-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JDFYpuxgSjo0mFOSHVXTgNjsP1Mea8hh1YoawQScjb3hWq+OiznwApHQY6M3SHvS s2WBXDSuWQ+uVVo5a1sVtQ== 0000889812-98-002903.txt : 19981214 0000889812-98-002903.hdr.sgml : 19981214 ACCESSION NUMBER: 0000889812-98-002903 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990113 FILED AS OF DATE: 19981211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISONIX INC CENTRAL INDEX KEY: 0000880432 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 112148932 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-10986 FILM NUMBER: 98767878 BUSINESS ADDRESS: STREET 1: 1938 NEW HIGHWAY CITY: FARMINGDALE STATE: NY ZIP: 11747 BUSINESS PHONE: 5166949555 FORMER COMPANY: FORMER CONFORMED NAME: MEDSONIC INC DATE OF NAME CHANGE: 19930328 DEF 14A 1 DEFINITIVE PROXY STATEMENT SCHEDULE 14A Information Required in Proxy Statement SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12 MISONIX, INC. ---------------------------------------- (Name of Registrant as Specified In Its Charter) ---------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 (1) Title of each class of securities to which transaction applies: ----------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------- (5) Total fee paid: ----------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check 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 or Schedule and the date of its filing. (1) Amount previously paid: ----------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------- (3) Filing Party: ----------------------------------- (4) Date Filed: ----------------------------------- MISONIX, INC. ----------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS January 13, 1999 ----------------- To the Shareholders of MISONIX, INC.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of MISONIX, INC., a New York corporation (the "Company"), will be held at the offices of Ernst & Young LLP, at 395 North Service Road, Melville, New York 11747 on Wednesday, January 13, 1999 at 10:00 a.m., or at any adjournment thereof, for the following purposes: 1. To elect four Directors to the Board of Directors; 2. To consider and vote upon (i) approval of the 1998 Employee Stock Option Plan and (ii) ratification of a grant previously made under such Plan; and 3. To consider and act upon such other business as may properly come before this meeting or any adjournment thereof. The above matters are set forth in the Proxy Statement attached to this Notice to which your attention is directed. Only shareholders of record on the books of the Company at the close of business on November 20, 1998 will be entitled to vote at the Annual Meeting of Shareholders or at any adjournment thereof. You are requested to sign, date and return the enclosed Proxy at your earliest convenience in order that your shares may be voted for you as specified. By Order of the Board of Directors PETER GERSTHEIMER Secretary Dated: December 11, 1998 Farmingdale, New York MISONIX, INC. 1938 New Highway Farmingdale, New York 11735 ----------------- PROXY STATEMENT ----------------- ANNUAL MEETING OF SHAREHOLDERS Wednesday, January 13, 1999 ----------------- The Annual Meeting of Shareholders of MISONIX, INC. (the "Company") will be held on Wednesday, January 13, 1999 at the offices of Ernst & Young LLP at 395 North Service Road, Melville, New York 11747 at 10:00 a.m. for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. The enclosed proxy is solicited by and on behalf of the Board of Directors of the Company for use at the Annual Meeting of Shareholders to be held on January 13, 1999 and at any adjournments of such meeting. The approximate date on which this proxy statement and the enclosed proxy are being first mailed to shareholders is December 11, 1998. If a proxy in the accompanying form is duly executed and returned, the shares represented by such proxy will be voted as specified. Any person executing a proxy may revoke it prior to its exercise either by letter directed to the Company or in person at the Annual Meeting. Voting Rights On November 20, 1998 (the "Record Date"), the Company had outstanding 5,767,680 shares of its only class of voting securities, namely common stock, $.01 par value per share (the "Common Shares"). Shareholders are entitled to one vote for each share registered in their names at the close of business on the Record Date. The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of Directors; the affirmative vote of a majority of the votes cast at the Annual Meeting is required for (i) the approval of the 1998 Employee Stock Option Plan and (ii) the ratification of a grant previously made under such Plan; on all other matters which may come before the Annual Meeting, the affirmative vote of a majority of the votes cast at the Annual Meeting is required. For purposes of determining whether proposals have received a majority vote, abstentions will not be included in the vote totals and, in instances where brokers are prohibited from exercising discretionary authority for beneficial owners who have not returned a proxy ("broker non-votes"), those votes will not be included in the vote totals. Therefore, abstentions and broker non-votes will be counted in the determination of a quorum and (i) will have no effect on the vote for the election of Directors; (ii) will have the effect of a vote against approval with respect to the 1998 Employee Stock Option Plan; and (iii) will have the effect of a vote against the ratification of the grant previously made under such Plan. SECURITY OWNERSHIP The following table sets forth as of December 1, 1998 certain information with regard to ownership of the Company's Common Shares by (i) each beneficial owner of more than 5% of the Company's Common Shares; (ii) each Director and nominee for Director; (iii) each executive officer named in the "Summary Compensation Table" below; and (iv) all executive officers and Directors of the Company as a group. Unless otherwise stated, the persons named in the table have sole voting and investment power with respect to all Common Shares shown as beneficially owned by them. Common Shares Percent Name and Address(1) Beneficially Owned of Class Howard Alliger 909,108 (2) 15.6% Joseph Librizzi (3) 247,700 (4) 4.2% Gary Gelman 750,750 (5) 11.6% Arthur Gerstenfeld 56,200 (6) * Michael A. McManus, Jr. 145,700 (7) 2.5% All executive officers and 2,283,853 (8) 33.1%(9) Directors as a group (eight persons) - ------------------- *Less than 1% (1) The business address of each of the named individuals in this table is c/o MISONIX, INC., 1938 New Highway, Farmingdale, New York 11735. (2) Includes 75,000 Common Shares which Mr. Alliger has the right to acquire upon exercise of stock options which are currently exercisable. (3) Mr. Librizzi is not standing for reelection as a Director. His Employment Agreement with the Company was extended to, and expired on, October 30, 1998 and he will act as an independent consultant for the Company for the six months ending April, 1999. (4) Includes 110,000 Common Shares which Dr. Librizzi has the right to acquire upon exercise of stock options which are currently exercisable. (5) Includes 688,500 Common Shares which Mr. Gelman has the right to acquire upon exercise of stock options which are currently exercisable. (6) Includes 18,000 Common Shares which Mr. Gerstenfeld has the right to acquire upon exercise of stock options which are currently exercisable. (7) Includes 125,000 Common Shares which Mr. McManus has the right to acquire upon exercise of stock options which are currently exercisable. (8) Includes the Common Shares indicated in notes (2), (4), (5), (6) and (7), 85,395 Common Shares which are beneficially owned by an executive officer of the Company (32,500 of which he has the right to acquire upon exercise of stock options which are currently exercisable), 56,500 Common Shares which are beneficially owned by another executive officer of the Company (55,000 of which he has the right to acquire upon exercise of stock options which are currently exercisable) and 32,500 Common Shares which another executive officer has the right to acquire upon exercise of stock options which are currently exercisable. (9) Based upon 5,767,680 outstanding Common Shares and presently exercisable options to acquire 1,136,500 Common Shares held by the persons noted. -2- PROPOSAL ONE ------------ ELECTION OF DIRECTORS The Company currently has five Directors, four of whom are to be elected at the Annual Meeting. The term of each Director expires at the Annual Meeting, with Messrs. Alliger, Gelman, Gerstenfeld and McManus standing for reelection for a term of one year. Mr. Librizzi is not standing for reelection. The following table contains information regarding all Directors and executive officers of the Company:
Director Name Age Position With Company Since - ---- --- --------------------- ----- Gary Gelman 51 Chairman of the Board 1995 of Directors Michael A. McManus, Jr. 55 Director, President, 1998 Chief Executive Officer Joseph Librizzi 60 Director 1971 Peter Gerstheimer 49 Vice President, Chief -- Financial Officer, Secretary and Treasurer Ronald Manna 44 Vice President - Operations -- Robert Lee 39 Vice President - Sales and Marketing -- Howard Alliger 71 Director 1971 Arthur Gerstenfeld 70 Director 1992 - --------------------- Principal Occupations and Business Experience of Directors and Executive Officers The following is a brief account of the business experience for the past five years of the Company's Directors and executive officers: Gary Gelman, the founder of American Claims Evaluation, Inc., a publicly traded company engaged in auditing hospital bills and providing vocational rehabilitational counseling, has been Chairman of the Board and a Director of that company for more than ten years. Since 1973, Mr. Gelman has also been Chief Executive Officer of American Para Professional Systems, Inc., a privately held entity, which provides nurses who perform physical examinations of applicants for life and/or health insurance for insurance companies. He received a B.A. Degree from Queens College. Mr. Gelman became Chairman of the Board of the Company in March 1996. -3- Michael A. McManus, Jr. became President and Chief Executive Officer of the Company on October 30, 1998. Prior to this he served as President and Chief Executive Officer of New York Bancorp Inc. from 1991 through March 1998 and as a director of such company from 1990 through March 1998. He also served as President and Chief Executive Officer of Home Federal Savings Bank, the principal subsidiary of New York Bancorp Inc., from February 1995 through March 1998. From 1990 through November 1991, Mr. McManus was President and Chief Executive Officer of Jamcor Pharmaceuticals Inc. Mr. McManus served as an Assistant to The President of The United States from 1982 to 1985 and also held positions with Pfizer Inc. and Revlon Group. Mr. McManus received a B.A. in economics from the University of Notre Dame and a J.D. from the Georgetown University Law Center. He serves as a member of the Board of Directors of the United States Olympic Committee, Document Imaging System, Corp., National Wireless Holdings, Inc., and Novavax, Inc. Joseph Librizzi served as President and Chief Executive Officer of the Company from March 1995 through October 1998. He will act as an independent consultant to the Company through April 1999. Prior to serving as the Company's President, he was Executive Vice President, Chief Operating Officer, Treasurer and Secretary of the Company since September 1991. Dr. Librizzi was previously President of the Company (prior to the merger between the Company and Sonic Needle Corp.) from 1986 to September 1991. Dr. Librizzi holds a doctorate in applied mechanics and aerospace engineering from Polytechnic Institute of Brooklyn. Peter Gerstheimer became Vice President and Chief Financial Officer of the Company in September 1992. From December 1984 to September 1992, he was Vice President of Finance at Thermex-Thermatron, Inc., a manufacturer of high-frequency electronic heat sealing and processing equipment. Previously, he served as Treasurer and Controller of LogiMetrics, a manufacturer of electronic test components and systems for military and non-military use. Mr. Gerstheimer is a licensed certified public accountant in the State of New York and was a senior accountant at Touche Ross & Co. Mr. Gerstheimer holds a B.A. Degree from Hofstra University. Ronald Manna became Vice President - Operations of the Company in September 1989. For more than three years prior thereto, Mr. Manna served as the Director of Engineering of the Company. Mr. Manna holds a B.S. Degree in mechanical engineering from Hofstra University. Robert Lee became Vice President of Sales and Marketing in August 1996. For the year prior thereto, he served as Director of Sales and Marketing for the laboratory products division of the Company. Prior to joining the Company, Mr. Lee was a Divisional General Manager, National Sales Manager and Regional Sales Manager for Pall Corporation, a filtration company, where he worked for seven years. Prior to Pall Corporation, Mr. Lee worked for American Bionetics as a Regional Manager. Mr. Lee holds a B.A. Degree in chemistry from the State University of New York at Plattsburg. -4- Howard Alliger founded the Company's predecessor in 1955 and the Company was a sole proprietorship until 1960. The Company name then was Heat Systems-Ultrasonics. Mr. Alliger was President of the Company until 1982 and Chairman of the Board until 1996. He has been awarded 23 patents and has published various papers on ultrasonic technology. For three years, ending in 1991, Mr. Alliger was the President of the Ultrasonic Industry Association. Mr. Alliger holds a B.A. degree in economics from Allegheny College and also attended Cornell University School of Engineering for four years. He has also established, and is President of, two privately held entities which are engaged in pharmaceutical research and development. Arthur Gerstenfeld is currently Professor of Industrial Engineering and Professor of Management at Worcester Polytechnic Institute, Worcester, Massachusetts. Dr. Gerstenfeld received his Ph.D. and Masters Degree from Massachusetts Institute of Technology (Sloan School of Management). He has edited and authored seven books and approximately forty articles focusing on innovation and productivity. Dr. Gerstenfeld's industry experience has been as founder, CEO, and Chairman of the Board of UFA, Inc. He is the holder of four patents on which that company is based. PROPOSAL TWO ------------ APPROVAL OF THE 1998 EMPLOYEE STOCK OPTION PLAN AND RATIFICATION OF A TRANSACTION WHEREBY STOCK OPTIONS WERE PREVIOUSLY ISSUED PURSUANT TO SUCH PLAN 1998 Employee Stock Option Plan On October 7, 1998 the Board of Directors adopted, subject to approval of the shareholders, the 1998 Employee Stock Option Plan (the "1998 Employees' Plan"). The following description of the 1998 Employees' Plan is qualified in its entirety by reference to the text of the 1998 Employees' Plan, a copy of which is annexed hereto as Exhibit "A". Purpose The purpose of the 1998 Employees' Plan is to provide an incentive to key employees (including directors and officers who are key employees) of the Company and to offer an additional inducement in obtaining the services of such individuals. -5- Administration Of The 1998 Employees' Plan The 1998 Employees' Plan is administered by a committee of the Board of Directors consisting of non-employee directors (the "Committee"). The Committee is authorized, subject to the provisions of the 1998 Employees' Plan, to determine the employees who will receive options under the 1998 Employees' Plan, the number of Common Shares subject to each option and the terms of those options, and to interpret the 1998 Employees' Plan and to make such rules and regulations relating to the 1998 Employees' Plan as the Committee may deem proper. Shares of Stock Subject To The 1998 Employees' Plan and Exercise Price Options granted under the 1998 Employees' Plan may be (i) Incentive Stock Options under the provisions and subject to the limitations of Section 422 of the Internal Revenue Code or (ii) non-qualified Stock Options. The 1998 Employees' Plan permits the granting of an aggregate of 500,000 Common Shares at a price equal to not less than one hundred percent (100%) of the fair market value of the Common Shares on the date that the option is granted. Further no Incentive Stock Option may be granted to an employee owning Common Shares having more than 10% of the voting power of the Company unless the option price for such employee's option is at least 110% of the fair market value of the Common Shares subject to the option at the time the option is granted and the option is not exercisable after five years from the date of granting. No option may be granted under the 1998 Employees' Plan after the tenth anniversary of the adoption of the 1998 Employees' Plan. Options may be granted through October 6, 2008. Upon the granting of any option, the optionee must enter into a written agreement with the Company setting forth the terms upon which the option may be exercised. Such an agreement sets forth the length of the term of the option and the timing of its exercise as determined by the Committee. In no event shall the length of an option extend beyond ten years from the date of its grant. An optionee may exercise an option by delivering payment to the Company in cash, previously acquired Common Shares, surrender of options or a combination thereof. Under the 1998 Employees' Plan, if the employment of any person to whom an option has been granted is terminated for any reason other than the death or disability of the optionee, the optionee may exercise within ninety days of such termination such options as the optionee could have exercised if his or her employment had continued for such ninety day period. If the optionee dies while employed by the Company or its subsidiaries, or during a period after termination of employment in which the optionee could exercise an option, the optionee's beneficiary may exercise the option within one year of the date of the optionee's death but in no event may the option be exercised later than the date on which the option would have expired if the optionee had lived. If the termination is by reason of disability, the optionee may exercise the option, in whole or in part, at any time within one year following such termination of employment, but in no event may the option be exercised later than the date on which the option would have expired if the optionee had not been terminated for disability. Notwithstanding the above, an optionee -6- terminated either (a) for cause or (b) without the consent of the Company may not exercise his or her outstanding options. Option The Board of Directors, subject to shareholder approval, granted the following options under the 1998 Employees' Plan: Number of Common Grantee Shares Covered ------- -------------- Michael A. McManus, Jr. 85,000 The foregoing grant is exercisable on and after October 30, 1999 at a price of $5.06 per Common Share and is exercisable through October 30, 2008. The fair market value of the Common Shares on October 30, 1998 was $5.06. The fair market value of the Common Shares on December 8, 1998 was $5.87. The Committee may, from time to time during the term of the Employees' Plan, grant further options pursuant to such Plan. Federal Income Tax Consequences With respect to the tax effects of Incentive Stock Options, the optionee does not recognize any taxable income when the option is granted or exercised. If no disposition of shares issued to an optionee pursuant to the exercise of an Incentive Stock Option is made by the optionee within two years from the date of grant and within one year after the transfer of such shares to the optionee then (a) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as long-term capital gain and any loss sustained will be a long-term capital loss and (b) no deduction will be allowed to the Company for Federal income tax purposes. The exercise of an Incentive Stock Option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee. If shares acquired upon the exercise of an Incentive Stock Option are disposed of prior to the expiration of the two year and one year holding periods described above (a "Disqualifying Disposition") generally (a) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at exercise (or, if less, the amount realized upon the sale of such shares) over the option price thereof, and (b) the Company will be entitled to deduct such amount, subject to applicable withholding requirements. Any further gain realized will be taxed as short-term or long-term capital gain and will not result in any deduction by the Company. A Disqualifying Disposition will eliminate the item of tax preference associated with the exercise of the Incentive Stock Option. -7- If an optionee is permitted to, and does, make the required payment of the option price by delivering shares, the optionee generally will not recognize any gain as a result of such delivery, but the amount of gain, if any, which is not so recognized will be excluded from his basis in the new shares received. However, the use by an optionee of shares previously acquired pursuant to the exercise of an Incentive Stock Option to exercise an Incentive Stock Option will be treated as a taxable disposition if the transferred shares are not held by the optionee for the requisite holding period described above. With respect to the tax effects of non-qualified options, a recipient of options incurs no income tax liability as a result of having been granted those options. The exercise by an individual of a stock option normally results in the immediate realization of income by the individual of the difference between the market value of the shares which are being purchased on the date of exercise and the price being paid for such shares. The amount of such income also is deductible by the Company. If the exercise price is paid in whole or in part in shares, no income, gain or loss is recognized by a director or former director on the receipt of shares equal in number to the shares delivered in payment of the exercise price, and the fair market value of the remainder of the shares received upon exercise of the option, determined as of the date of exercise, less the amount of cash, if any, paid upon exercise, is treated as compensation income received by the director or former director. Under current law an individual who sells shares which were acquired upon the exercise of options will receive long-term capital gains or loss treatment, if the individual has held such shares for longer than one year following the date of such exercise, on gain or loss equal to the difference between the price for which such shares were sold and the market value of the shares on the date of the exercise. If the individual has held the shares for one year or less the gain or loss will be treated as short-term capital gain or loss. Amendments To The 1998 Employees' Plan The 1998 Employees' Plan may be terminated, suspended, or modified at any time by the Board of Directors, but no amendment increasing the maximum number of Common Shares for which options may be granted (except to reflect a stock split, stock dividend or other distribution), materially increasing the benefits accruing to an optionee or changing the class of persons eligible to be optionees shall be made without first obtaining approval by a majority of the shares of the Company voting thereon. No termination, suspension or modification of the 1998 Employees' Plan shall adversely affect any right previously acquired by the optionee or other beneficiary under the 1998 Employees' Plan without such optionee's or beneficiary's consent. Options granted under the 1998 Employees' Plan may not be transferred other than by will or by the laws of descent and distribution or a qualified domestic relations order and, during the optionee's lifetime, may be exercised only by the optionee. -8- Plan Benefits The benefits or amounts that will be received by or allocated to any participants are not now determinable, except that the following grant has been made under the 1998 Employees' Plan: Name and Dollar Number Principal Position Value($) of Units ------------------ -------- -------- Michael A. McManus, Jr., President and CEO 430,100(1) 85,000 Joseph Librizzi, Former President and CEO 0(2) 0 Executive Group 430,100(1)(3) 85,000 Non-Executive Director Group 0(4) 0 Nominees for Director 430,100(1)(3) 85,000 Non-Executive Officer Employee Group 0(5) 0 - -------------------- (1) Based on an exercise price of $5.06 per Common Share. (2) The number of units and dollar value are shown as zero for Mr. Librizzi because he is not eligible to participate in the 1998 Employees' Plan, although he is required by the rules and regulations of the Securities and Exchange Commission to be listed in the table. (3) Consists of options granted to Mr. McManus. (4) The number of units and dollar value are shown as zero for the named group because non-employee directors are not eligible to participate in the 1998 Employees' Plan, although they are required by the rules and regulations of the Securities and Exchange Commission to be listed in the table. (5) No options have been granted this group to date under the 1998 Employees' Plan. Financial and Accounting Aspects The grant of the stock options made under the 1998 Employees' Plan to Mr. McManus will result in a non-cash compensation charge to the Company measured by the difference between the exercise price ($5.06) and the fair market value (i.e., market price) of the Common Shares on the date of approval of the transaction (which will be the date of the Annual Meeting of Shareholders, assuming such approval is forthcoming). By way of example, if the market price of the Common Shares is $6.06 per Common Share on the date of approval, the compensation expense to be recognized by the Company would be $1.00 multiplied by the total number of Common Shares (85,000) or $85,000. This charge will be recognized ratably over the vesting period of the options commencing with the date of grant and will have the effect of reducing the Company's net income for financial statement reporting by this amount or increasing the Company's loss. This is a non-cash charge in accordance with Accounting Principles Board Opinion Number 25, which will have no affect on the Company's tax liability or benefits, will not affect its cash position, and will not reduce the Company's net worth. These outstanding options will however, like any other options at similar prices, have the effect of increasing dilution in any calculation of earnings per share. -9- Vote Required The 1998 Employees' Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting. If the 1998 Employees' Plan is not approved by shareholders, it will not become effective. The Board of Directors recommends a vote FOR approval of the 1998 Employee Stock Option Plan. * * * Meetings of the Board of Directors During the last fiscal year ended June 30, 1998, the Board of Directors held three meetings and acted once by unanimous written consent and the Stock Option Committees held one meeting and acted once by unanimous written consent. No Director attended less than 75% of the aggregate of the total number of meetings of the Board of Directors and meetings of Committees of which they were a member that were held during the Company's last fiscal year. Currently, the only standing committees of the Board of Directors of the Company are its Stock Option Committees. The Stock Option Committee for the 1996 Employee Stock Option Plan consists of Messrs. Gelman, Alliger, and Gerstenfeld. The Stock Option Committees for both the 1991 Employee Stock Option Plan and the 1996 Non-Employee Director Stock Option Plan consist of Messrs. Gelman, Librizzi, Alliger and Gerstenfeld, the entire Board of Directors. The Stock Option Committees are responsible for administering the Company's stock option plans. Director Compensation Each non-employee Director receives $1,500 for each meeting of the Board of Directors attended (to a maximum of $7,500), $2,500 for dual attendance at the Annual Meeting of Shareholders and of the Board, and an award of $5,000 payable in a cash or the Company's Common Shares at the end of the fiscal year. In addition, Mr. Gelman is to receive a special Chairman's fee of $15,000 per year, commencing July 1, 1998. Each non-employee Director is also reimbursed for reasonable expenses incurred while traveling to attend meetings of the Board of Directors or while traveling in furtherance of the business of the Company. -10- EXECUTIVE COMPENSATION The following table sets forth for the fiscal years indicated the compensation paid by the Company to its Chief Executive Officer. No other executive officer had annual compensation exceeding $100,000: Summary Compensation Table
Long Term Annual Compensation (1) Compensation ------------ Awards Name and Underlying Principal Position Fiscal Year Salary Bonus Options/SARS(#) - ------------------ ----------- ------ ----- --------------- Joseph Librizzi, President 1998 $193,333 $170,141 50,000 Chief Executive Officer and 1997 160,000 379,394 60,000 Treasurer 1996 160,000 23,971 --
- ------------------------ (1) No other annual compensation is shown because the amounts of perquisites and other non-cash benefits provided by the Company do not exceed the lesser of $50,000 or 10% of the total annual base salary and bonus disclosed in this table for the named officer. Employment Agreements The Company's employment agreement with Dr. Librizzi expired, after being extended for one month, on October 30, 1998. The agreement provided for an annual salary of $200,000 and additional benefits that are generally provided to other employees of the Company. Dr. Librizzi will remain for a period of six (6) months through April 30, 1999 as a consultant and receive a fee of $10,000. In addition, he will receive a one-time severance payment of $100,000 in January 1999. The Company has entered into an employment agreement with Mr. McManus providing for his employment as President and Chief Executive Officer. The initial term of the agreement expires on October 31, 2000 and is automatically renewable for one year periods unless notice is given by the Company or Mr. McManus that it or he declines to renew the agreement. The agreement provides for an annual salary of $250,000 and an annual bonus, solely in the discretion of the Board of Directors of the Company, pursuant to a formula to be mutually agreed upon. During the year ending October 31, 1999, Mr. McManus will receive a bonus of not less than $225,000. The agreement provides that Mr. McManus will be granted options to purchase an aggregate of 250,000 Common Shares. Options to purchase 165,000 Common Shares were granted to Mr. McManus pursuant to the 1996 Employee Stock Option Plan. The balance of such options are the subject of the grant described in PROPOSAL TWO of this Proxy Statement. Mr. McManus will also receive such benefits as are generally provided to other executives of the Company. Upon the occurrence of certain "Changes in Control" events (as defined in the agreement), Mr. McManus will receive a one-time payment equal to six months base salary. -11- In conformity with the Company's policy, all of its Directors, officers and employees execute confidentiality and nondisclosure agreements upon the commencement of employment with the Company. The agreements generally provide that all inventions or discoveries by the employee related to the Company's business and all confidential information developed or made known to the employee during the term of employment shall be the exclusive property of the Company and shall not be disclosed to third parties without prior approval of the Company. Messrs. Gerstheimer and Manna also have agreements with the Company which provide for the payment of six months severance upon their termination for any reason. The Company's employment agreement with Dr. Librizzi also contains non-competition provisions that preclude him from competing with the Company for a period of one year from the date of his termination of employment. Option Grants in Last Fiscal Year The following table contains information concerning options granted to executive officers named in the Summary Compensation Table during the fiscal year ended June 30, 1998: Individual Grants
Number of Securities Underlying Options % of Total Options Granted Name Granted (#) to Employees in Fiscal Year Exercise Price ($/sh) Expiration Date - ---- ----------- ---------------------------- --------------------- --------------- Joseph Librizzi 30,000(1) 24 12.33(1) 9/9/07 20,000 16 18.50 10/21/07
- ---------------- (1) Adjusted for fifty percent (50%) stock dividend paid on October 20, 1997. Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values No options were exercised by any executive officer named in the Summary Compensation Table during the fiscal year ended June 30, 1998. The following table contains information concerning the number and value, at June 30, 1998, of unexercised options held by executive officers named in the Summary Compensation Table:
Number of Securities Underlying Unexercised Options at FY-End (#) Value of Unexercised In-the-Money Options at Name (Exercisable/Unexercisable) FY-End (Exercisable/Unexercisable)($)(1) - ---- --------------------------- ---------------------------------------- Joseph Librizzi 150,000/50,000 $939,000/0
- ---------------- (1) Fair market value of underlying securities (the closing price of the Company's Common Shares on the National Association of Securities Dealers Automated Quotation System) at fiscal year end (June 30, 1998) minus the exercise price. 12 Stock Options In September 1991, in order to attract and retain persons necessary for the success of the Company, the Company adopted a stock option plan (the "1991 Plan") which, as amended, covers up to 375,000 of the Company's Common Shares. Pursuant to the 1991 Plan, officers, Directors, consultants and key employees of the Company are eligible to receive incentive and/or non-qualified stock options. At June 30, 1998, options to purchase 162,750 Common Shares were outstanding under the 1991 Plan at $.50 to $6.78 per share and 212,250 options had been exercised. In March 1996, the Board of Directors approved the 1996 Employee Stock Option Plan covering an aggregate of 450,000 Common Shares of the Company and the 1996 Non-Employee Director Stock Option Plan covering an aggregate of 1,125,000 Common Shares of the Company. At June 30, 1998 options to acquire 242,750 Common Shares at prices of $4.00 and $18.50 under the 1996 Employee Stock Option Plan and options to acquire 778,500 Common Shares at a price of $.73 under the 1996 Non-Employee Director Stock Option Plan were outstanding. At June 30, 1998, options to purchase 2,250 Common Shares under the 1996 Employee Stock Option Plan have been exercised. The options are exercisable for 10 years. Both of these plans and the transactions under which options to acquire 898,500 Common Shares were granted were ratified and approved at the Annual Meeting of Shareholders held on February 19,1997. Since the exercise price of the granted options was less than the market price of the Company's Common Shares on February 19, 1997, this resulted in a non-cash compensation charge in the amount of $4,544,600, of which $185,000 was recorded during the fourth quarter of fiscal 1997. The foregoing plans are administered by the Board of Directors with the right to designate a committee. The selection of participants, allotments of shares, determination of price and other conditions relating to options are determined by the Board of Directors, or a committee thereof, in its sole discretion. The Board of Directors has designated a committee to administer each of the plans. Stock options granted under the plans are exercisable for a period of up to ten years from the date of grant at an exercise price which is not less than the fair market value of the Common Shares on the date of the grant, except that the term of a stock option granted under the plans to a shareholder owning more than 10% of the outstanding Common Shares may not exceed five years and its exercise price may not be less than 110% of the fair market value of the Common Shares on the date of grant. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires the Company's officers, Directors and persons who own more than ten percent of a registered class of the Company's equity securities ("Reporting Persons") to file reports of ownership and changes in ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission (the "SEC") and the National Association of Securities Dealers, Inc. (the "NASD"). These Reporting Persons are required by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file with the SEC and NASD. Based solely on the Company's review of the copies of the forms it has received, the 13 Company believes that all Reporting Persons complied on a timely basis with all filing requirements applicable to them with respect to transactions during fiscal year 1998. ACCOUNTANTS The Board of Directors has continued to retain the firm Ernst & Young LLP to act as the Company's independent certified public accountants. A representative of such firm is expected to be available either personally or by telephone hookup at the Annual Meeting to respond to appropriate questions from shareholders and will be given the opportunity to make a statement if he desires to do so. MISCELLANEOUS INFORMATION As of the date of this Proxy Statement, the Board of Directors does not know of any business other than that specified above to come before the Annual Meeting, but, if any other business does lawfully come before the Annual Meeting, it is the intention of the persons named in the enclosed Proxy to vote in regard thereto in accordance with their judgment. The Company will pay the cost of soliciting proxies in the accompanying form and as set forth below. In addition to solicitation by use of the mails, certain officers and regular employees of the Company may solicit proxies by telephone, telegraph or personal interview without additional remuneration therefor. SHAREHOLDER PROPOSALS Shareholder proposals with respect to the Company's next Annual Meeting of Shareholders must be received by the Company no later than August 13, 1999 to be considered for inclusion in the Company's next Proxy Statement. A copy of the Company's Annual Report of Shareholders for the fiscal year ended June 30, 1998 has been provided to all shareholders. Shareholders are referred to the report for financial and other information about the Company, but such report is not incorporated in this proxy statement and is not a part of the proxy soliciting material. By Order of the Board of Directors, PETER GERSTHEIMER Secretary Dated: December 11, 1998 Farmingdale, New York 14 EXHIBIT A 1998 EMPLOYEE STOCK OPTION PLAN of MISONIX, INC. 1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is designed to provide an incentive to key employees (including directors and officers who are key employees) of MISONIX, INC., a New York corporation (the "Company"), and its present and future subsidiary corporations, as defined in Paragraph 19 ("Subsidiaries"), and to offer an additional inducement in obtaining the services of such individuals. The Plan provides for the grant of (i) "incentive stock options" ("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) non-qualified stock options. 2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12, the aggregate number of shares of Common Stock, $.01 par value per share, of the Company ("Common Stock") for which options may be granted under the Plan shall not exceed 500,000. Such shares of Common Stock may, in the discretion of the Board of Directors of the Company (the "Board of Directors"), consist either in whole or in part of authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company. The Company shall at all times during the term of the Plan reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of the Plan. Subject to the provisions of Paragraph 13, any shares of Common Stock subject to an option which for any reason expires, is canceled or is terminated unexercised or which ceases for any reason to be exercisable shall again become available for the granting of options under the Plan. 3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee of the Board of Directors (the "Committee") consisting of not less than three Directors, each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A majority of the members of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, and any acts approved in writing by all members without a meeting, shall be the acts of the Committee. A-1 Subject to the express provisions of the Plan, the Committee shall have the authority, in its sole discretion, to determine the key employees who shall receive options; whether options shall be ISOs or non-qualified options; the times when they shall receive options; the number of shares of Common Stock to be subject to each option; the term of each option; the date each option shall become exercisable; whether an option shall be exercisable in whole, in part or in installments, and, if in installments, the number of shares of Common Stock to be subject to each installment; whether the installments shall be cumulative; the date each installment shall become exercisable and the term of each installment; whether to accelerate the date of exercise of any option; whether shares of Common Stock may be issued on exercise of an option as partly paid, and, if so, the dates when future installments of the exercise price shall become due and the amounts of such installments; the exercise price of each option; the form of payment of the exercise price; the amount, if any, necessary to satisfy the Company's obligation to withhold taxes; whether to restrict the sale or other disposition of the shares of Common Stock acquired upon the exercise of an option and to waive any such restriction; whether to subject the exercise of all or any portion of an option to the fulfillment of contingencies as specified in the contract referred to in Paragraph 11 (the "Contract"), including, without limitation, contingencies relating to entering into a covenant not to compete with the Company and its Parent and Subsidiaries, to financial objectives for the Company, a Subsidiary, a division, a product line or other category, and/or the period of continued employment of the optionee with the Company, its Parent or its Subsidiaries, and to determine whether such contingencies have been met; to construe the respective Contracts and the Plan; with the consent of the optionee, to cancel or modify an option, provided such option as modified would be permitted to be granted on such date under the terms of the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; and to make all other determinations necessary or advisable for administering the Plan. The determinations of the Committee on the matters referred to in this Paragraph 3 shall be conclusive. 4. ELIGIBILITY. The Committee may, consistent with the purposes of the Plan, grant options from time to time, to key employees (including directors and officers who are key employees) of the Company or any of its Subsidiaries. Options granted shall cover such number of shares of Common Stock as the Committee may determine; provided, however, that the aggregate fair market value (determined at the time the option is granted) of the shares of Common Stock for which any eligible person may be granted ISOs under the Plan or any other plan of the Company, or of a Parent or a Subsidiary of the Company, which are exercisable for the first time by such optionee during any calendar year shall not exceed $100,000. The $100,000 ISO limitation shall be applied by taking ISOs into account in the order in which they were granted. Any option (or the portion thereof) granted in excess of such amount shall be treated as a nonqualified stock option. 5. EXERCISE PRICE. The exercise price of the shares of Common Stock under each option shall be determined by the Committee; provided, however, that the exercise price shall not be less than 100% of the fair market value of the Common Stock subject to such option on the date of grant; and A-2 further provided, that if, at the time an ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, of any of its Subsidiaries or of a Parent, the exercise price of such ISO shall not be less than 110% of the fair market value of the Common Stock subject to such ISO on the date of grant. The fair market value of the Common Stock on any day shall be (a) if the principal market for the Common Stock is a national securities exchange, the average between the high and low sales prices of the Common Stock on such day as reported by such exchange or on a consolidated tape reflecting transactions on such exchange, (b) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is quoted on the National Association of Securities Dealers Automated Quotations System ("NASDAQ"), and (i) if actual sales price information is available with respect to the Common Stock, the average between the high and low sales prices of the Common Stock on such day on NASDAQ, or (ii) if such information is not available, the average between the highest bid and the lowest asked prices for the Common Stock on such day on NASDAQ, or (c) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is not quoted on NASDAQ, the average between the highest bid and lowest asked prices for the Common Stock on such day as reported on the NASDAQ OTC Bulletin Board Service or by National Quotation Bureau, Incorporated or a comparable service; provided that if clauses (a), (b) and (c) of this Paragraph are all inapplicable, or if no trades have been made or no quotes are available for such day, the fair market value of the Common Stock shall be determined by the Committee by any method consistent with applicable regulations adopted by the Treasury Department relating to stock options. The determination of the Committee shall be conclusive in determining the fair market value of the Common Stock. 6. TERM. The term of each option granted pursuant to the Plan shall be such term as is established by the Committee, in its sole discretion, at or before the time such option is granted; provided, however, that the term of each option granted pursuant to the Plan shall be for a period not exceeding 10 years from the date of grant thereof, and further, provided, that if, at the time an ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, of any of its Subsidiaries or of a Parent, the term of the option shall be for a period not exceeding five years from the date of grant. Options shall be subject to earlier termination as hereinafter provided. 7. EXERCISE. An option (or any part or installment thereof), to the extent then exercisable, shall be exercised by giving written notice to the Company at its principal office (at present 1938 New Highway, Farmingdale, New York 11735, Attn: Employee Stock Option Committee), stating which option is being exercised, specifying the number of shares of Common Stock as to which such option is being exercised and accompanied by payment in full of the aggregate exercise price therefor (or the amount due on exercise if the Contract permits installment A-3 payments) (a) in cash or by certified check, (b) with previously acquired shares of Common Stock having an aggregate fair market value, on the date of exercise, equal to the aggregate exercise price of all options being exercised or (c) by reducing the number of shares of Common Stock otherwise deliverable to the holder of an option upon exercise of the option, or with any combination of cash, certified check, shares of Common Stock or reduction as aforesaid. A person entitled to receive Common Stock upon the exercise of an option shall not have the rights of a shareholder with respect to such shares of Common Stock until the date of issuance of a stock certificate to him for such shares; provided, however, that until such stock certificate is issued, any option holder using previously acquired shares of Common Stock in payment of an option exercise price shall continue to have the rights of a shareholder with respect to such previously acquired shares. In no case may a fraction of a share of Common Stock be purchased or issued under the Plan. 8. TERMINATION OF EMPLOYMENT. Any holder of an option whose employment with the Company (and its Parent and Subsidiaries) has terminated for any reason other than his death or Disability (as defined in Paragraph 19) may exercise such option, to the extent exercisable on the date of such termination, at any time within 90 days after the date of termination, but not thereafter and in no event after the date the option would otherwise have expired; provided, however, that if his employment shall be terminated either (a) for cause, or (b) without the consent of the Company, said option shall terminate immediately. Options granted under the Plan shall not be affected by any change in the status of the holder so long as he continues to be a full-time employee of the Company, its Parent or any of its Subsidiaries (regardless of having been transferred from one corporation to another). For the purposes of the Plan, an employment relationship shall be deemed to exist between an individual and a corporation if, at the time of the determination, the individual was an employee of such corporation for purposes of Section 422(a) of the Code. As a result, an individual on military, sick leave or other bona fide leave of absence shall continue to be considered an employee for purposes of the Plan during such leave if the period of the leave does not exceed 90 days, or, if longer, so long as the individual's right to reemployment with the Company (or a related corporation) is guaranteed either by statute or by contract. If the period of leave exceeds 90 days and the individual's right to reemployment is not guaranteed by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. Nothing in the Plan or in any option granted under the Plan shall confer on any individual any right to continue in the employ of the Company, its Parent or any of its Subsidiaries, or interfere in any way with the right of the Company, its Parent or any of its Subsidiaries to terminate the employee's employment at any time for any reason whatsoever without liability to the Company, its Parent or any of its Subsidiaries. A-4 9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a) while he is employed by the Company, its Parent or any of its Subsidiaries, (b) within 90 days after the termination of his employment (unless such termination was for cause or without the consent of the Company) or (c) within one year following the termination of his employment by reason of Disability, the option may be exercised, to the extent exercisable on the date of his death, by his executor, administrator or other person at the time entitled by law to his rights under such option, at any time within one year after death, but not thereafter and in no event after the date the option would otherwise have expired. Any optionee whose employment has terminated by reason of Disability may exercise his option, to the extent exercisable upon the effective date of such termination, at any time within one year after such date, but not thereafter and in no event after the date the option would otherwise have expired. 10. COMPLIANCE WITH SECURITIES LAWS. The Committee may require, in its discretion, as a condition to the exercise of any option that either (a) a Registration Statement under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the shares of Common Stock to be issued upon such exercise shall be effective and current at the time of exercise, or (b) there is an exemption from registration under the Securities Act for the issuance of shares of Common Stock upon such exercise. Nothing herein shall be construed as requiring the Company to register shares subject to any option under the Securities Act. The Committee may require the optionee to execute and deliver to the Company his representation and warranty, in form and substance satisfactory to the Committee, that the shares of Common Stock to be issued upon the exercise of the option are being acquired by the optionee for his own account, for investment only and not with a view to the resale or distribution thereof. In addition, the Committee may require the optionee to represent and warrant in writing that any subsequent resale or distribution of shares of Common Stock by such optionee will be made only pursuant to (i) a Registration Statement under the Securities Act which is effective and current with respect to the shares of Common Stock being sold, or (ii) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption, the optionee shall prior to any offer of sale or sale of such shares of Common Stock provide the Company with a favorable written opinion of counsel, in form and substance satisfactory to the Company, as to the applicability of such exemption to the proposed sale or distribution. In addition, if at any time the Committee shall determine in its discretion that the listing or qualification of the shares of Common Stock subject to such option on any securities exchange or under any applicable law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to, or in connection with, the A-5 granting of an option or the issue of shares of Common Stock thereunder, such option may not be exercised in whole or in part unless such listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. 11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an appropriate Contract which shall be duly executed by the Company and the optionee, and shall contain such terms and conditions not inconsistent herewith as may be determined by the Committee. 12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other provisions of the Plan, in the event of any change in the outstanding Common Stock by reason of a stock dividend, recapitalization, merger or consolidation in which the Company is the surviving corporation, split-up, combination or exchange of shares or the like, the aggregate number and kind of shares subject to the Plan, the aggregate number and kind of shares subject to each outstanding option and the exercise price thereof shall be appropriately adjusted by the Board of Directors, whose determination shall be conclusive. In the event of (a) the liquidation or dissolution of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation, or (c) any other capital reorganization in which more than 50% of the shares of Common Stock of the Company entitled to vote are exchanged, any outstanding options shall vest in their entirety and become exercisable within the period of thirty (30) days commencing upon the date of the action of the shareholders (or the Board of Directors if shareholders' action is not required) is taken to approve the transaction and upon the expiration of that period all options and all rights thereto shall automatically terminate, unless other provision is made therefor in the transaction. 13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the Board of Directors on October 7, 1998. No option may be granted under the Plan after October 6, 2008. The Board of Directors, without further approval of the Company's shareholders, may at any time suspend or terminate the Plan, in whole or in part, or amend it from time to time in such respects as it may deem advisable, including, without limitation, in order that options granted hereunder meet the requirements for "stock options" under the Code, to comply with applicable requirements of the Securities Act and the Exchange Act, and to conform to any change in applicable law or to regulations or rulings of administrative agencies; provided, however, that no amendment shall be effective without the requisite prior or subsequent shareholder approval which would (a) except as contemplated in Paragraph 12, increase the maximum number of shares of Common Stock for which options may be granted under the Plan, (b) materially increase the benefits to participants under the Plan or (c) change the eligibility requirements for individuals entitled to receive options hereunder. No termination, suspension or amendment of the Plan shall, without the consent of the holder of an existing option affected thereby, adversely affect his A-6 rights under such option. The power of the Committee to construe and administer any options granted under the Plan prior to the termination or suspension of the Plan nevertheless shall continue after such termination or during such suspension. 14. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan shall be transferable otherwise than by will or the laws of descent and distribution or a qualified domestic relations order ("QDRO") as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and options may be exercised, during the lifetime of the holder thereof, only by him or his legal representatives or pursuant to a QDRO. Except to the extent provided above, options may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attach ment or similar process. 15. WITHHOLDING TAXES. The Company may withhold cash and/or shares of Common Stock to be issued with respect thereto having an aggregate fair market value equal to the amount which it determines is necessary to satisfy its obligation to withhold Federal, state and local income taxes or other taxes incurred by reason of the grant or exercise of an option, its disposition, or the disposition of the underlying shares of Common Stock. Alternatively, the Company may require the holder to pay to the Company such amount, in cash, promptly upon demand. The Company shall not be required to issue any shares of Common Stock pursuant to any such option until all required payments have been made. Fair market value of the shares of Common Stock shall be determined in accordance with Paragraph 5. 16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or legends upon the certificates for shares of Common Stock issued upon exercise of an option under the Plan and may issue such "stop transfer" instructions to its transfer agent in respect of such shares as it determines, in its discretion, to be necessary or appropriate to (a) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act, (b) implement the provisions of the Plan or any agreement between the Company and the optionee with respect to such shares of Common Stock, or (c) permit the Company to determine the occurrence of a "disqualifying disposition," as described in Section 421(b) of the Code, of the shares of Common Stock transferred upon the exercise of an option granted under the Plan. The Company shall pay all issuance taxes with respect to the issuance of shares of Common Stock upon the exercise of an option granted under the Plan, as well as all fees and expenses incurred by the Company in connection with such issuance. A-7 17. USE OF PROCEEDS. The cash proceeds from the sale of shares of Common Stock pursuant to the exercise of options under the Plan shall be added to the general funds of the Company and used for such corporate purposes as the Board of Directors may determine. 18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board of Directors may, without further approval by the shareholders, substitute new options for prior options of a Constituent Corporation (as defined in Paragraph 19) or assume the prior options of such Constituent Corporation. 19. DEFINITIONS. a. Subsidiary. The term "Subsidiary" shall have the same definition as "subsidiary corporation" in Section 424(f) of the Code. b. Parent. The term "Parent" shall have the same definition as "parent corporation" in Section 424(e) of the Code. c. Constituent Corporation. The term "Constituent Corporation" shall mean any corporation which engages with the Company, its Parent or any Subsidiary in a transaction to which Section 424(a) of the Code applies (or would apply if the option assumed or substituted were an ISO), or any Parent or any Subsidiary of such corporation. d. Disability. The term "Disability" shall mean a permanent and total disability within the meaning of Section 22(e)(3) of the Code. 20. GOVERNING LAW. The Plan, such options as may be granted hereunder and all related matters shall be governed by, and construed in accordance with, the laws of the State of New York. 21. PARTIAL INVALIDITY. The invalidity or illegality of any provision herein shall not affect the validity of any other provision. A-8 22. SHAREHOLDER APPROVAL. The Plan shall require the approval of a majority of the votes cast thereon by the shareholders of the Company at the next meeting of its shareholders. No options granted hereunder may be exercised prior to such approval, provided that the date of grant of any options granted hereunder shall be determined as if the Plan had not been subject to such approval. Notwithstanding the foregoing, if the Plan is not approved by a vote of the shareholders of the Company on or before October 6, 1999, the Plan and any options granted hereunder shall terminate. A-9 PROXY CARD MISONIX, INC. This Proxy is solicited on behalf of the Board of Directors The undersigned hereby appoints Gary Gelman and Michael A. McManus, Jr., as Proxies, each with the power to appoint a substitute, and hereby authorizes them to represent and to vote, as designated below, all the Common Shares held of record by the undersigned on November 20, 1998 at the Annual Meeting of Shareholders to be held on January 13, 1999 or any adjournment thereof. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED -------------- -------------------- ACCOUNT NUMBER NO. OF COMMON SHARES
- ------------------------------------------------------------------------------------------------------------------------------------ 1. Election of Directors: Gary Gelman, Michael A. McManus, Jr., Howard Alliger, Arthur Gerstenfeld. FOR all Nominees listed WITHHOLD (Instruction: To withhold authority to vote (except as marked to the AUTHORITY vote for all for one or more individual nominees write contrary) Nominees listed the nominee's name(s) in the line provided below). / / / / ------------------------------- 2. Approval of the 1998 Employee Incentive Stock Option Plan and ratification of grant previously made thereunder. FOR AGAINST ABSTAIN / / / / / / - ------------------------------------------------------------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, the Proxy will be voted FOR the election of all Directors and Proposal 2. Please sign exactly as name appears hereon. ---------------------------------- (Signature) - ----------------------- ---------------------------------- Dated (Signature if held jointly) When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Please note any change in your address alongside the address as it appears in the proxy. PLEASE MARK IN BLUE OR BLACK INK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----