SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
[Amendment
No. ____]
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Check
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14a-6(e)(2))
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Definitive Proxy Statement
[_]
Definitive Additional Materials
[_]
Soliciting Material under ss. 240.14a-12
CHEMBIO
DIAGNOSTICS, INC.
----------------------------------------------
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of
Registrant as Specified in Its Charter)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of
each class of securities to which transaction applies:
2. Aggregate
number of securities to which transaction applies:
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price or other underlying value of transaction computed pursuant to Exchange
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Rule 0-11 (set forth the amount on which the filing fee is calculated and
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box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
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Schedule and the date of its filing.
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1.
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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CHEMBIO
DIAGNOSTICS, INC.
3661
Horseblock Road
Medford,
NY 11763
(631)
924-1135
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held June 15, 2006
The
Annual Meeting of Stockholders of Chembio
Diagnostics, Inc. will be held on June 15, 2006 at 10:00 am (local time)
at the
Radisson Hotel, 1730 North Ocean Avenue, Holtsville, New York 11742, for
the
following purposes:
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1.
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To
elect a Board of Directors consisting of four
Directors;
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2.
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To
consider and vote upon a proposal recommended by the Board of
Directors to
ratify the selection of Lazar, Levine & Felix LLP to serve as our
certified independent accountants for the fiscal year ending
December 31,
2005; and
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3. To
transact any other business that properly may come before the Annual
Meeting.
Only
the
stockholders of record as shown on our transfer books at the close of business
on April 25, 2006 are entitled to notice of, and to vote at, the Annual
Meeting.
Our
Annual Report for the fiscal year ended December 31, 2005 on Form 10-KSB
is
being mailed to stockholders with this proxy statement. The Annual Report
is not
part of the proxy soliciting material.
All
stockholders, regardless of whether they expect to attend the meeting in
person,
are requested to complete, date, sign and return promptly the enclosed
form of
proxy in the accompanying envelope (which requires no postage if mailed
in the
United States). The person executing the proxy may revoke it by filing
with our
Secretary an instrument of revocation or a duly executed proxy bearing
a later
date, or by electing to vote in person at the Annual Meeting.
All
stockholders are extended a cordial invitation to attend the Annual
Meeting.
By
the
Board of Directors
/s/
Lawrence A. Siebert
Medford,
New York
Lawrence
A. Siebert
May
15,
2006
President,
Chief Executive Officer &
Chairman
of the Board
PROXY
STATEMENT
CHEMBIO
DIAGNOSTICS, INC.
3661
Horseblock Road
Medford,
NY 11763
(631)
924-1135
ANNUAL
MEETING OF STOCKHOLDERS
To
be held June 15, 2006
SOLICITATION
AND REVOCATION OF PROXIES
This
proxy statement is provided in connection with the solicitation of proxies
by
and on behalf of the Board of Directors of Chembio Diagnostics, Inc., a
Nevada
corporation (referred to as the “Company” or “Chembio” or “we” or “us”), to be
voted at the Annual Meeting of Stockholders to be held at 10:00 am (local
time)
on June 15, 2006 at the Radisson Hotel, 1730 North Ocean Avenue, Holtsville,
New
York 11742, or at any adjournment or postponement of the Annual Meeting.
We
anticipate that this proxy statement and the accompanying form of proxy
will be
first mailed or given to stockholders on or about May 15, 2006.
A
stockholder giving a proxy may revoke it at any time before it is exercised
by
delivering written notice of revocation to our Secretary, by substituting
a new
proxy executed at a later date, or by requesting, in person at the Annual
Meeting, that the proxy be returned.
The
solicitation of proxies is to be made principally by mail; however, following
the initial solicitation, further solicitations may be made by telephone
or oral
communication with stockholders. Our officers, directors, and employees
may
solicit proxies, but these persons will not receive compensation for that
solicitation other than their regular compensation as employees. Arrangements
also will be made with brokerage houses and other custodians, nominees
and
fiduciaries to forward solicitation materials to beneficial owners of the
shares
held of record by those persons. We may reimburse those persons for reasonable
out-of-pocket expenses incurred by them in so doing. We will pay all expenses
involved in preparing, assembling and mailing this proxy statement and
the
enclosed material.
VOTING
SECURITIES
The
close
of business on April 25, 2006 has been fixed as the record date for the
determination of holders of record of the Company’s $0.01 par value per share
(the “Common Stock”), entitled to notice of and to vote at the Annual Meeting.
On the record date, 9,569,863 shares of Common Stock were outstanding and
eligible to be voted at the Annual Meeting. A majority of the issued and
outstanding shares of common stock entitled to vote, represented either
in
person or by proxy, constitutes a quorum at any meeting of the stockholders.
If
sufficient votes for approval of the matters to be considered at the Annual
Meeting have not been received prior to the meeting date, we intend to
postpone
or adjourn the Annual Meeting in order to solicit additional votes. The
form of
proxy we are soliciting requests authority for the proxies, in their discretion,
to vote the stockholders’ shares with respect to a postponement or adjournment
of the Annual Meeting. At any postponed or adjourned meeting, we will vote
any
proxies received in the same manner described in this proxy statement with
respect to the original meeting.
VOTING
PROCEDURES
Votes
at
the Annual Meeting are counted by an inspector of election appointed by
the
Chairman of the meeting. If a quorum is present, an affirmative vote of
a
majority of the votes entitled to be cast by those present in person or
by proxy
is required for the approval of items submitted to shareholders for their
consideration, unless a different number of votes is required by Nevada
law or
our Articles Of Incorporation. Abstentions by those present at the Annual
Meeting are tabulated separately from affirmative and negative votes and
do not
constitute affirmative votes. If a shareholder returns his or her proxy
card and
withholds authority to vote for any or all of the nominees, the votes
represented by the proxy card will be deemed to be present at the meeting
for
purposes of determining the presence of a quorum but will not be counted
as
affirmative votes. Shares in the names of brokers that are not voted on
a
particular matter are treated as not present with respect to that
matter.
FORWARD-LOOKING
STATEMENTS
This
proxy statement includes “forward-looking” statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. All statements other
than statements of historical facts included in this proxy statement regarding
our financial position, business strategy and plans and objectives of management
for future operations and capital expenditures are forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements and the assumptions upon which the forward-looking statements
are
based are reasonable, we can give no assurance that such expectations and
assumptions will prove to have been correct.
BENEFICIAL
OWNERSHIP OF THE COMPANY’S EQUITY SECURITIES
At
the
Annual Meeting, holders of 9,569,863 shares of Common Stock, the number
of
shares of Common Stock outstanding as of the record date, will have the
right to
vote. Each share, unless otherwise set forth herein, is entitled to one
vote. On
April 25, 2006, there were 9,569,863 shares of Common Stock issued and
outstanding. The following table sets forth certain information regarding
the
beneficial ownership of our common stock by each person or entity known
by us to
be the beneficial owner of more than 5% of the outstanding shares of common
stock, each of our directors and each of our “named executive officers” and all
of our directors and executive officers as a group as of April 15,
2006.
Name
and Address of Beneficial Owner
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Number
of Shares Beneficially Owned
|
|
Percent
of Class
|
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Lawrence
Siebert (1)
3661
Horseblock Road
Medford,
NY 11763
|
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2,046,139
|
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22.94
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%
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Avi
Pelossof (2)
3661
Horseblock Road
Medford,
NY 11763
|
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599,314
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6.76
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%
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Javan
Esfandiari (3)
3661
Horseblock Road
Medford,
NY 11763
|
|
|
185,830
|
|
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2.15
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%
|
Richard
Bruce (4)
3661
Horseblock Road
Medford,
NY 11763
|
|
|
100,500
|
|
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1.17
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%
|
Richard
J. Larkin (5)
3661
Horseblock Road
Medford,
NY 11763
|
|
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99,513
|
|
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1.16
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%
|
Alan
Carus (6)
3661
Horseblock Road
Medford,
NY 11763
|
|
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51,000
|
|
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0.60
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%
|
Gary
Meller (7)
3661
Horseblock Road
Medford,
NY 11763
|
|
|
51,000
|
|
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0.60
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%
|
Gerald
Eppner (8)
3661
Horseblock Road
Medford,
NY 11763
|
|
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51,000
|
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0.60
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%
|
All
officers and directors as a group(9)
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3,184,296
|
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32.49
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%
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Mark
Baum (10)
580
Second Street, Suite 102
Encinitas,
CA 92024
|
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1,400,000
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|
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14.99
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%
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Thunderbird
Global Corporation (11)
c/o
The Baum Law Firm
580
Second Street, Suite 102
Encinitas,
CA 92024
|
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487,504
|
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5.74
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%
|
Daniel
Gressel (12)
460
E. 79th
Street, Apt. 17B
New
York, NY 10021
|
|
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462,501
|
|
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5.42
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%
|
Tomas
Haendler (13)
31
Cogswell Lane
Stamford,
CT 06902
|
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454,720
|
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5.33
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%
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Beneficial
ownership is determined in accordance with the Rule 13d-3(a) of the Securities
Exchange Act of 1934, as amended, and generally includes voting or investment
power with respect to securities. Except as subject to community property
laws,
where applicable, the person named above has sole voting and investment
power
with respect to all shares of our common stock shown as beneficially owned
by
him.
The
term
“named executive officer” refers to our chief executive officer and each of our
other executive officers who received at least $100,000 of compensation
in
2005.
This
table does not include convertible securities which, due to contractual
restrictions, are not exercisable within 60 days of the date of this proxy
statement. Specifically, at no time may a holder of shares of series A
or series
B preferred stock convert shares of the series A or series B preferred
stock if
the number of shares of common stock to be issued pursuant to such conversion
would exceed, when aggregated with all other shares of common stock owned
by
such holder at such time, the number of shares of common stock which would
result in such holder beneficially owning (as determined in accordance
with
Section 13(d) of the Securities Exchange Act) in excess of either 4.999%
or
9.999% of the then issued and outstanding shares of common stock outstanding
at
such time, unless the holder has provided us with sixty-one (61) days notice
that the holder has elected to waive this restriction.
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(
1)
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Includes
220,000 shares issuable upon exercise of options exercisable
within 60
days and 207,566 warrants. Also does not include 1,937,220 shares
issuable
upon conversion of series A preferred stock, 2,324,666 shares
issuable
upon exercise of warrants, 88,971 shares issuable upon conversion
of
series B preferred stock and 77,868 shares issuable upon exercise
of
warrants because conversion of any of those shares of series
A or series B
preferred stock or exercise of those warrants would result in
the holder
beneficially owning in excess of 4.99% of the then issued and
outstanding
shares of common stock outstanding at that
time.
|
|
(
2)
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Includes
350,000 shares issuable upon exercise of options exercisable
within 60
days and 22,555 shares issuable upon exercise of warrants. Does
not
include 50,000 shares issuable upon exercise of options that
are not
exercisable within the next 60 days. Also does not include 10,078
shares
issuable upon conversion of series A preferred stock and 12,095
shares
issuable upon exercise of warrants because conversion of any
of those
shares of series A preferred stock or exercise of any of those
warrants
would result in the holder beneficially owning in excess of 4.99%
of the
then issued and outstanding shares of common stock outstanding
at that
time.
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(
3)
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Includes
163,750 shares issuable upon exercise of options exercisable
within 60
days and 2,007 shares issuable upon exercise of warrants. Does
not include
68,750 shares issuable upon exercise of options that are not
exercisable
within the next 60 days.
|
|
(
4)
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Includes
95,000 shares issuable upon exercise of options exercisable within
60 days
and 500 shares issuable upon exercise of warrants. Does not include
25,000
shares issuable upon exercise of options that are not exercisable
within
the next 60 days.
|
|
(
5)
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Includes
137,500 shares issuable upon exercise of options exercisable
within 60
days and 250 shares issuable upon exercise of warrants. Does
not include
43,750 shares issuable upon exercise of options that are not
exercisable
within the next 60 days. Also does not include 30,236 shares
issuable upon
conversion of series A preferred stock and 25,196 shares issuable
upon
exercise of warrants because conversion of any of those shares
of series A
preferred stock or exercise of any of those warrants would result
in the
holder beneficially owning in excess of 4.99% of the then issued
and
outstanding shares of common stock outstanding at that
time.
|
|
(
6)
|
Includes
51,000 shares issuable upon exercise of options exercisable within
60
days. Does not include 36,000 shares issuable upon exercise of
options
that are not exercisable within the next 60
days.
|
|
(
7)
|
Includes
51,000 shares issuable upon exercise of options exercisable within
60
days. Does not include 36,000 shares issuable upon exercise of
options
that are not exercisable within the next 60
days.
|
|
(
8)
|
Includes
51,000 shares issuable upon exercise of options exercisable within
60
days. Does not include 36,000 shares issuable upon exercise of
options
that are not exercisable within the next 60
days.
|
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(
9)
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Includes
footnotes (1)-(8).
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(10)
|
Includes
850,000 shares issuable upon exercise of warrants. Does not include
108,333 shares issuable upon conversion of series A preferred
stock and
130,000 shares issuable upon exercise of warrants because conversion
of
any of those shares of series A preferred stock or exercise of
those
warrants would result in the holder beneficially owning in excess
of 4.99%
of the then issued and outstanding shares of common stock outstanding
at
that time.
|
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(11)
|
Does
not include 251,963 shares issuable upon conversion of series
A preferred
stock and 302,356 shares issuable upon exercise of warrants because
conversion of any of those shares of series A preferred stock
or exercise
of any of those warrants would result in the holder beneficially
owning in
excess of 4.99% of the then issued and outstanding shares of
common stock
outstanding at that time. Gustavo Montilla may be deemed to have
voting or
investment control over the shares held by Thunderbird Global
Corporation.
|
|
(12)
|
Includes
42,065 shares issuable upon exercise of warrants exercisable
within 60
days.
|
|
(13)
|
Includes
38,197 shares issuable upon exercise of options exercisable within
60
days. Does not include 35,556 shares issuable upon conversion
of series A
preferred stock and 53,334 shares issuable upon the exercise
of warrants
because conversion of any of those shares of series A preferred
stock or
exercise of any of those warrants would result in the holder
beneficially
owning in excess of 4.99% of the then issued and outstanding
shares of
common stock outstanding at that
time.
|
AVAILABLE
INFORMATION
Copies
of
our Annual Report on Form 10-KSB are being sent to each stockholder with
this
proxy statement. Upon written request, we will provide, without charge,
a copy
of our quarterly reports on Form 10-QSB for the quarters ended March 31,
2005, June 30, 2005 and September 30, 2005 to any stockholders of record,
or to
any stockholder who owns common stock listed in the name of a bank or broker
as
nominee, at the close of business on April 25, 2006. Any request for a
copy of
these reports should be mailed to the Secretary, Chembio Diagnostics, Inc.,
3661
Horseblock Road, Medford, NY 11763. Stockholders may also receive copies
of
these reports by accessing the SEC’s website at www.sec.gov.
ITEM
1. ELECTION OF DIRECTORS
At
the
Annual Meeting, the stockholders will elect four directors to serve as
our Board
of Directors. Each director will be elected to hold office until the next
annual
meeting of stockholders and thereafter until his successor is elected and
qualified. The affirmative vote of a plurality of the shares voted at the
Annual
Meeting in person or by proxy is required to elect each director. Cumulative
voting is not permitted in the election of directors. In the absence of
instructions to the contrary, the person named in the accompanying proxy
shall
vote the shares represented by that proxy for the persons named below as
management’s nominees for directors. Each of the four nominees currently is a
director of the Company.
It
is not
anticipated that any of the nominees will become unable or unwilling to
accept
nomination or election, but, if that should occur, the persons named in
the
proxy intend to vote for the election of such other person as the Board
of
Directors may recommend.
The
following table sets forth, with respect to each nominee for director,
the
nominee’s age, his positions and offices with the Company, the expiration of his
term as a director and the year in which he first became a director. Individual
background information concerning each of the nominees follows the table.
For
additional information concerning the nominees, including stock ownership
and
compensation, see “Executive Compensation,” “Beneficial Ownership of the
Company’s Equity Securities,” and “—Certain Transactions With Management And
Principal Stockholders.”
Name
|
Age
|
Position(s)
and Office(s) with the Company
|
Expiration
of Term of Director
|
Initial
Date as Director
|
Lawrence
A. Siebert
|
49
|
Chief
Executive Officer, President and Chairman of the Board
|
2006
Annual Meeting
|
May
2004
|
|
|
|
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|
Dr.
Gary Meller
|
55
|
Director
|
2006
Annual Meeting
|
March
2005
|
|
|
|
|
|
Gerald
A. Eppner
|
66
|
Director
|
2006
Annual Meeting
|
March
2005
|
|
|
|
|
|
Alan
Carus
|
67
|
Director
|
2006
Annual Meeting
|
April
2005
|
Lawrence A.
Siebert (49),
President, Chief Executive Officer and Director. Mr. Siebert was appointed
President of Chembio Diagnostics, Inc. and a member of our board of directors
upon consummation of the merger with Chembio Diagnostic Systems Inc. Mr.
Siebert
has been Chairman of Chembio Diagnostic Systems Inc. for approximately
12 years
and its President since May 2002. Mr. Siebert’s background is in private equity
and venture capital investing. From 1982 to 1991, Mr. Siebert was associated
with Stanwich Partners, Inc, which during that period invested in middle
market
manufacturing and distribution companies. From 1992 to 1999, Mr. Siebert
was an
investment consultant and business broker with Siebert Capital Corp. and
Siebert
Associates LLC, and was a principal investor in a privately held test and
measurement company which was sold in 2002. Mr. Siebert received a JD from
Case
Western Reserve University School of Law in 1981 and a BA with Distinction
in
Economics from the University of Connecticut in 1978.
Dr.
Gary Meller (55),
Director. Dr. Meller was elected to our Board of Directors on March 15,
2005.
Dr. Meller has been the president of CommSense Inc., a healthcare business
development company, since 2001. CommSense Inc. works with clients in Europe,
Asia, North America, and the Middle East on medical information technology,
medical records, pharmaceutical product development and financing, health
services operations and strategy, and new product and new market development.
From 1999 until 2001 Dr. Meller was the executive vice president, North
America,
of NextEd Ltd., a leading internet educational services company in the
Asia
Pacific region. Dr. Meller also is a limited partner and a member of the
Advisory Board of Crestview Capital Master LLC, which was the lead investor
in
our series B preferred stock private placement. Dr. Meller is a graduate
of the
University of New Mexico School of Medicine and has an MBA from the Harvard
Business School.
Gerald
A. Eppner (66), Director.
Mr. Eppner was elected to our Board of Directors on March 15, 2005. Mr.
Eppner is Counsel in the Corporate and Finance Department of Kaye Scholer
where
his practice includes matters under the federal securities laws. He has
engaged in private law practice in New York City for over 40 years and
retired
as a partner in Cadwalader, Wickersham & Taft at the end of 2004 and as
Senior Counsel to that firm in 2005. Mr. Eppner is Vice Chairman and General
Counsel of Emeritus Capital Partners, LLC, a New York City-based capital
strategies firm that specializes in large asset-based securitizations and
secondary market intermediation of senior life settlement insurance
portfolios. He is also a Managing Director of Access Equity Partners, LLC,
a New York-and Chicago-based venture capital firm. Prior to coming to New
York, Mr. Eppner was an employee of agencies and departments of the United
States government.
Alan
Carus, CPA (67),
Director, Audit Committee chair. Mr. Carus was elected to Chembio’s Board of
Directors on April 15, 2005. He is a co-founder of LARC Strategic Concepts
LLC, a consulting firm dedicated to guiding emerging companies to next
stage
development. Prior to co-founding LARC Strategic Concepts LLC, Mr. Carus
was
Senior Vice President of Maritime Overseas Corporation (“MOC”) and a senior
executive of Overseas Ship holding Group, Inc. (“OSG”) from 1981 to 1998 when he
retired. MOC was managing agent for OSG, one of the world’s largest ship-owners.
He was a member of OSG’s senior management committee and had senior
responsibility in areas relating to administration, accounting, tax, finance,
budgets, long-range projections, and human resources. Mr. Carus was involved
in
numerous acquisitions, debt and equity offerings, complex transaction
structuring, and was active in the management of OSG’s major investments in the
cruise industry and other development stage companies. From 1964 to 1981,
he was
with Ernst & Young (including predecessors), the last seven years as a
partner. Mr. Carus has a B.B.A. from the Baruch School of Business of the
City
College of New York.
Recommendation
of the Board of Directors
The
Board of Directors unanimously recommends that the stockholders vote FOR
the
election of the four nominees listed above.
INFORMATION
REGARDING THE BOARD OF DIRECTORS
AND
EXECUTIVE OFFICERS
Other
Executive Officers
The
following table sets forth with respect to each other executive officer,
the
officer’s age, the officer’s positions and offices with the Company, the
expiration of his term as an officer and the period during which he has
served,
either the Company or Chembio Diagnostic Systems Inc.
Name
|
Age
|
Position
With Company
|
Initial
Date as Officer
|
Richard
J. Larkin
|
49
|
Chief
Financial Officer
|
2003
|
|
|
|
|
Avi
Pelossof
|
43
|
Vice
President Sales, Marketing and Business Development
|
2001
|
|
|
|
|
Javan
Esfandiari
|
39
|
Director
of Research & Development
|
2004
|
|
|
|
|
Rick
Bruce
|
51
|
Vice
President, Operations
|
2004
|
|
|
|
|
Les
Stutzman
|
54
|
Vice
President of Marketing
|
2005
|
|
|
|
|
Tom
Ippolito
|
43
|
Vice
President of Regulatory Affairs, Quality Assurance and Quality
Control
|
2005
|
Richard J.
Larkin (49),
Chief
Financial Officer. Mr. Larkin was appointed as Chief Financial Officer
of
Chembio Diagnostics, Inc. upon consummation of the merger. Mr. Larkin oversees
our financial activities and information systems. Mr. Larkin has been the
Chief
Financial Officer of Chembio Diagnostic Systems Inc. since September 2003.
Prior
to joining Chembio Diagnostic Systems Inc., Mr. Larkin served as CFO at
Visual
Technology Group from May 2000 to September 2003, and also led their consultancy
program that provided hands-on expertise in all aspects of financial service,
including the initial assessment of client financial reporting requirements
within an Enterprise
Resource Planning (Manufacturing) environment through training and
implementation. Prior to joining VTG, he served as CFO at Protex International
Corporation from May 1987 to January 2000. Mr. Larkin holds a BBA in Accounting
from Dowling College and is a member of the American Institute of Certified
Public Accountants.
Avi
Pelossof (43),
Vice
President Sales, Marketing and Business Development. Mr. Pelossof joined
Chembio
Diagnostic Systems Inc. in 1996 and has been responsible for developing
Chembio
Diagnostic System’s marketing strategy and collaborations. From 1991 to 1996, he
was Managing Director and co-founder of The IMS Group, Inc., which provided
strategic marketing advisory services to companies involved in Latin American
markets including Chembio Diagnostics, Inc. Prior to IMS he was a Citibank
Vice
President in the International Corporate Finance Group focused on Latin
America.
Mr. Pelossof received his MBA in finance and international business from
New
York University in 1986 and a BA with Distinction in economics from the
University of Michigan in 1984.
Javan
Esfandiari (39),
Director
of Research & Development. Mr. Esfandiari joined Chembio Diagnostic Systems,
Inc. in 2000. Mr. Esfandiari co-founded, and became a co-owner of Sinovus
Biotech AB where he served as Director of Research and Development concerning
lateral flow technology until Chembio Diagnostic Systems Inc. acquired
Sinovus
Biotech AB in 2000. From 1993 to 1997, Mr. Esfandiari was Director of Research
and Development with On-Site Biotech/National Veterinary Institute, Uppsala,
Sweden, which was working in collaboration with Sinovus Biotech AB on
development of veterinary lateral flow technology. Mr. Esfandiari received
his
B.Sc. in Clinical Chemistry and his M. Sc. in Molecular Biology from Lund
University, Sweden. He has published articles in various veterinary journals
and
has co-authored articles on tuberculosis serology with Dr.
Lyashchenko.
Rick
Bruce (51),
Vice
President, Operations. Mr. Bruce was hired in April 2000 as Director of
Operations. He is responsible for production, maintenance, inventory, shipping,
receiving, and warehouse operations. Prior to joining Chembio Diagnostic
Systems
Inc., he held director level positions at Wyeth Laboratories from 1984
to 1993.
From 1993 to 1998, he held various management positions in the Operations
department at Biomerieux. From 1998 to 2000, he held a management position
at
V.I. Technologies. Mr. Bruce has over 25 years of operations management
experience with Fortune 500 companies in the field of in-vitro diagnostics
and
blood fractionation. Mr. Bruce received his BS in Management from National
Louis University in 1997.
Les
Stutzman (54), VP
of
Marketing. In 2005, Mr. Stutzman joined Chembio as Vice President of Marketing
to lead the development and launch of rapid tests for veterinary and human
TB
and other veterinary products. Mr. Stutzman has spent over twenty years
in
marketing leadership positions within various diagnostics companies. He
has held
Global Director and Business Development Director positions in Marketing
for
diagnostic companies including bioMérieux Inc., (formerly Organon Teknika
Corp.), Durham, North Carolina from 1997 to 2002 and TREK Diagnostic Systems,
Cleveland, Ohio from 2002 to 2005. Mr. Stutzman received his MBA in Marketing
from Duke University Fuqua School of Business in 1988 and his Masters in
Microbiology from Wagner College in 1982. Mr. Stutzman is MT (ASCP) SM
certified.
Tom
Ippolito (43), VP
of
Regulatory Affairs, QA and QC. Mr. Ippolito joined Chembio in June 2005.
He has
over twenty years experience with in vitro diagnostics for infectious diseases,
protein therapeutics, vaccine development, Process Development, Regulatory
Affairs and Quality Management. Over the years, Mr. Ippolito has held Vice
President level positions at Biospecific Technologies, Corp. from 2000
- 2005,
Director level positions in Quality Assurance, Quality Control, Process
Development and Regulatory Affairs at United Biomedical, Inc. from 1987
- 2000.
Since 2003, he has been a guest instructor for "drug development process"
and
"FDA regulations", a BioScience Certificate program at New York State University
of Stony Brook.
Each
of
our officers serves at the pleasure of the Board of Directors. There are
no
family relationships among our officers and directors.
Certain
Transactions With Management And Principal Stockholders
Mark
L.
Baum, our former president prior to the merger and a former director of
Chembio
Diagnostics, Inc., entered into a nine-month employment agreement with
Chembio
Diagnostics, Inc., effective upon the closing of the merger, pursuant to
which
Mr. Baum received 400,000 shares of our common stock as well as a warrant
to
acquire 425,000 shares of common stock at $.60 per share and a warrant
to
acquire an additional 425,000 shares of common stock at $.90 per share.
The
warrants expire five years after the date of grant. Pursuant to the employment
agreement, Mr. Baum was to advise Chembio Diagnostics, Inc. concerning
management, marketing, strategic planning, corporate structure, business
operations, expansion of services, acquisitions and business opportunities,
matters related to our public reporting obligations, and our overall needs
through February 5, 2005. Mr. Baum also invested $65,000 in the private
placement of series A preferred stock, pursuant to which he received 2.167
shares of series A preferred stock convertible into 108,350 shares of common
stock, and a warrant to purchase 130,020 shares of common stock. Mr. Baum
also
owns 300,000 shares of our common stock in addition to the stock and warrants
described above. In November of 2004 as payment of dividends on the series A
preferred he received 4,333 shares of common stock. Prior to the merger,
Mr.
Baum was the sole director and officer of Chembio Diagnostics, Inc. On
March 18,
2005, as compensation for Mr. Baum’s service on the Board of Directors of
Chembio Diagnostics, Inc., the exercise price of Mr. Baum’s warrant to acquire
425,000 shares of common stock at $.90 per share was reduced to $.75 per
share.
Mr. Baum received no other compensation for his services on the Board of
Directors.
Lawrence
A. Siebert, the president and chairman of the board of directors of Chembio
Diagnostics, Inc. beginning at the time of and after the merger, and the
president and chairman of Chembio Diagnostic Systems Inc. since May 2002,
held
two promissory notes issued by Chembio Diagnostic Systems Inc. One note
was
issued on August 1, 1999 in the original principal amount of $338,125,
bearing
interest at a rate of 11% per annum. The other was issued on April 25,
2001 in
the original principal amount of $795,937, bearing interest at a rate of
12% per
annum. Mr. Siebert converted the entire outstanding principal amount of
the 11%
note and $561,875 principal amount of the 12% note into 30 shares of Chembio
Diagnostics, Inc.’s series A preferred stock, together with warrants to acquire
1,800,000 shares of common stock at $.90 per share, pursuant to Chembio
Diagnostics, Inc.’s private placement of its series A preferred stock on May 5,
2004. The shares of series A preferred stock held by Mr. Siebert are convertible
into 1,547,100 shares of Chembio Diagnostics, Inc.’s common stock. The remaining
debt of $234,062 held by Mr. Siebert was exchanged on December 29, 2004
into
7.80208 shares of Chembio Diagnostics, Inc.’s series A preferred stock, together
with warrants to acquire 468,125 shares of common stock at $.90 per share,
pursuant to the terms of Chembio Diagnostics, Inc.’s private placement of its
series A preferred stock on May 5, 2004. Approximately $236,852 of accrued
interest on the debt is also due to Mr. Siebert, but is not accruing interest.
The accrued interest will be paid out according to the terms of Chembio
Diagnostics, Inc.’s private placement of its series B preferred stock on January
28, 2005. Mr. Siebert also invested $50,000 in our series B preferred stock
private placement pursuant to which he received 1 share of series B preferred
stock convertible into 81,967 shares of common stock and a warrant to purchase
77,868 shares of common stock.
Mr.
Siebert also invested $18,700 in Chembio Diagnostic Systems Inc. pursuant
to a
private placement of convertible notes on March 22, 2004. Mr. Siebert converted
the entire principal amount of the note that he received, together with
accrued
interest thereon, into .942 shares of Chembio Diagnostics, Inc.’s series A
preferred stock, together with warrants to acquire 56,520 shares of common
stock
at $.90 per share, pursuant to Chembio Diagnostics, Inc.’s private placement of
its series A preferred stock on May 5, 2004. In November of 2004 as payment
of
dividends on the series A preferred he received 61,884 shares of common
stock.
Mr. Siebert exercised a warrant to purchase 66,869 shares of common stock
on
December 30, 2004 at a price of $0.45 per share. These shares were gifted
by Mr.
Siebert to a third party. In May of 2005 as payment of dividends on the
series A
preferred he received 72,234 shares of common stock. In July of 2005 as
payment
of dividends on the series B preferred he received .03871 shares of series
B
preferred stock In November of 2005 as payment of dividends on the series
A
preferred he received 77,488 shares of common stock.
Mr.
Siebert prior to March 22, 2004 had either advanced funds to Chembio Diagnostic
Systems, Inc. or paid vendors directly on Chembio Diagnostic Systems, Inc.’s
behalf. The total amount so paid or advanced and not repaid totaled $182,181
as
of December 31, 2005.
Richard
J. Larkin, the Chief Financial Officer of Chembio Diagnostics, Inc., invested
$10,000 in Chembio Diagnostic Systems Inc. pursuant to the March 22, 2004
private placement of convertible notes. Mr. Larkin converted the entire
principal amount of the note that he received, together with accrued interest
thereon, into .504 shares of Chembio Diagnostics, Inc.’s series A preferred
stock, together with warrants to acquire 30,240 shares of common stock
at $.90
per share, pursuant to Chembio Diagnostics, Inc.’s private placement of its
series A preferred stock on May 5, 2004. In November of 2004 as payment
of
dividends on the series A preferred he received 1,007 shares of common
stock. In
May of 2005 as payment of dividends on the series A preferred he received
999
shares of common stock. In November of 2005 as payment of dividends on
the
series A preferred he received 1,007 shares of common stock.
Avi
Pelossof, the vice president of sales and marketing of Chembio Diagnostics,
Inc., invested $4,000 in Chembio Diagnostics, Inc. pursuant to the March
22,
2004 private placement of convertible notes. Mr. Pelossof converted the
entire
principal amount of the note that he received, together with accrued interest
thereon, into .202 shares of Chembio Diagnostics, Inc.’s series A preferred
stock, together with warrants to acquire 22,555 shares of common stock
at $.90
per share, pursuant to Chembio Diagnostics, Inc.’s private placement of its
series A preferred stock on May 5, 2004. In November of 2004 as payment
of
dividends on the series A preferred he received 403 shares of common stock.
In
May of 2005 as payment of dividends on the series A preferred he received
399
shares of common stock. In November of 2005 as payment of dividends on
the
series A preferred he received 403 shares of common stock.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s directors, executive officers and holders of more than
10% of the Company’s common stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of
common stock and other equity securities of the Company. The Company believes
that during the year ended December 31, 2005, its officers, directors and
holders of more than 10% of the Company’s common stock complied with all Section
16(a) filing requirements, except the following filings were filed late:
(i)
Form 4 for Gerald Eppner filed on March 25, 2005; (ii) Form 4 for Gary
Meller
filed on March 25, 2005; (iii) Form 4 for Alan Carus filed on April 22,
2005;
(iv) Form 4 for Richard Larkin on May 17, 2005; (v) Form 4 for Avi Pelossof
filed on May 17, 2005; (vi) Form 4 for Lawrence Siebert filed on May 17,
2005;
(vii) Form 4 for Lawrence Siebert filed on November 17, 2005.
Board
of Directors and Committees
The
Board
of Directors held five meetings during the fiscal year ended December 31,
2005 and each director participated in at least 75% of those meetings and
meetings of the committees on which he served. Although the Company does
not
have a formal policy regarding attendance by members of the Board of Directors
at the Company’s annual meeting of stockholders, the Company encourages each
director to attend. One director attended last year’s annual
meeting.
The
Company’s audit committee met three times in 2005 and consists of Alan Carus,
Gerald A. Eppner, and Dr. Gary Meller. The board of directors has
determined that Mr. Carus is an “audit committee financial expert,” as defined
under the rules of the SEC. Each of the members of the audit committee
is
“independent,” as that term is defined in Rule 4200(a)(15) of the Nasdaq Stock
Market. This committee oversees, reviews, acts on and reports to our Board
of
Directors on various auditing and accounting matters including: the selection
of
our independent accountants, the scope of our annual audits, fees to be
paid to
the independent accountants, and the performance of our independent accountants.
A copy of the committee’s charter is attached to this proxy as Appendix
A.
The
Company’s nominating and corporate governance committee met one time in 2005 and
consists of Alan Carus, Gerald A. Eppner, and Dr. Gary Meller. Each of
the
committee’s members is “independent,” as that term is defined in Rule
4200(a)(15) of the Nasdaq Stock Market. The committee (i) identifies
individuals qualified to become members of the Board of Directors,
(ii) recommends director candidates to the Company’s Board of Directors,
(iii) develops, updates as necessary, and recommends to the Company’s Board
of Directors corporate governance principles and policies, and
(iv) monitors compliance with such principles and policies. The committee’s
charter is attended to this proxy statement as Appendix
B.
To
be
considered for nomination by the Board at the next annual meeting of
stockholders, the nominations must be made by stockholders of record entitled
to
vote. Stockholder nominations must be made by notice in writing, delivered
or
mailed by first class U.S. mail, postage prepaid, to the Secretary of the
Company at the Company’s principal business address, not less than 60 days nor
more than 90 days prior to any meeting of the stockholders at which directors
are to be elected. Each notice of nomination of directors by a stockholder
shall
set forth the nominee’s name, age, business address, if known, residence address
of each nominee proposed in that notice, the principal occupation or employment
of each nominee for the five years preceding the date of the notice, the
number
of shares of the Company’s common stock beneficially owned by each nominee and
any arrangement, affiliation, association, agreement or other relationship
of
the nominee with any Company stockholder.
Stockholders
wishing to send communications to the Board may contact Lawrence Siebert,
our
CEO, President and Chairman, at the Company’s principal executive office
address. All such communications shall be shared with the members of the
Board,
or if applicable, a specified committee or director.
The
Company’s compensation committee met two times in 2005 and consists of Alan
Carus, Gerald A. Eppner, and Dr. Gary Meller. The compensation committee
establishes salaries, incentives and other forms of compensation for officers
and employees. The compensation committee also administers our incentive
compensation plan.
Audit
Committee Report
This
report shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to
the
extent that we specifically incorporate this information by reference,
and shall
not otherwise be deemed filed under either of such Acts.
The
audit
committee oversees the Company’s financial reporting process. Management has the
primary responsibility for the financial statements and the reporting process,
including the systems of internal controls. In fulfilling its oversight
responsibilities, the committee reviewed and discussed with management
the
audited financial statements in the Company’s Annual Report on Form 10-KSB for
the year ended December 31, 2005 and the unaudited financial statements
included
in the Quarterly Reports on Form 10-QSB for the first three quarters of
the
fiscal year ended December 31, 2005.
The
committee discussed with the independent auditors, who are responsible
for
expressing an opinion on the conformity of audited financial statements
with
generally accepted accounting principles, the auditors’ judgments as to the
quality, not just the acceptability, of the Company’s accounting principles and
such other matters as are required to be discussed by the auditors with
the
committee under Statement on Auditing Standard No. 61, as amended. In addition,
the committee discussed with the independent auditors the auditors’ independence
from management and the Company, including the matters in the written
disclosures and the letter required by the Independence Standards Board
Standard
No. 1. The committee considered whether the auditors’ providing services on
behalf of the Company other than audit services is compatible with maintaining
the auditors’ independence.
The
committee discussed with the Company’s independent auditors the overall scope
and plans for their respective audits. The committee will meet with the
independent auditors, with and without management present, to discuss the
results of the auditors’ examinations, their evaluations of the Company’s
internal controls, and the overall quality of the Company’s financial reporting.
In
reliance on the reviews and discussions referred to above, the committee
approved inclusion of the audited financial
statements in the Annual Report on Form 10-KSB for the year ended
December 31, 2005 for filing with the SEC.
The
Audit
Committee
Dr.
Gary
Meller
Gerald
A.
Eppner
Alan
Carus
Executive
Compensation
The
following table summarizes the annual compensation paid to Chembio Diagnostics,
Inc.’s Named Executive Officers for the three years ended December 31,
2005, 2004 and 2003:
Name
and Position
|
|
Year
|
|
Annual
Comp Salary
|
|
Long-Term
Compensation Awards—Securities Underlying Stock
Options
|
|
Lawrence
A. Siebert, President, CEO, Chairman of Board of Chembio Diagnostics,
Inc.
(1)
|
|
|
2005
2004
2003
|
|
$
|
160,151
145,994
140,641
|
|
|
—
160,000
—
|
|
Avi
Pelossof, Vice President of Chembio Diagnostics, Inc. (2)
|
|
|
2005
2004
2003
|
|
$
|
154,165
154,635
83,077
|
|
|
50,000
250,000
—
|
|
Javan
Esfandiari, Vice President of Chembio Diagnostic Systems, Inc.
(3)
|
|
|
2005
2004
2003
|
|
$
|
155,046
129,323
88,269
|
|
|
50,000
110,000
—
|
|
Richard
Bruce, Vice President of Chembio Diagnostic Systems, Inc. (4)
|
|
|
2005
2004
2003
|
|
$
|
116,765
114,286
110,326
|
|
|
25,000
35,000
—
|
|
Richard
J. Larkin, CFO of Chembio Diagnostics, Inc.(5)
|
|
|
2005
2004
2003
|
|
$
|
123,673
97,385
19,594
|
|
|
50,000
—
50,000
|
|
|
(1)
|
Mr.
Siebert currently is a director, the President and Chief Executive
Officer
of Chembio Diagnostics, Inc., and the President of Chembio Diagnostic
Systems Inc. The compensation information represents compensation
earned
while employed by Chembio Diagnostic Systems Inc. In 2004, Mr.
Siebert
received, prior to the merger, 50,000 options exercisable at
$0.75 and
10,000 options exercisable at $1.00. In addition as part of his
contract
signed in May 2004, Mr. Siebert received 50,000 options with
an exercise
price of $1.20 per share, becoming exercisable in May 2005 and
50,000
options with an exercise price of $1.50 per share becoming exercisable
in
May of 2006.
|
|
(2)
|
Mr.
Pelossof currently is a Vice President of both Chembio Diagnostics,
Inc.
and Chembio Diagnostic Systems, Inc. The compensation information
represents compensation earned while employed by Chembio Diagnostic
Systems Inc. In 2004, Mr. Pelossof received, prior to the merger,
40,000
options exercisable at $0.75 and 10,000 options exercisable at
$1.00. In
addition as part of his contract signed in May 2004, Mr. Pelossof
received
100,000 options exercisable at $0.60 per share, becoming exercisable
in
May 2004, 50,000 options exercisable with an exercise price of
$0.90 per
share, becoming exercisable in May 2005 and 50,000 options with
an
exercise price of $1.35 per share becoming exercisable in May
of 2006. In
May 2005, Mr. Pelossof received 25,000 options with an exercise
price of
$0.80 per share, becoming exercisable in January 2006 and 25,000
options
with an exercise price of $0.80 per share becoming exercisable
in January
of 2007.
|
|
(3)
|
Mr.
Esfandiari currently is a Vice President of Chembio Diagnostics,
Inc. and
Chembio Diagnostic Systems, Inc. The compensation information
represents
compensation earned while employed by Chembio Diagnostic Systems
Inc. In
2004, Mr. Esfandiari received, prior to the merger, 30,000 options
exercisable at $0.75 and 5,000 options exercisable at $1.00.
In addition
as part of his contract signed in May 2004, Mr. Esfandiari received
25,000
options exercisable at $0.90 per share, becoming exercisable
in May 2005,
25,000 options with an exercise price of $1.20 per share, becoming
exercisable in May 2006 and 25,000 options with an exercise price
of $1.50
per share becoming exercisable in May of 2007. In May 2005, Mr.
Esfandiari
received 25,000 options with an exercise price of $0.80 per share,
becoming exercisable in January 2006 and 25,000 options with
an exercise
price of $0.80 per share becoming exercisable in January of 2007.
|
|
(4)
|
Mr.
Bruce currently is a vice president of Chembio Diagnostic Systems
Inc. The
compensation information represents compensation earned while
employed by
Chembio Diagnostic Systems Inc. Mr. Bruce received, prior to
the merger,
20,000 options exercisable at $0.588, 10,000 options exercisable
at $0.75
and 5,000 options exercisable at $1.00. In May 2005, Mr. Bruce
received
12,500 options with an exercise price of $0.80 per share, becoming
exercisable in January 2006 and 12,500 options with an exercise
price of
$0.80 per share becoming exercisable in January of
2007.
|
|
(5)
|
Mr.
Larkin currently is the Chief Financial Officer of both Chembio
Diagnostics, Inc. and Chembio Diagnostic Systems, Inc. The compensation
information represents compensation earned while employed by
Chembio
Diagnostic Systems Inc. In 2003, Mr. Larkin received, prior to
the merger,
50,000 options exercisable at $0.45. In May 2005, Mr. Larkin
received
25,000 options with an exercise price of $0.80 per share, becoming
exercisable in January 2006 and 25,000 options with an exercise
price of
$0.80 per share becoming exercisable in January of
2007.
|
The
following table sets forth certain information regarding stock options
granted
to the named executive officers during the year ended of December 31, 2005.
|
Individual
Grants
|
Name
|
Number
of Securities Underlying Options/SARs Granted
(#)
|
Percentage
of Total Options/ SARs Outstanding
|
Exercise
or Base Price ($/Sh)
|
Expiration
Date
|
Avi
Pelossof
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
Avi
Pelossof
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
Javan
Esfandiari
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
Javan
Esfandiari
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
Richard
Bruce
|
12,500
|
0.87%
|
0.80
|
5/17/10
|
Richard
Bruce
|
12,500
|
0.87%
|
0.80
|
5/17/10
|
Richard
J. Larkin
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
Richard
J. Larkin
|
25,000
|
1.75%
|
0.80
|
5/17/10
|
There
were no options were exercised by the named executive officers in the last
fiscal year.
Employment
Agreements
Mr.
Siebert.
On May
5, 2004, Mr. Siebert and the Company entered into an employment agreement,
effective May 10, 2004, which terminates on May 10, 2006. Pursuant to the
employment agreement Mr. Siebert serves as the President and Chief Executive
Officer of the Company and is entitled to receive a base compensation of
$150,000 per year, subject to periodic review by the Board of Directors
of the
Company. Mr. Siebert is eligible to participate in any profit sharing,
stock
option, retirement plan, medical and/or hospitalization plan, and/or other
benefit plans except for disability and life insurance that the Company
may from
time to time place in effect for the Company’s executives during the term of Mr.
Siebert’s employment agreement. If Mr. Siebert’s employment agreement is
terminated by the Company without cause, or if Mr. Siebert terminates his
employment agreement for a reasonable basis, including within 12 months
of a
change in control, the Company is required to pay as severance Mr. Siebert’s
salary for six months. Mr. Siebert has agreed for a period of two years
after
the termination of his employment with the Company not to induce customers,
agents, or other sources of distribution of the Company’s business under
contract or doing business with the Company to terminate, reduce, alter,
or
divert business with or from the Company.
Mr.
Pelossof.
On May
5, 2004, Mr. Pelossof and the Company entered into an employment agreement,
effective May 10, 2004, which terminates on May 10, 2007. Pursuant to the
employment agreement Mr. Pelossof serves as the Vice President of Sales,
Marketing, and Business Development of the Company and is entitled to receive
a
base compensation of $120,000 per year, with annual salary increases of
not less
than five percent, and subject to periodic review by the Board of Directors
of
the Company. Mr. Pelossof is eligible to participate in any profit sharing,
stock option, retirement plan, medical and/or hospitalization plan, and/or
other
benefit plans except for disability and life insurance that the Company
may from
time to time place in effect for the Company’s executives during the term of Mr.
Pelossof’s employment agreement. If Mr. Pelossof’s employment agreement is
terminated by the Company without cause, or if Mr. Pelossof terminates
his
employment agreement for a reasonable basis, including within 12 months
of a
change in control, the Company is required to pay as severance Mr. Pelossof’s
salary for six months. Mr. Pelossof has agreed for a period of two years
after
the termination of his employment with the Company not to induce customers,
agents, or other sources of distribution of the Company’s business under
contract or doing business with the Company to terminate, reduce, alter,
or
divert business with or from the Company.
Mr.
Esfandiari.
On May
5, 2004, Mr. Esfandiari and the Company entered into an employment agreement,
effective May 10, 2004, which terminates on May 10, 2007. Pursuant to the
employment agreement Mr. Esfandiari serves as the Director of Research
&
Development for the Company and is entitled to receive a base compensation
of
$115,000 per year, subject to periodic review by the Board of Directors
of the
Company. Mr. Esfandiari is eligible to participate in any profit sharing,
stock
option, retirement plan, medical and/or hospitalization plan, and/or other
benefit plans except for disability and life insurance that the Company
may from
time to time place in effect for the Company’s executives during the term of Mr.
Esfandiari’s employment agreement. If Mr. Esfandiari’s employment agreement is
terminated by the Company without cause, or if Mr. Esfandiari terminates
his
employment agreement for a reasonable basis, including within 12 months
of a
change in control, the Company is required to pay as severance Mr. Esfandiari’s
salary for six months. Mr. Esfandiari has agreed for a period of two years
after
the termination of his employment with the Company not to induce customers,
agents, or other sources of distribution of the Company’s business under
contract or doing business with the Company to terminate, reduce, alter,
or
divert business with or from the Company.
Director
Compensation
All
non-emploee directors are paid an annual retainer of $18,000, paid
semi-annually, and 36,000 stock options, with an exercise price equal to
the
market price on the date of the grant. One-third of each non-employee director's
stock options are exercisable on the date of grant, one-third become exercisable
on the first anniversary of the date of grant, and one-third become exercisable
on the second anniversary of the date of grant. The audit committee chair
director is paid an annual retainer of $2,500, paid semi-annually. In addition,
the non-employee directors are paid $1,000 in cash for each meeting of
the Board
of Directors attended, and paid $500 in cash for each telephonic Board
of
Directors meeting. The non-employee directors who are members of a committee
of
the Board of Directors are paid $500 in cash for each committee meeting
attended, or $750 in cash for each committee meeting attended if that
non-employee director is the committee chairman. In addition, in December
2005,
each of the three non-employee directors was granted options to purchase
15,000
shares of the Company’s common stock at an exercise price equal to the market
price of the underlying common stock on the date of grant.
ITEM
2. PROPOSAL TO RATIFY THE SELECTION OF LAZAR, LEVINE & FELIX LLP
AS
CERTIFIED INDEPENDENT ACCOUNTANTS
The
audit
committee of the Company's Board of directors has appointed Lazar Levine
&
Felix LLP ("Lazar") of New York, New York to serve as the Company's certified
independent accountants to audit the Company's financial statements for
the 2006
fiscal year. On June 1, 2004, the Company's Board of Directors initially
engaged
Lazar to serve as the Company's certified independent accountants to audit
the
Company's financial statements for the fiscal year ended December 31, 2004.
Lazar was originally the audit firm for Chembio Diagnostic Systems Inc.
before
Chembio Diagnostic Systems Inc. became our wholly-owned subsidiary in May
2004.
It
is
expected that one or more representatives of Lazar will be present at the
Annual
Meeting and will be given the opportunity to make a statement and to respond
to
appropriate questions from stockholders.
Principal
Accountant Fees and Services
Audit
Fees
For
the
years ended December 31, 2005 and December 31, 2004, Lazar billed the Company
$99,000 and $92,000, respectively, for fees for the audit of the Company’s
annual financial statements and review of financial statements included
in the
Company’s Forms 10-QSB and 10-KSB.
Audit-Related
Fees
For
the
years ended December 31, 2005 and December 31, 2004, Lazar did not provide
the
Company with any assurances or related services reasonably related to the
performance of the audit or review of the Company’s financial statements that
are not reported above under “Audit Fees.”
Tax
Fees
For
the
years ended December 31, 2005 and December 31, 2004, Lazar billed the Company
$9,100 and $14,008, for professional services for tax compliance, tax advice,
and tax planning.
All
Other Fees
For
the
years ended December 31, 2005 and December 31, 2004, Lazar billed the Company
$17,700 and $48,890 for fees associated with the preparation and filing
of the
Company’s registration statements, responses to SEC comment letters and other
related matters.
Audit
Committee Pre-Approval Policies
The
Audit
Committee (and prior to the adoption of the Audit Committee, the Board
of
Directors) approves in advance all audit and non-audit services performed
by
Lazar, Levine & Felix LLP. There are no other specific policies or
procedures relating to the pre-approval of services performed by Lazar,
Levine
& Felix LLP.
Required
Vote; Board Recommendation
An
affirmative vote of the majority of shares represented at the Annual Meeting
in
person or by proxy is necessary to ratify the selection of auditors. There
is no
legal requirement for submitting this proposal to the stockholders; however,
the
Board of Directors believes that it is of sufficient importance to seek
ratification. Whether the proposal is approved or defeated, the Board may
reconsider its selection of Lazar.
The
Board of Directors unanimously recommends that the stockholders vote FOR
ratifying the selection of the certified public accounting firm of Lazar
Levine
& Felix LLP to serve as the Company’s certified independent accountants for
the fiscal year ending December 31, 2006 or until the Board of Directors,
in its
discretion, replaces them.
OTHER
BUSINESS
The
Board
of Directors is not aware of any other matters that are to be presented
at the
Annual Meeting, and it has not been advised that any other person will
present
any other matters for consideration at the meeting. Nevertheless, if other
matters should properly come before the Annual Meeting, the stockholders
present, or the persons, if any, authorized by a valid proxy to vote on
their
behalf, shall vote on such matters in accordance with their
judgment.
RESOLUTIONS
PROPOSED BY INDIVIDUAL STOCKHOLDERS;
DISCRETIONARY
AUTHORITY TO VOTE PROXIES
Under
Rule 14a-8(e) of the Securities Exchange Act of 1934, in order to be considered
for inclusion in the proxy statement and form of proxy relating to our
next
annual meeting of stockholders following the end of our 2006 fiscal year,
proposals by individual stockholders must be received by us no later
than January
15, 2007.
In
addition, under Rule 14a-4(c)(1) of the Securities Exchange Act, the proxy
solicited by the Board of Directors for the next annual meeting of stockholders
following the end of our 2006 fiscal year will confer discretionary authority
on
any stockholder proposal presented at that meeting unless we are provided
with
notice of that proposal no later than March 31, 2007.
*
* * *
*
This
Notice and Proxy statement are sent by order of the Board of
Directors.
Dated:
May 15, 2006 /s/
Lawrence A. Siebert
Lawrence
A. Siebert, President,
Chief
Executive Officer and
Chairman of the Board
*
* * *
*
PROXY
PROXY
CHEMBIO
DIAGNOSTICS, INC.
For
the
Annual Meeting of Stockholders on June 15, 2006
Proxy
Solicited on Behalf of the Board of Directors
The
undersigned hereby appoints Lawrence A. Siebert, Richard Larkin, or either
of
them, as proxies with full power of substitution to vote all the shares
of the
undersigned with all of the powers which the undersigned would possess
if
personally present at the Annual Meeting of Stockholders of Chembio Diagnostics,
Inc. (the “Corporation”) to be held at 10:00 a.m. (local time) on June 15, 2006,
at the Radisson Hotel, 1730 North Ocean Avenue, Holtsville, New York 11742,
or
any adjournments thereof, on the following matters:
[X]
Please mark votes as in this example.
1.
To
elect the following four directors:
Nominees:
Lawrence A. Siebert, Dr. Gary Meller, Gerald A. Eppner, and Alan
Carus.
FOR
ALL
NOMINEES [ ]
WITHHELD
AUTHORITY FOR ALL NOMINEES [ ]
FOR
ALL
NOMINEES EXCEPT AS NOTED ABOVE [ ]
2.
To
ratify the selection of Lazar, Levine & Felix, LLP as the Corporation’s
certified independent accountants.
[
] FOR [
] AGAINST [
]
ABSTAIN
3.
In
their discretion, to vote upon an adjournment or postponement of the
meeting.
[
] YES [
] NO [
]
ABSTAIN
4.
In
their discretion, to vote upon such other business as may properly come
before
the meeting.
[
] YES [
] NO [
]
ABSTAIN
(Continued
and to be signed on the reverse side)
Unless
contrary instructions are given, the shares represented by this proxy will
be
voted in favor of Items 1, 2, 3, and 4. This proxy is solicited on behalf
of the
Board of Directors of Chembio Diagnostics, Inc.
EVEN
IF
YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THIS
PROXY IN THE ACCOMPANYING ENVELOPE.
MARK
HERE
FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Number
of
voting
shares:
Dated: ____________________________________
Signature:
____________________________________
Signature:
____________________________________
Signature
if held jointly
(Please
sign exactly as shown on your stock certificate and on the envelope in
which
this proxy was mailed. When signing as partner, corporate officer, attorney,
executor, administrator, trustee, guardian, etc., give full title as such
and
sign your own name as well. If stock is held jointly, each join owner should
sign.)
APPENDIX A
CHEMBIO
DIAGNOSTICS, INC.
AUDIT
COMMITTEE CHARTER
Purpose
and Authority
The
purpose of the Audit Committee (the “Committee”) is to assist the Board of
Directors (the “Board”) in overseeing: (1) the integrity of the Company’s
financial statements; (2) the Company’s compliance with legal and regulatory
requirements; (3) the independent auditor’s qualifications and independence; (4)
the performance of the Company’s internal auditors, if applicable, and
independent auditor; and (5) compliance with the Company’s code of ethics for
senior financial officers and compliance with the Company’s code of conduct for
all Company personnel. The Committee shall have the ultimate authority
and
responsibility to select, evaluate and, where appropriate, replace the
independent auditor. The Committee shall also have all authority necessary
to
fulfill the duties and responsibilities assigned to the Committee in this
Charter or otherwise assigned to it by the Board. The Committee shall fulfill
its oversight role by performing the duties and responsibilities set forth
in
this Charter.
As
the
Committee deems appropriate, it may retain independent counsel, accounting
and
other professionals to assist the Committee without seeking Board approval
with
respect to the selection, fees or terms of engagement of any such
advisors.
Committee
Structure and Expertise
The
Committee shall consist of at least three directors, or such other number
as the
Audit Committee may have and remain in compliance with the rules and regulations
promulgated by the Nasdaq Stock Market, who shall be appointed by the Board.
Each member of the Committee shall be “independent” as that term is defined in
Nasdaq Stock Market (“Nasdaq”) Rule 4200(a)(15) and shall otherwise meet the
independence and experience requirements of Nasdaq, Section 10A-3 of the
Securities Exchange Act of 1934 (the “Exchange Act”), and the rules and
regulations of the SEC. The Board may, at any time and in its complete
discretion, replace a Committee member. Each member of the Committee shall
be
financially literate and shall, at a minimum, be able to read and understand
fundamental financial statements, including the Company’s balance sheet, income
statement and cash flow statement. No member of the Committee shall have
participated in the preparation of the financial statements of the Company
or
any current subsidiary of the Company at any time during the three years
prior
to that member being appointed to the Committee. At least one Committee
member
shall have, through education and experience as a public accountant or
auditor,
or a principal financial officer, controller or principal accounting officer
or
a chief executive officer, or from performance of similar functions, sufficient
financial expertise in accounting and auditing so as to be a “financial expert”,
in accordance with such regulations as may be applicable to the Company
from
time to time.
If
the
Committee is aware of any material noncompliance with the structure or
expertise
requirements set forth above, the Committee shall report such noncompliance
to
the Board.
Meetings
The
Committee shall meet as often as necessary, at least on a quarterly basis.
The
Committee shall meet periodically in separate, private sessions with each
of
management, the independent auditor and the internal auditors to discuss
anything the Committee or these groups believe should be discussed. The
Committee may require any Company officer or employee or the Company’s outside
counsel or external auditor to attend a Committee meeting or to meet with
any
members of, or consultants to, the Committee, and to provide pertinent
information as necessary. In the absence of a member designated by the
Board to
serve as chair, the members of the Committee may appoint from among their
number
a person to preside at their meetings.
The
Committee shall maintain minutes and other relevant documentation of all
its
meetings.
Committee
Authority and Responsibilities
The
Committee shall have the following duties and responsibilities, in addition
to
any duties and responsibilities assigned to the Committee from time to
time by
the Board:
Engagement
of Independent Auditor
·
|
The
Committee has the sole authority to approve all audit engagement
fees and
terms, as well as all significant non-audit engagements with
the
independent auditor. The Committee shall be directly responsible
for
overseeing the work of the independent auditor (including resolution
of
disagreements between management and the independent auditor
regarding
financial reporting) for the purpose of preparing or issuing
an audit
report or performing other audit, review or attest services for
the
Company. The independent auditor shall report directly to the
Committee.
|
·
|
The
Committee shall pre-approve all audit and non-audit services
as the
independent auditor is permitted to provide, subject to de
minimus
exceptions for other than audit, review, or attest services that
are
approved by the Committee prior to completion of the audit. Alternatively,
the engagement of the independent auditor may be entered into
pursuant to
pre-approved policies and procedures established by the Committee,
provided that the policies and procedures are detailed as to
the
particular services and the Committee is informed of each service.
In
considering whether to pre-approve any non-audit services, the
Committee
shall consider whether the provision of such services is compatible
with
maintaining the independence of the
auditor.
|
·
|
The
Committee shall ensure that the Committee’s approval of any non-audit
services is publicly disclosed pursuant to applicable laws, rules
and
regulations.
|
·
|
The
Committee shall have the authority to engage, without Board approval,
independent legal, accounting, and other advisors as it deems
necessary to
carry out its duties. The Company shall provide appropriate funding,
as
determined by the Committee, to compensate the independent auditor,
outside legal counsel, or any other advisors employed by the
Committee,
and to pay ordinary Committee administrative expenses that are
necessary
and appropriate in carrying out its
duties.
|
Evaluate
Independent Auditor’s Qualifications, Performance and
Independence
·
|
At
least annually, the Committee shall evaluate the independent
auditor’s
qualifications, performance and independence, including that
of the lead
audit partner.
|
·
|
At
least annually, the Committee shall obtain and review the letter
and
written disclosures from the independent auditor consistent with
Independence Standards Board No. 1, including a formal written
statement
by the independent auditor delineating all relationships between
the
auditor and the Company; actively engage in a dialogue with the
auditor
with respect to that firm’s independence and any disclosed relationships
or services that may impact the objectivity and independence
of the
auditor; and take, or recommend that the Board take, appropriate
action to
oversee the independence of the outside
auditor.
|
·
|
The
Committee shall discuss with the independent auditor the matters
required
to be discussed by the Statement of Auditing Standards (“SAS”) No. 61, as
amended from time to time, together with any other matters as
may be
required for public disclosure or otherwise under applicable
laws, rules
and regulations.
|
Review
Financial Statements and Financial Disclosure
·
|
The
Committee shall review and discuss the annual audited financial
statements
and quarterly financial statements with management and the independent
auditor, including disclosures under “Management’s Discussion and Analysis
of Financial Condition and Results of Operations”, the report of the
independent auditor thereon, the disclosures regarding critical
accounting
estimates, and shall discuss any significant issues encountered
in the
course of the audit work, including any restrictions on the scope
of
activities, access to required information or the adequacy of
internal
controls.
|
·
|
If
so determined by the Committee, based on its review and discussion
of the
audited financial statements with management and the independent
auditor,
its discussions with the independent auditor regarding the matters
required to be discussed by SAS 61, and its discussions regarding
the
auditor’s independence, recommend to the Board that the audited financial
statements be included in the Company’s annual report on Form
10-KSB.
|
·
|
The
Committee shall review the CEO and CFO’s disclosures and certifications
set forth in the Company’s Forms 10-QSB and 10-KSB under Sections 302 and
906 of the Sarbanes-Oxley Act of
2002.
|
·
|
The
Committee shall discuss earnings press releases, as well as the
financial
information and earnings guidance provided to analysts and rating
agencies. This may be done generally and does not require the
Committee to
discuss in advance each earnings release or each instance in
which the
Company may provide earnings
guidance.
|
Periodic
Assessment of Accounting Practices and Policies
·
|
The
Committee shall obtain and review timely reports from the independent
auditor regarding: (1) all critical accounting policies to be
used; (2)
all alternative treatments of financial information within GAAP
that have
been discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred
by the
independent auditor; and (3) other material written communications
between
the independent auditor and management, such as any management
letter or
schedule of unadjusted differences.
|
·
|
The
Committee shall review with management and the independent auditor
the
effect of regulatory and accounting initiatives, as well as off-balance
sheet structures on the financial statements of the
Company.
|
·
|
The
Committee shall review changes in promulgated accounting and
auditing
standards that may materially affect the Company’s financial reporting
practices.
|
·
|
The
Committee shall review any reports by management regarding the
effectiveness of, or any deficiencies in, the design or operation
of
internal controls and any fraud, whether or not material, that
involves
management or other employees who have a significant role in
the Company’s
internal controls. Review any report issued by the Company’s independent
auditor regarding management’s assessment of the Company’s internal
controls.
|
Proxy
Statement Report of Audit Committee
·
|
The
Committee shall prepare the report required by the rules of the
SEC to be
included in the Company’s annual proxy
statement.
|
Related-Party
Transactions
·
|
The
Committee shall review and approve all related-party transactions,
including transactions between the Company and its officers or
directors
or affiliates of officers or directors.
|
Hiring
Policies
·
|
The
Committee shall set clear hiring policies for the Company’s hiring of
employees and former employees of the independent auditor who
were engaged
on the Company’s account, and ensure that such policies comply with any
regulations applicable to the Company from time to
time.
|
Ethics
Compliance and Complaint Procedures
·
|
The
Committee shall develop, and monitor compliance with, a code
of ethics for
senior financial officers pursuant to, and to the extent required
by,
regulations applicable to the Company from time to
time.
|
·
|
The
Committee shall develop, and monitor compliance with, a code
of conduct
for all Company employees, officers and directors pursuant to,
and to the
extent required by, regulations applicable to the Company from
time to
time.
|
·
|
The
Committee shall establish procedures for the receipt, retention
and
treatment of complaints regarding accounting, internal accounting
controls
or auditing matters.
|
·
|
The
Committee shall establish procedures for the confidential, anonymous
submission by employees of concerns regarding questionable accounting
or
auditing matters.
|
Evaluation
The
Committee shall review and reassess the adequacy of this Charter at least
annually and submit proposed changes to the Board for approval. The Committee
has the powers and responsibilities delineated in this Charter. It is not,
however, the Committee’s responsibility to prepare and certify the Company’s
financial statements, to guaranty the independent auditor’s report, or to
guaranty other disclosures by the Company. These are the fundamental
responsibilities of management and the independent auditor. Committee members
are not full-time Company employees and are not performing the functions
of
auditors or accountants.
The
Committee shall obtain or perform an annual evaluation of the Committee's
performance and make applicable recommendations for improvement.
It
is
not the responsibility of the Committee to plan or conduct audits or to
determine whether the Company’s financial statements are complete and accurate
or in conformance with generally accepted accounting
principles.
*****
Appendix B
CHEMBIO
DIAGNOSTICS, INC.
NOMINATING
AND CORPORATE GOVERNANCE
COMMITTEE
CHARTER
Purpose
and Authority
The
purpose of the Nominating and Corporate Governance Committee (the “Committee”)
is to (i) identify individuals qualified to become members of the Board of
Directors (the “Board”), (ii) recommend director candidates to the Board,
(iii) develop, update as necessary and recommend to the Board corporate
governance principles and policies applicable to the Company, and
(iv) monitor compliance with such principles and policies.
The
Committee also shall have all authority necessary to fulfill the duties
and
responsibilities assigned to the Committee in this Charter or otherwise
assigned
to it by the Board.
Composition
Independence
The
Committee shall be composed of three or more directors, as determined by
the
Board, and shall meet the independence standards required by the NASDAQ,
Section
10A-3 of the Securities Act of 1934 (the “Exchange Act”), to the extent that
Section 10A-3 is applicable to membership on the Committee, and any regulations
of the Securities Exchange and Commission (the “SEC”) applicable to the
Company.
Notwithstanding
the foregoing, one director who is not independent and who is not a current
employee of, or an immediate family member of a current employee of, the
Company
may be appointed to the Nominating Committee if the Board, under exceptional
and
limited circumstances, determines that membership on the Committee by the
individual is required by the best interests of the Company and its
shareholders, and the Board discloses such determination, the nature of
the
relationship, and the reason for the determination in the next annual proxy
statement or, if the Company does not file a proxy statement, in the next
annual
report on Form 10-KSB. A director who is appointed to the Committee pursuant
to
this exception may not serve in excess of two years.
Appointment
and Removal of Members
The
members of the Committee shall be appointed by the Board on the recommendation
of the Chair of the Board following the Chair’s consultation with the incumbent
Chair of the Committee. The Board may remove any member from the Committee
at
any time with or without cause.
Duties
and Responsibilities:
The
Committee shall have the following duties and responsibilities, in addition
to
any duties and responsibilities assigned to the Committee from time to
time by
the Board.
Director
Selection
·
|
Review,
approve and recommend for Board consideration director candidates
based on
the Director Selection Guidelines outlined in Exhibit A
to
this Charter, and advise the Board with regard to nomination
or election
of director candidates.
|
·
|
Periodically
review, approve and recommend to the Board appropriate revisions
to the
Director Selection Guidelines outlined in Exhibit A to
this Charter.
|
·
|
Determine
procedures for the review, approval and recommendation of director
candidates, as appropriate.
|
·
|
Determine
procedures for the consideration of shareholder-recommended Board
candidates.
|
Periodic
Disclosure
Prepare
the disclosure required in the Company’s proxy statement which explains the
process used to identify and evaluate nominees for the board of directors,
including an explanation of:
1. Director
Nomination Process
a. The
“minimum qualifications” that must be met for a nominee to be recommended by the
Committee, including any specific qualities or skills necessary for a
nominee.
b. Whether
the Company has a policy regarding consideration of shareholder-recommended
Board candidates and, if not, why not. The Committee must describe the
material
terms of any policy, including whether the Committee will consider
shareholder-recommended candidates and, if so, what the procedures are
for
recommending them.
c. The
Committee’s process for identifying and evaluating potential nominees for the
Board, including shareholder-recommended candidates. If shareholder-recommended
candidates are evaluated on a different basis from other candidates, the
Committee must disclose and explain these differences. For all nominees
proposed
by the Committee for election (other than executive officers or current
directors standing for reelection) the Committee must disclose which of
the
following recommended each nominee: shareholder; non-management director,
CEO,
other executive officer; third party search firm; or other source. The
Committee
must disclose the identity and role of any third party engaged to identify
or
evaluate potential Board candidates.
d. If
a 5%
or greater shareholder (or group) that has held its position for at least
a year
recommends a director candidate at least 120 days prior to the anniversary
of
the mailing date of the prior year’s proxy statement, the Committee must
disclose the name of the candidate and of the recommending shareholder,
and
whether the Company nominated the candidate.
e. The
Committee shall assist the Board in preparing disclosure regarding any
material
change to the procedures for shareholder nomination of directors. The disclosure
will be made in the Form 10-QSB filed for the period in which the material
change occurred (or the Form 10-KSB, for the fourth quarter). Adopting
procedures for the first time will be considered a material change.
2. Shareholder
Communications with the Board
The
Committee shall disclose whether the Company has a process for shareholders
to
communicate with the Board and, if not, why not. Finally, the Committee
must
explain the process shareholders should use for sending communications
to the
Board or to specific individual directors.
Board
and Board Performance
·
|
Periodically
review and recommend to Board appropriate size of the
Board.
|
·
|
Periodically
review appropriateness of any restrictions on Board service,
such as term
limits and retirement policy.
|
·
|
Recommend
to Board standards regarding Company’s definition of “independence” as
such term relates to directors (taking into account, among other
things,
Nasdaq requirements and any other laws and regulations applicable
to the
Company).
|
·
|
Establish
performance criteria/expectations for directors in areas of attendance,
preparedness, candor and
participation.
|
·
|
Establish,
coordinate and review with the Chair of Board criteria and method
for
evaluating the effectiveness of the
Board.
|
·
|
Recommend
frequency of regular meetings of non-management directors and
develop
format for such meetings, including selection of presiding director
at
such meetings.
|
·
|
Determine
method of communications between (i) employees, shareholders and
other interested parties and (ii) non-management directors and/or the
presiding non-management director.
|
Board
Leadership
·
|
Develop
and recommend to the Board procedures for selection of the Chair
of the
Board.
|
·
|
Develop
and recommend to the Board procedures for Board review of, and
for
communicating such review to, the Chair of the
Board.
|
Board
Relationship to Senior Management
·
|
Monitor
process and scope of director access to Company management and
employees
and communications between directors and Company management and
employees.
|
Meeting
Procedures
·
|
Develop
annual meeting calendar for Board.
|
·
|
Develop
process for preparing agendas for, organizing and running Board
meetings.
|
·
|
Determine
appropriate timing for distribution of Board materials to allow
directors
adequate time to review materials and prepare for
meetings.
|
Board
Committee Matters
·
|
Recommend
to Board, as appropriate, number, type, functions, structure
and
independence of committees.
|
·
|
Annually
recommend to Board director membership on Board committees and
advise
Board and/or committees with regard to selection of Chairs of
committees.
(The Committee should consider rotation of Chairs and committee
members
when making its recommendations).
|
·
|
Determine
criteria and procedures for selection of committee members and
Chairs, as
appropriate.
|
·
|
Establish
and coordinate with applicable committee Chair criteria and method
for
evaluating the effectiveness of the
committees.
|
Director
Orientation and Continuing Education
·
|
Periodically
review and revise, as appropriate, the Company’s director orientation
program.
|
·
|
Monitor,
plan and support continuing education activities of the
directors.
|
Governance
Policies
·
|
Develop,
review and recommend to the Board, as appropriate, other principles
and
policies relating to corporate governance; and monitor compliance
with and
the effectiveness of such principles and policies, as
appropriate.
|
Committee
Reports to Board
·
|
Provide
minutes of Committee meetings to the Board and report to the
Board on any
significant matters arising from the Committee’s
work.
|
Meetings
The
Committee shall establish a meeting calendar annually. The Committee may
hold
such other meetings as are necessary or appropriate in order for the Committee
to fulfill its responsibilities. In the absence of a member designated
by the
Board to serve as Chair, the members of the Committee may appoint from
among
their number a person to preside at their meetings.
Evaluation
The
Committee shall review and reassess this Charter at least annually and,
if
appropriate, propose changes to the Board.
The
Committee shall obtain or perform an annual evaluation of the Committee’s
performance and make applicable recommendations.
EXHIBIT
A
Director
Selection Guidelines
The
Charter of the Nominating and Corporate Governance Committee (the “Committee”)
of the Board requires the Committee to develop and periodically review
and
recommend to the Board appropriate revisions to these Director Selection
Guidelines. The following guidelines have been adopted by the Board upon
the
recommendation of the Committee.
Director
Qualifications
When
considering potential director candidates for nomination or election, directors
should consider the following qualifications, among others, of each director
candidate:
·
|
High
standard of personal and professional ethics, integrity and
values;
|
·
|
Training,
experience and ability at making and overseeing policy in business,
government and/or education
sectors;
|
·
|
Willingness
and ability to keep an open mind when considering matters affecting
interests of the Company and its
constituents;
|
·
|
Willingness
and ability to devote the required time and effort to effectively
fulfill
the duties and responsibilities related to Board and committee
membership;
|
·
|
Willingness
and ability to serve on the Board for multiple terms, if nominated
and
elected, to enable development of a deeper understanding of the
Company’s
business affairs;
|
·
|
Willingness
not to engage in activities or interests that may create a conflict
of
interest with a director’s responsibilities and duties to the Company and
its constituents; and
|
·
|
Willingness
to act in the best interests of the Company and its constituents,
and
objectively assess Board, committee and management
performances.
|
Board
Composition Selection Criteria
The
Board
believes that its effectiveness depends on the overall mix of the skills
and
characteristics of its directors. Accordingly, the following factors, among
others, relating to overall Board composition should be considered when
determining Board needs and evaluating director candidates to fill such
needs:
·
|
Diversity
(e.g., age, geography, professional,
other);
|
·
|
Professional
experience;
|
·
|
Industry
knowledge (e.g., relevant industry or trade association
participation);
|
·
|
Skills
and expertise (e.g., accounting or
financial);
|
·
|
Public
company board and committee
experience;
|
·
|
Non-business-related
activities and experience (e.g., academic, civic, public
interest);
|
·
|
Board
continuity (including succession
planning);
|
·
|
Number
and type of committees, and committee sizes;
and
|
·
|
Legal
and Nasdaq, or other applicable trading exchange or quotation
system,
requirements and recommendations, and other corporate governance-related
guidance regarding board and committee
composition.
|
Selection
Procedures
Potential
director candidates should be referred to the Chair of the Committee for
consideration by the Committee and possible recommendation to the Board.
The
Committee shall maintain a list of director candidates to consider and
propose
to the Board, as required. If necessary or desirable in the opinion of
the
Committee, the Committee will determine appropriate means for seeking additional
director candidates, including engagement of any outside consultant to
assist
the Committee in the identification of director candidates.
The
Committee shall decide on the appropriate means for the review, recommendation
and/or selection of individual director candidates, including current directors,
and the recommendation of director candidates to the Board. In the event
of a
vacancy on the Board, the Chair of the Committee shall initiate the effort
to
identify appropriate director candidates.