Exhibit 10.4

 
FORM OF
STOCK OPTION AWARD AGREEMENT
MEDICAL ACTION INDUSTRIES INC.
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
 

AGREEMENT made as of this ___ day of ___, ____ between MEDICAL ACTION INDUSTRIES
INC., a Delaware corporation (hereinafter called the "Company"), and
___________, a non-employee Director of the Company (hereinafter called
"Optionee").
 
WITNESSETH:
WHEREAS, the Company, for the purposes stated therein, has adopted a 1996
Non-Employee Directors Stock Option Plan, a copy of which is annexed hereto as
Exhibit "A" (hereinafter called the "Plan"); and
WHEREAS, in accordance with said Plan the Board of Directors has determined that
Optionee is eligible for and should be granted an option pursuant to said Plan
as hereinbelow provided, and Optionee desires to have such option;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, THE PARTIES HERETO AGREE AS FOLLOWS:
1.           EXERCISE OF OPTION.  The Company hereby grants to Optionee an
option to purchase a total of ___ shares of the authorized and unissued Common
Stock of the Company, having a par value of $.001 per share, at the price of
$___ per share, upon and subject to the following terms and conditions:
(a)           The within option may be exercised only before the expiration of
ten
 
 

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(10) years from the date of this Agreement, and except as set forth below, such
options shall be exercisable in whole or in part at all times after the date of
this Agreement.  It being expressly understood and agreed that in the event the
within option is not exercised on or before the expiration of ten (10) years
from the date of this Agreement, as to any part or all of the shares which may
be purchased under the option, the right to purchase such shares shall, upon the
expiration of said ten (10) years, completely lapse.
(b)           Each exercise of the within option shall be by delivery to the
Company, at its then principal office (attention of the Secretary) of written
notice stating the number of shares to be purchased and a date (not less than
ten (10) business days after the date of the notice) on which the purchase is to
be made, accompanied by payment in full of the option price of such shares.  The
option price shall be payable in United States dollars in cash or by certified
check, bank draft, postal or express money order; provided, however, that in
lieu of payment in full in cash, an Optionee may, with the approval of the
Company's Board of Directors, exercise his option by tendering to the Company
shares of the Company's Common Stock owned by him and having a fair market value
(as determined in accordance with the Plan) equal to the cash exercise price (or
the balance thereof) applicable to his option.
(c)           In the event of each exercise of the within option, the Company
shall deliver to the Optionee, personally or at such address as he may specify
in the above-mentioned notice, on or before the purchase date stated in said
notice, a certificate made out to the Optionee for the number of shares being
purchased.
2.           NON-TRANSFERABILITY OF OPTION.  The option granted under this
 
 

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Agreement shall not be transferred otherwise than by Will or the laws of descent
and distribution, and during the lifetime of Optionee, it may be exercised only
by the Optionee or Optionee's guardian or legal representative.  Notwithstanding
the above, options may be transferred pursuant to a qualified domestic relations
order.  No option granted under this Plan shall be subject to execution,
attachment, pledge, hypothecation, or other process.
3.           TERMINATION OF SERVICE AS ELIGIBLE DIRECTOR.
(a)           Except as provided in subparagraphs (b) and (c) of this paragraph
3, all outstanding options held by Optionee shall be automatically cancelled
upon Optionee's termination of service as a Non-Employee Director of the
Company.
(b)           Upon termination of Optionee's service as a Non-Employee Director
by reason of his voluntary mid-term resignation, declining to stand for
reelection (whether as a result of the Company's mandatory retirement program or
otherwise), becoming an employee of the Company or a subsidiary thereof or
become disabled (as defined in the Company's pension plan), all outstanding
options held by Optionee on the date of such termination shall expire five (5)
years form the date upon which Optionee ceases to be a Non-Employee Director.
(c)           In the event of the death of Optionee (whether before or after
termination of service as a Non-Employee Director), all outstanding options held
by Optionee (and not previously cancelled or expired) on the date of such death
shall be fully exercisable by Optionee's legal representative within one (1)
year after the date of death (without regard to the expiration date of the
option specified in subparagraph (b) above).
 
 

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4.           DILUTION AND OTHER ADJUSTMENTS.  In the event that there is any
change in the stock subject to the within option through merger, consolidation
or reorganization, or in the event of any dividend in stock of the same class to
holders of issued and outstanding stock of the same class, or the issuance to
the holders of such stock of rights to subscribe to stock of the same class, or
in the event of any split, combination or exchange of stock or other change in
the capital structure of the Company, the Board of Directors of the Company
shall make such adjustments in the within option as it may deem equitable to
prevent dilution or enlargement of the rights granted to the Optionee hereunder,
and such adjustments, when so made, shall be conclusive and binding on the
parties to this Agreement; and provided, further, that nothing herein shall be
construed as limiting or preventing the Company from exercising any right or
power to make or enter into adjustments, reclassifications, reorganizations, or
changes in its capital or business structure or to merge, consolidate or
dissolve or to sell or transfer all or any part of its business or assets.
5.           REQUIREMENTS BY LAW.
(a)           If any law, regulation of the Securities and Exchange Commission,
or any regulation of any other commission or agency having jurisdiction shall
require the Company or the Optionee to take any action with respect to the
shares of stock to be acquired upon the exercise of the within option, then the
date upon which the Company shall deliver or cause to be delivered the
certificate or certificates for the shares of stock shall be postponed until
full compliance has been made with all such requirements of law or regulation.
 
 

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(b)           Neither the Optionee nor any person or persons referred to in
Paragraph 3(c) above, as the case may be, shall be, or shall be deemed to be, a
holder of any shares subject to the within option unless and until certificates
for such shares are delivered to him or them in accordance with this Agreement,
and no certificates may be delivered until the shares represented thereby are
paid in full.
6.           PURCHASE FOR INVESTMENT.  The Optionee represents, on behalf of
himself and the person or persons referred to in Paragraph 3(c) above, that any
shares of the Company purchased pursuant to this Agreement will be acquired in
good faith for investment and not for resale or distribution, and Optionee, on
behalf of himself and said person or persons, agrees that each notice of the
exercise of the within option shall contain or be accompanied by a
representation in writing signed by him or said person or persons, as the case
may be, in form satisfactory to the Company, that the shares of the Company to
be purchased pursuant to such notice are being so acquired.  The requirements of
this Paragraph 6 may be waived by the Company if the Company shall have received
an opinion of its counsel that such representation is not required.
7.           BINDING EFFECT OF THE PLAN.  Optionee represents that he has read
and understands the Plan and agrees to be bound by all of the terms and
conditions thereof.
IN WITNESS WHEREOF, the parties hereby have duly executed this Agreement as of
the day and year first above written.

   
MEDICAL ACTION INDUSTRIES INC.
                   BY:                              
, Optionee