Item 1.01 Entry into a Material Definitive Agreement.
On November 4, 2016, Chembio Diagnostics, Inc. ("Chembio"), Avijit Roy and Magentiren Vajuram (the "Sellers"), and RVR Diagnostics Sdn Bhd, a Malaysian corporation ("RVR"), entered into a Stock Purchase Agreement dated as of November 4, 2016 (the "Agreement") for Chembio to acquire all the stock and any other equity interests in RVR from the Sellers. Pursuant to the Agreement:
(i)
The purchase price at closing shall consist of US$1.4 million cash; US$1.85 million in Chembio's stock (based on a 15-day volume weighted average trading price ("VWAP")); and Chembio's forgiveness of a US$250,000 contingent obligation from RVR to Chembio;
(ii)
The Sellers also will be entitled to receive milestone payments of an aggregate total of up to US$100,000 in cash and US$150,000 in Chembio's common stock (calculated with the same 15-day VWAP) in increasing amounts up to the US$250,000 maximum aggregate milestone payment to the extent that RVR's sales for 2017 exceed US$2.25 million;
(iii)
Each of the Sellers will be employed by RVR for one year after closing at a salary of US$10,000 per month;
(iv)
Chembio will be entitled to undertake due diligence after signing of the Stock Purchase Agreement;
(v)
Each of the Sellers will indemnify Chembio for any undisclosed liabilities;
(vi)
Chembio, immediately after signing the Agreement and as soon as RVR has provided Chembio with the RVR financial statements needed for the filing, will file a registration statement with the SEC to register the issuance of the shares to the Sellers, and the closing will occur within a few days after the registration statement becomes effective with the SEC;
(vii)
Closing of the transaction is subject to a number of other conditions that can be waived by the party for whom the condition is to be satisfied; and
(vii)
Upon closing of the acquisition, the directors of RVR will be Magentiren Vajuram, Avijit Roy, Katherine Davis, John Sperzel, and Rich Larkin. Katherine Davis is a director and Chair of the Board of Directors of Chembio, John Sperzel is CEO and a director of Chembio, and Rich Larkin is CFO of Chembio.
Chembio and RVR also are parties to agreements entered into in 2013 and 2014 that grant exclusive distribution rights to RVR in certain countries in Asia and that enable RVR to manufacture certain Chembio products.