Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Departure of Chief Executive Officer and Director
On January 9, 2020, we announced that John J. Sperzel III had notified the board
of directors of his resignation as our Chief Executive Officer and President and
one of our directors.
We entered into a Separation and Release Agreement with Mr. Sperzel as of
January 7, 2020, which we refer to as the Separation Agreement, under which Mr.
Sperzel's resignation was deemed effective as of 5 p.m. (Eastern time) on
January 3, 2020. The Separation Agreement provides for our payment to Mr.
Sperzel of unpaid base salary and unreimbursed business expenses through his
separation date, together with a severance payment of $1,000,000 payable over
twelve months. In consideration for the severance payment, Mr. Sperzel agreed
to: (a) release claims in favor of our company and our subsidiaries and
affiliated companies; (b) consult with us on transition matters for ninety days;
(c) comply with various restrictive covenants, including a perpetual
nondisparagrement covenant, a perpetual confidentiality covenant, a covenant not
to solicit our employees for two years, a covenant not to interfere with our
customers and business partners for one year, and a covenant not to compete with
our business activities for one year; and (d) assist us in connection with any
litigation or other disputes. Under our existing employment agreement with Mr.
Sperzel, upon our termination of Mr. Sperzel's employment without defined
"cause" (which termination would be deemed to occur if, among other things, we
did not enter into a new employment agreement with him by March 13, 2020), Mr.
Sperzel was entitled to receive severance benefits that included continued base
salary for twelve months, a pro rata annual bonus (based on actual performance),
continued payment of our monthly share of health insurance premiums for twelve
months, and accelerated vesting of his outstanding equity awards (which
consisted, as of the separation date, of 440,631 restricted shares of common
stock and unvested options to acquire 8,333 shares of common stock, none of
which will accelerate under the terms of the Separation Agreement).
The foregoing description of the Separation Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
such agreement, which is included as Exhibit 10.1 to this report and is
incorporated herein by reference.
Appointment of Interim Chief Executive Officer
On January 9, 2020, we also announced that we had appointed Gail S. Page, one of
our directors, to serve as our Interim Chief Executive Officer until such time
as we appoint Mr. Sperzel's successor.
Ms. Page, age 64, has served as a member of the board of directors since July
2017. She currently serves as the Chair of the board's Compensation Committee
and a member of the board's Audit Committee and Nominating and Corporate
Governance Committee. Ms. Page has been a Venture Partner at Turret Capital
Management, L.P., an international healthcare-focused investment management
fund, since September 2018. She previously was:
• Managing Partner and founder of Vineyard Investment Advisors, LLC, a firm
assisting with new product and services development, from 2014 to November 2018
• co-founder and director of Consortia Health Holdings LLC, a rehabilitation
services provider focused on pelvic disorders, from 2013 to June 2018;
• President, Chief Executive Officer and director of Vermillion, Inc.
(NASDAQ:VRML), a developer and manufacturer of novel diagnostic blood tests,
from 2006 to 2012;
• Executive Vice President and Chief Operating Officer of Luminex Corporation, a
developer of testing solutions for life science applications, from 2000 to
2003; and
• Senior Vice President of Roche Biomedical Laboratories, Inc. / Laboratory
Corporation of America, a healthcare diagnostic company, from 1988 to 2000.
Ms. Page received a Bachelor of Science degree in Medical Technology from the
University of Florida and has completed the executive management program at the
Kellogg School of Management at Northwestern University.
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Item 7.01 Regulation FD Disclosure.
On January 9, 2020, we issued a press release entitled "Chembio Diagnostics
Announces CEO Transition." A copy of the press release is furnished as Exhibit
99.1 to this report. The information contained in this Item 7.01 and in the
press release furnished as Exhibit 99.1 to this report shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that Section or Section 11 or 12(a)(2)
of the Securities Act of 1933. The information contained in this Item 7.01 and
in the press release furnished as Exhibit 99.1 to this report shall not be
incorporated by reference into any filing with the Securities and Exchange
Commission made by us whether made before or after the date hereof, regardless
of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
10.1† Separation and Release Agreement, dated January 7, 2020, between
Chembio Diagnostics, Inc. and John J. Sperzel III
99.1 Press release of Chembio Diagnostics, Inc. dated January 9, 2020
† Indicates management contract or compensatory plan or arrangement.
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