this Agreement, and the Executive’s employment hereunder, for Cause
(as hereinafter defined). For purposes of this Agreement, the Company shall have
“Cause” to terminate this Agreement, and the Executive’s employment hereunder:

 

(i)          upon the Indictment (as hereinafter defined) or conviction of, or
plea of nolo contendere by, the Executive for (A) a felony or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud;

 

(ii)         upon a material violation of the policies and procedures of the
Company, including, without limitation, the Company’s policies with respect to
insider trading and sexual harassment, in each case, as in effect from time to
time;

 

(iii)        upon the Executive’s gross negligence, willful misconduct or
insubordination with respect to the Company or any Affiliate (as hereinafter
defined) of the Company; or

 

(iv)        upon a material breach by the Executive of any of the Executive’s
material obligations under this Agreement.

 

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For purposes of this Agreement, the term “Indictment” shall mean an indictment,
probable cause hearing or any other procedure pursuant to which an initial
determination of probable or reasonable cause with respect to such offense is
made. For purposes of this Agreement, the term “Affiliate,” when used with
respect to a specified person or entity, means any other person or entity in
control of, controlled by or under common control with such specified person or
entity.         

 

In the event a final determination is made by a court of competent jurisdiction
that the Company’s termination of this Agreement, and the Executive’s employment
hereunder, under this Section 5(d), does not meet the definition of Cause, then
this Agreement, and the Executive’s employment hereunder, will be deemed to have
been terminated by the Company without Cause.

 

The Company shall provide the Executive with written notice describing any event
or condition that gives the Company Cause for terminating this Agreement and the
Executive’s employment hereunder. Only in the case of conduct described in
clause (iv) above, Cause will not be considered to exist unless the Executive is
given thirty (30) days after the date of such written notice to cure such breach
to the reasonable satisfaction of the Board. If the Executive cures such breach
to the reasonable satisfaction of the Board within such thirty (30) day period,
then the Company shall not be entitled to terminate this Agreement, and the
Executive’s employment hereunder, for Cause.

 

6.            Termination Procedure.

 

(a)          Notice of Termination. Any termination of this Agreement, and the
Executive’s employment hereunder, whether by the Company or by the Executive,
except as a result of the Executive’s death, shall be communicated by written
notice of termination to the other party hereto in accordance with Section 15.
Such notice of termination shall state the specific termination provision in
this Agreement relied upon in terminating this Agreement, and the Executive’s
employment hereunder, and the notice of termination shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination.

 

(b)          Date of Termination. The effective date of any termination of this
Agreement, and the Executive’s employment hereunder, whether by the Company or
by the Executive, shall be, in the event of the Executive’s death, the date of
his death, or, in the event of termination for any other reason, the date of
termination set forth in such notice of termination, subject to any applicable
notice or cure periods described in Section 5.

 

7.            Effects of Termination.

 

(a)          Termination Compensation and Benefits. If this Agreement, and the
Executive’s employment hereunder, is terminated, then: (i) the Company shall pay
to the Executive promptly after the effective date of termination that portion
of the Executive’s Base Salary which has been fully earned but not yet paid to
the Executive and which is not subject to a deferral election or deferral
requirement that has become irrevocable; and (ii) all unvested awards by the
Company under the Company’s equity incentive compensation plans and other equity
compensation in the Company granted to the Executive shall be forfeited.

 

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(b)          Acknowledgements. The Executive acknowledges and agrees that the
compensation and benefits set forth in this Section 7 constitute liquidated
damages upon the termination of this Agreement, and the Executive’s employment
hereunder, and the parties hereto have agreed that such compensation and
benefits are reasonable. The Executive further acknowledges and agrees that he
shall have no other remedies in connection with, or as a result of, any such
termination. The Company’s obligations under this Section 7 shall survive the
termination of this Agreement.

 

8.            Restrictive Covenants.

 

(a)          Executive Acknowledgements. The Executive acknowledges and agrees
that: (i) as a part of the Executive’s employment hereunder, the Executive shall
be afforded access to Confidential Information (as hereinafter defined); (ii)
public disclosure or utilization of such Confidential Information in violation
of this Agreement could have a material and adverse impact on the Company and
its business; and (iii) accordingly, the non-disclosure provisions of this
Agreement are reasonable and necessary to prevent the improper use or disclosure
of Confidential Information. The Executive further acknowledges and agrees that:
(i) that the Company’s business is international in scope and its products and
services are marketed throughout the world; (ii) the Company and its products
and services compete with other businesses and products and services located
throughout the world; (iii) the Company provides resources and training to the
Company’s employees (including, without limitation, the Executive) related to
the Company’s products and services and processes that are available only to the
Company’s employees and cannot be acquired outside of the Company; and (iv)
accordingly, the non-solicitation, anti-raiding and related restrictive
provisions of this Agreement are reasonable and necessary to protect, among
other things, the Company’s goodwill with its customer base, its investment in
its employees and its interests in its Confidential Information.

 

(b)          Non-Disclosure Obligation. Without the prior written consent of the
Company, except as may be required by applicable law, rule or regulation, the
Executive will not, at any time, either during or after his employment with the
Company, directly or indirectly, divulge or disclose to any person or entity,
including, without limitation, any future employer, or use for the Executive’s
own or others’ benefit or gain, any financial information, prospects, customers,
tenants, suppliers, clients, sources of leads, methods of doing business,
intellectual property, plans, products, data, results of tests or any other
trade secrets or confidential materials or like information of the Company,
including, without limitation, any and all information and instructions,
technical or otherwise, prepared or issued for the use of the Company
(collectively, the “Confidential Information”), it being the intent of the
Company, with which intent the Executive hereby agrees, to restrict the
Executive from dissemination or using any like information that is not readily
available to the general public.

 

(c)          Information is Property of the Company. All books, records,
accounts, customer, client and other lists, customer and client street and
e-mail addresses and information (whether in written form or stored in any
computer medium) relating in any manner to the business, operations, or
prospects of the Company, whether prepared by the Executive or otherwise coming
into the Executive’s possession, shall be the exclusive property of the Company
and shall be returned immediately to the Company upon the termination of the
Executive’s employment with the Company, or at the Company’s request at any
time. Upon the termination of the Executive’s employment with the Company, the
Executive shall immediately deliver to the Company all lists, books, records,
schedules, data and other information (including all copies thereof) of every
kind relating to or connected with the Company and its activities, business and
customers.

 

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(d)          Covenant Not to Solicit. The Executive agrees that, during the
period that the Executive is employed by the Company hereunder and for a period
of one (1) year thereafter, (such one (1) year period, the “Post-Employment
Restricted Period”), the Executive shall not, without the prior written consent
of the Company, directly or indirectly, interfere with or disrupt or diminish or
attempt to disrupt or diminish, or take any action that could reasonably be
expected to disrupt or diminish, any past, present or prospective relationship,
contractual or otherwise, between the Company and any customer, supplier,
consultant, advisor, employee or independent contractor of the Company.

 

(e)          No Raiding. The Executive agrees that, during the period that the
Executive is employed by the Company hereunder and throughout the
Post-Employment Restricted Period, the Executive shall not, without the prior
written consent of the Company, directly or indirectly, solicit, recruit, employ
or otherwise engage as an employee, independent contractor, consultant or
advisor or attempt to solicit, recruit, employ or otherwise engage as an
employee, independent contractor, consultant or advisor, any person who is or
was an employee, independent contractor, consultant or advisor of or to the
Company at any time during the Executive’s last twelve (12) months of employment
with the Company, or in any manner induce or attempt to induce any person who is
or was during the Executive’s last twelve (12) months of employment with the
Company an employee, independent contractor, consultant or advisor of or to the
Company to terminate that person’s relationship with the Company.

 

(f)          Non-Disparagement. The Executive agrees that he will not, directly
or indirectly, disparage the Company or disseminate, or cause or permit others
to disseminate, negative statements regarding the Company or any employee,
officer, director or agent of the Company. The Company agrees that it will not,
directly or indirectly, disparage the Executive or disseminate, or cause or
permit others to disseminate, negative statements regarding the Executive.
Notwithstanding the foregoing, neither the Executive nor the Company is barred
or otherwise restricted from complying with applicable laws, rules and
regulations.

 

(g)          Survival. The obligations contained in this Section 8 shall survive
the termination of this Agreement.

 

9.            Enforcement and Remedies.

 

(a)          Enforcement. It is the desire and intent of the Company and the
Executive that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws, rules, regulations and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly,
although the Executive and the Company consider the provisions of this Agreement
to be reasonable for the purpose of preserving and protecting the legitimate
interests of the Company, if any particular provision of this Agreement shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete the portion thus adjudicated to be invalid or unenforceable,
such deletion to apply only with respect to the operation of such provision in
the particular jurisdiction in which such adjudication is made. Additionally, it
is expressly understood and agreed that, although the Company and the Executive
consider the provisions contained in this Agreement to be reasonable, if a final
determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement, including,
without limitation, in Section 8, is unenforceable against the Executive, then
the provisions of this Agreement shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable.

 

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(b)          Remedies. The Company and the Executive acknowledge that the
Company’s damages at law would be an inadequate remedy for the breach or
threatened breach by the Executive of any provision of Section 8. Accordingly,
the Company and the Executive agree, in the event of any such breach or
threatened breach, that the Company shall be entitled to temporary and permanent
injunctive or other equitable relief restraining the Executive from such breach
or threatened breach, as the Company may deem appropriate, without the
accounting of all earnings, profits, and other benefits arising from any such
breach or threatened breach. The rights of the Company under this paragraph
shall be cumulative and in addition to any other rights or remedies available to
the Company hereunder or at law or in equity.

 

10.           Withholding. The Company shall withhold and deduct such amounts
from any compensation or other benefits payable to the Executive under this
Agreement on account of payroll and other taxes and similar items as may be
required by applicable law, rule or regulation.

 

11.           Successors; Binding Agreement. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
heirs, successors, permitted assigns and personal representatives.

 

(a)          The Company’s Successors. The rights or obligations of the Company
under this Agreement may be assigned or transferred, in whole or in part, to any
successor in interest of the Company or its business. As used in this Agreement,
“Company” shall mean the Company as herein before defined and any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the equity, business and/or assets of the Company.

 

(b)          The Executive’s Successors. No rights or obligations of the
Executive under this Agreement may be assigned or transferred, other than his
rights to payments or benefits hereunder, which may be transferred only by will
or the laws of descent and distribution. Upon the Executive’s death, this
Agreement and all rights of the Executive hereunder shall inure to the benefit
of, and be enforceable by, the Executive’s beneficiary or beneficiaries,
personal or legal representatives or estate, to the extent any such person
succeeds to the Executive’s interests under this Agreement. The Executive shall
be entitled to select and change a beneficiary or beneficiaries to receive any
benefit or compensation payable hereunder following the Executive’s death by
giving the Company written notice thereof. In the event of the Executive’s death
or a judicial determination of the Executive’s incompetence, references in this
Agreement to the “Executive” shall be deemed, where appropriate, to refer to the
Executive’s beneficiary(ies), estate or other legal representative(s). If the
Executive should die following the effective date of termination of his
employment while any amounts would still be payable to the Executive hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons so appointed in writing by the Executive, or otherwise to the
Executive’s legal representatives or estate.

 

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12.           Indemnity. The Company shall, to the fullest extent permitted
under the Delaware General Corporation Law, indemnify and hold harmless the
Executive from and against any and all liabilities, costs and expenses,
including, but not limited to, amounts paid in satisfaction of judgments, in
settlement or as fines or penalties, and counsel fees and disbursements,
reasonably incurred by the Executive in connection with the defense or
disposition of, or otherwise in connection with or resulting from, any action,
suit or other proceeding, whether civil, criminal, administrative or
investigative, before any court or administrative or legislative or
investigative body, in which the Executive may be or may have been involved as a
party or otherwise or with which the Executive may be or may have been
threatened, while in office or thereafter, by reason of the Executive’s being an
executive officer of the Company or by reason of any action taken or not taken
in such capacity, except with respect to any matter as to which the Executive
shall have been finally adjudicated by a court of competent jurisdiction not to
have acted in good faith or in a manner he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.

 

13.           Entire Agreement. This Agreement contains the entire understanding
between the Company and the Executive and supersedes any and all other oral and
written agreements or understandings between them.

 

14.           Controlling Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida, without regard to its conflicts of law principles. Each of the Company
and the Executive unconditionally and irrevocably agrees that the exclusive
forum and venue for any action, suit or proceeding shall be in Miami-Dade
County, Florida, and each consents to submit to the exclusive jurisdiction,
including, without limitation, personal jurisdiction, and forum and venue of the
Circuit Courts of the State of Florida or the United States District Court for
the Southern District of Florida, in each case, located in Miami-Dade County,
Florida.

 

15.           Notice. All notices or other communications that are required or
permitted hereunder shall be in writing and delivered personally, or sent by
nationally-recognized, overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, addressed as follows:

 

If to the Company, then to: ERBA Diagnostics, Inc.   14100 NW 57th Court   Miami
Lakes, FL  33014   Attention: Executive Chairman

 

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with a copy to: Stearns Weaver Miller Weissler   Alhadeff & Sitterson, P.A.  
150 West Flagler Street, Suite 2200   Miami, FL  33130   Attention: David
Seifer, Esq.     If to the Executive, then to: Prakash Patel   14100 NW 57th
Court   Miami Lakes, FL 33014     with a copy to: ___________________  
___________________   ___________________   ___________________

 

or to such other address as either party may furnish to the other in writing in
accordance herewith. All such notices and other communications shall be deemed
to have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of delivery by nationally-recognized, overnight
courier, on the first business day immediately following dispatch and (iii) in
the case of mailing as described above, on the third business day following such
mailing.

 

16.           Amendment and Waiver. No provision of this Agreement may be
amended, modified or canceled unless such amendment, modification or
cancellation is agreed to in a writing signed by the Executive and by a duly
authorized officer of the Company, and no provision of this Agreement may be
waived unless such waiver is set forth in a writing signed by the party to be
charged. No waiver by either party hereto at any time of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

 

17.           Survival of Rights and Obligations. The respective rights and
obligations of the Executive and the Company set forth in this Agreement shall
survive the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations.

 

18.           Validity. If any provision of this Agreement shall for any reason
be finally held illegal, invalid or unenforceable by a court or agency of
competent jurisdiction, such provision shall be modified by such court or the
parties, as the case may be, so as to cause such provision to be legal, valid
and enforceable to the maximum extent permitted by law (and to the extent
modified, it shall be modified so as to reflect, to the extent possible, the
intent of the parties) and shall in no way affect or impair the legality,
validity or enforceability of the remaining provisions of this Agreement, which
shall remain in full force and effect, and this Agreement shall be interpreted
as if such illegal, invalid or unenforceable provision was not contained in this
Agreement.

 

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19.           Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

20.           Headings. The section and paragraph headings in this Agreement are
for convenience of reference only and in no way define, limit or describe the
scope of this Agreement or the intent of any provision hereof.

 

[ SIGNATURES ON FOLLOWING PAGE ]

 

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
as of the date and year first above written to be effective as of the Effective
Date.

 

  THE COMPANY:       ERBA Diagnostics, Inc.,   a Delaware corporation       By:
/s/ Suresh Vazirani   Name: Suresh Vazirani   Title: Executive Chairman      
THE EXECUTIVE:       /s/ Prakash Patel   Prakash Patel

 

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EXHIBIT A

 

FORM OF NONQUALIFIED STOCK OPTION AGREEMENT

 

ERBA DIAGNOSTICS, INC.

Nonqualified Stock Option Award Agreement

(Employee)

 

1.          Grant of Stock Option. In accordance with and subject to the terms
and conditions of (a) the ERBA Diagnostics, Inc. 2009 Equity Incentive Plan, as
it may be amended from time to time (the “Plan”), a copy of which is attached
hereto as Exhibit A, and (b) this Nonqualified Stock Option Award Agreement (the
“Award Agreement”), ERBA Diagnostics, Inc., a Delaware corporation (the
“Company”), grants to the optionee identified on Schedule 1 attached hereto (the
“Optionee”) a nonqualified stock option (the “Stock Option”) to purchase the
number of shares (the “Shares”) of the Company’s common stock, par value $0.01
per share, set forth on Schedule 1, at the per Share exercise price set forth on
Schedule 1.

 

2.          Acceptance by Optionee. The exercise of the Stock Option, or any
portion thereof, is conditioned upon acceptance by the Optionee of the terms and
conditions of this Award Agreement, as evidenced by the Optionee’s execution of
Schedule 1, and the delivery to the Company of a copy of Schedule 1 which has
been executed by the Optionee.

 

3.          Vesting of Stock Option. The Stock Option shall become exercisable
in accordance with the vesting schedule set forth on Schedule 1. If the
Optionee’s employment agreement with the Company, dated effective as of June 1,
2014 (the “Employment Agreement”), and the Executive’s employment thereunder, is
terminated for any reason whatsoever (including, without limitation, by reason
of the Optionee’s death or Disability, by the Company with Cause or for any
reason or for no reason, or by the Optionee for any reason or for no reason
(each of the foregoing terms, as defined in the Employment Agreement)) prior to
the date on which the Stock Option, or any portion thereof, becomes vested,
then: (a) the non-vested portion of the Stock Option will thereupon
automatically terminate and be void and will not become exercisable; and (b) the
vested portion of the Stock Option will survive and will be exercisable until
the earlier of the Expiration Date and the date which is thirty (30) days after
the effective date of termination of the Employment Agreement and the Optionee’s
employment thereunder, and, upon the earlier to occur of the foregoing, the
vested portion of the Stock Option will automatically terminate and be void and
will not be exercisable.

 

4.          Expiration of Stock Option. The Stock Option shall expire on the
expiration date set forth on Schedule 1 (the “Expiration Date”), and may not be
exercised after such date.

 

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5.          Procedure for Exercise. The Stock Option may be exercised for the
number of Shares specified in a written notice which has been executed by the
Optionee and delivered to the Company at least ten (10) days prior to the date
on which purchase is requested, accompanied by full payment for the Shares with
respect to which the Stock Option is being exercised, in the manner and subject
to the terms and conditions set forth in the Plan. Notwithstanding the
foregoing, the Stock Option may not be exercised as to less than ten (10) Shares
at any time or, if less than ten (10) Shares, the number of Shares subject to
the Stock Option. If any applicable law, rule or regulation requires the Company
to take any action with respect to the Shares specified in such notice or if any
action remains to be taken under the Certificate of Incorporation or Bylaws of
the Company, as they may be amended from time to time, to effect due issuance of
the Shares, then the Company shall take such action and the day for delivery of
such Shares shall be extended for the period necessary to take such action.
Neither the Optionee nor any other Person entitled to exercise the Stock Option,
if any, shall be, or have any rights or privileges of, a stockholder of the
Company in respect of any of the Shares issuable upon exercise of the Stock
Option, unless and until the Shares are issued to the Optionee by the Company.

 

6.          No Right to Employment. Neither the grant of the Stock Option nor
the issuance of any Shares pursuant to the Stock Option shall give the Optionee
any right to be employed or retained in the employ of the Company. Neither the
grant of the Stock Option nor the issuance of any Shares pursuant to the Stock
Option shall affect the right of the Company to discharge or discipline the
Optionee or the right of the Optionee to terminate his or her employment.

 

7.          Return of Economic Value. If the Optionee’s employment with the
Company or its subsidiaries ceases by reason of termination by the Company “with
cause” (as “with cause” may be determined under the procedures established by
the Committee for purposes of the Plan), then the Committee may require the
Optionee to return to the Company the economic value of the Stock Option, or any
portion thereof, which was realized or obtained by the Optionee at any time
during the period beginning on the date which is twelve (12) months prior to the
date of such cessation of the Optionee’s employment with the Company or its
subsidiaries. If the Optionee’s employment with the Company or its subsidiaries
ceases for any reason whatsoever and if, within one (1) year after such
cessation thereof, the Optionee accepts employment with any competitor of, or
otherwise engages in competition with, the Company or its subsidiaries, then the
Committee may require the Optionee to return to the Company the economic value
of the Stock Option, or any portion thereof, which was realized or obtained by
the Optionee at any time during the period beginning on the date which is twelve
(12) months prior to the date of the Optionee’s cessation of employment with the
Company or its subsidiaries.

 

8.          Representations as to Purchase of Shares. As a condition of the
Company’s obligation to issue Shares upon exercise of the Stock Option, if
requested by the Company, then the Optionee shall, concurrently with the
delivery of the stock certificate representing the Shares so purchased, give
such written assurances to the Company, in the form and substance that the
Company’s counsel reasonably requests, to the effect that the Optionee is
acquiring the Shares for investment and without any present intention of
reselling or redistributing the same in violation of any applicable law, rule or
regulation. If the Company elects to register, or has registered, the Shares
under the Securities Act of 1933, as amended, and any applicable state laws,
rules and regulations, then the issuance of such Shares shall not be subject to
the aforementioned conditions contained in this Section 8.

 

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9.          Compliance with Applicable Law. The issuance of the Shares pursuant
to the exercise of this Stock Option is subject to compliance with all
applicable laws, rules and regulations, including, without limitation, laws,
rules and regulations governing withholding from employees and nonresident
aliens for income tax purposes.

 

IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed
as of the date of grant set forth on Schedule 1.

 

  ERBA Diagnostics, Inc.       By:     Name:     Title:  

 

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Schedule 1

to

Nonqualified Stock Option Award Agreement

(Employee)

 

Name of Optionee: ______________ Number of Shares: ______________ Exercise Price
Per Share: ______________ Date of Grant: ______________ Expiration Date:
______________ Vesting Schedule: ______________

 

The undersigned agrees to the terms and conditions of the Nonqualified Stock
Option Award Agreement of which this Schedule 1 is a part, and acknowledges
receipt of the prospectus relating to the Plan and of the Company’s most recent
annual report to stockholders.

 

   

  Name:  

  Social Security No.:     Date of Acceptance:  

 

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