SEC Contract Filing

Filing Date: 2016-05-19

Document Content:
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<TYPE>EX-10.4
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<FILENAME>v440395_ex10-4.htm
<DESCRIPTION>EXHIBIT 10.4
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<P STYLE="margin: 0; text-align: right"><B>Exhibit 10.4</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>INCENTIVE STOCK OPTION AGREEMENT</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B>INCENTIVE STOCK OPTION AGREEMENT</B> made
this ____ day of _____________, 2016 between <B>PSYCHEMEDICS CORPORATION</B>, a Delaware corporation (hereinafter called the Corporation),
and <B>____________________</B>, an employee of the Corporation or one or more of its subsidiaries (hereinafter called the Employee).</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Corporation desires, by affording the Employee
an opportunity to purchase shares of its Common Stock, $.005 par value (hereinafter called the Common Stock), as hereinafter provided,
to carry out the purpose of the Corporation's 2006 Incentive Plan, as amended (the Plan).</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">NOW, THEREFORE, in consideration of the mutual
covenants hereinafter set forth and for other good and valuable consideration, the parties hereto have agreed, and do hereby agree
as follows:</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">1.&nbsp; <U>Grant of Option</U>. The Corporation hereby
irrevocably grants to the Employee the right and option (hereinafter called the Option) to purchase all or any part of an aggregate
of __________ shares of the Common Stock (such number being subject to adjustment as provided in paragraph 7 hereof) on the terms
and conditions herein set forth. The Option is intended by the parties hereto to be, and shall be treated as, an incentive stock
option (as such term is defined under Section 422 of the Internal Revenue Code of 1986 (hereinafter called the Code)).</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">2.&nbsp; <U>Purchase Price</U>. The purchase price
of the shares of the Common Stock covered by the Option shall be $__________ per share.</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">3.&nbsp;<U>Term of Option; Exercisability</U>. The
term of the Option shall be for a period of ten (10) years from the date hereof, subject to earlier termination as provided in
paragraph 6 hereof. Except as otherwise provided in paragraph 6 hereof, the Option shall become exercisable with respect to 25%
of the total number of shares subject to the Option on the first anniversary date of the date hereof, and with respect to an additional
25% of such total number of shares at the end of each twelve-month period thereafter during the succeeding three years, provided
however, that the Option shall immediately become exercisable in full immediately prior to a Change in Control (as defined below)
transaction. The purchase price of the shares as to which the Option shall be exercised shall be paid at the time of exercise as
provided in paragraph 8 hereof. For purposes of this Agreement, a Change in Control shall mean (i ) the consummation of a reorganization,
merger or consolidation or sale or disposition of all or substantially all of the assets of the Corporation (a &ldquo;Business
Combination&rdquo;), unless, in each case following such Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners of the Common Stock of the Corporation immediately before the consummation of such
Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors,
as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a
result of the transaction owns the Corporation or all or substantially all of the assets of the Corporation either directly or
indirectly through one or more subsidiaries); and (B) no person or group (as defined in Section 13(d) or 14(d)(2) of the Securities
Exchange Act of 1934) of the Corporation or the entity resulting from the Business Combination) beneficially owns, directly or
indirectly, more than 30% of the then outstanding shares of the common stock of the entity resulting from the Business Combination;
(ii) Individuals who, as of the date of this Agreement, constitute the Board of Directors of the Corporation (the &quot;Incumbent
Board&quot;) cease for any reason to constitute at least a majority of the Board of Directors of the Corporation, provided, however,
that any individual's becoming a director after the date