UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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by Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-12
SCIENTIFIC INDUSTRIES, INC.
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Scientific Industries, Inc.
(Letterhead)
November 21, 2011
Dear Fellow Stockholders:
You are cordially invited to attend the 2011 Annual Meeting
of Stockholders of Scientific Industries, Inc. which will be held at
11:00 a.m. (New York time) on Thursday, January 12, 2012 at La Quinta
Inn & Suites, 10 Aero Road, Bohemia, New York, 11716.
Information concerning the matters to be considered and voted upon
at the Annual Meeting is set out in the attached Notice of 2011 Annual
Meeting of Stockholders and Proxy Statement.
It is important that your shares be represented at the 2011 Annual
Meeting, regardless of the number of shares you hold and whether or not
you plan to attend the meeting in person. Accordingly, please complete,
sign and date the enclosed proxy card and return it as soon as possible
in the accompanying business reply envelope so that your shares will be
represented at the Annual Meeting. This will not limit your right to
vote in person or to attend the meeting.
Thank you for your continued support.
Sincerely,
/s/ Joseph G. Cremonese
Joseph G. Cremonese
Chairman
SCIENTIFIC INDUSTRIES, INC.
70 Orville Drive
Bohemia, New York 11716
_____________
NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS
JANUARY 12, 2012
Notice is hereby given that the 2011 Annual Meeting of Stockholders
(the "Annual Meeting") of Scientific Industries, Inc., a Delaware
corporation (the "Company"), will be held on Thursday, January 12, 2012,
at 11:00 a.m. (New York time) at La Quinta Inn & Suites, 10 Aero Road,
Bohemia, New York, 11716, for the following purposes:
1. To elect two Class C Directors to the Company's Board of Directors
to serve until the Company's annual meeting of stockholders with respect
to the year ending June 30, 2014 and until the election and qualification
of their respective successors.
2. To consider and act upon a proposal to approve the 2012 Stock
Option Plan of the Company.
3. To ratify the appointment of Nussbaum Yates Berg Klein & Wolpow,
LLP as the Company's independent registered public accounting firm for
the fiscal year ending June 30, 2012.
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The foregoing items of business are more fully described in the
accompanying proxy statement.
The Board of Directors has fixed the close of business on
November 11, 2011, as the record date for determination of stockholders
entitled to notice of and to vote at, the Annual Meeting and at any
adjournments or postponements thereof.
A complete list of the stockholders entitled to vote at the Annual
Meeting will be available for inspection by any stockholder of the
Company at the Annual Meeting. In addition, the list will be open for
examination by any stockholder of the Company for any purpose germane to
the Annual Meeting during ordinary business hours for a period of ten
days prior to the Annual Meeting at the offices of the Company.
You are requested to fill in and sign the enclosed form of proxy,
which is being solicited by the Board of Directors of the Company, and
mail it promptly in the enclosed postage paid envelope. Any proxy may
be revoked by delivery of a later dated proxy.
By Order of your Board of Directors,
/s/ Robert P. Nichols
Robert P. Nichols
Secretary
Bohemia, New York
November 21, 2011
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE KINDLY
REQUEST THAT YOU PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED. IF YOU ARE A
STOCKHOLDER OF RECORD AND YOU ATTEND THE ANNUAL MEETING, YOU MAY
VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR
PROXY CARD.
YOUR VOTE IS IMPORTANT
SCIENTIFIC INDUSTRIES, INC.
70 Orville Drive
Bohemia, New York 11716
PROXY STATEMENT
_________________
2011 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 12, 2012
_________________
Solicitation of Proxies
This proxy statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors
(the "Board") of Scientific Industries, Inc., a Delaware corporation
(the "Company"), for use at the 2011 Annual Meeting of Stockholders
(the "Annual Meeting") to be held at La Quinta Inn & Suites, 10 Aero
Road, Bohemia, New York, 11716, on Thursday, January 12, 2012, at
11:00 a.m. (New York time), and at any adjournments or postponements
thereof.
At the Annual Meeting, stockholders of the Company will be asked
to: (1) elect two Directors of the Company to serve until the Company's
annual meeting of stockholders with respect to the fiscal year ending
June 30, 2014, and the election and qualification of their respective
successors; (2) consider and act upon a proposal to approve the 2012
Stock Option Plan of the company; (3) ratify the appointment of Nussbaum
Yates Berg Klein & Wolpow, LLP, as the Company's independent registered
public accounting firm for the fiscal year ending June 30, 2012; and
(4) transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Record Date, Voting Rights
Only stockholders of record of the Company's Common Stock, par
value $0.05 per share (the "Common Stock"), as of the close of business
on November 11, 2011 (the "Record Date"), are entitled to notice of and
to vote at the Annual Meeting and any adjournments or postponements
thereof. On the Record Date, there were 1,196,577 shares of Common
Stock issued and outstanding. Each share of Common Stock is entitled
to one vote.
The presence at the Annual Meeting, in person or by a properly
executed proxy, of the holders of a majority of the outstanding shares
of the Company's Common Stock as of the Record Date is necessary to
constitute a quorum. In the determination of the number of shares
of Common Stock present at the Annual Meeting for quorum purposes
abstentions and broker "non-votes" are included. A broker "non-vote"
occurs when a nominee holding shares of Common Stock for a beneficial
owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has
not received instructions from the beneficial owner.
Voting of Proxies, Revocation, Solicitation
All stockholders who deliver properly executed and dated proxies
to the Company prior to the Annual Meeting will be deemed present at the
Annual Meeting regardless of whether such proxies direct the proxy
holders to vote for or against, or to withhold or abstain from voting.
The proxies, when properly executed and returned to the Company, will be
voted in accordance with the instructions given therein by the person
executing the proxy. In the absence of instructions, properly executed
proxies other than with respect to broker "non-votes" will be voted FOR
(1) the election of the Board's nominees, Joseph G. Cremonese and Roger B.
Knowles as Directors of the Company; (2) the approval of the Company's
2012 Stock Option Plan; and (3) the ratification of the appointment by
the Board of Directors of Nussbaum Yates Berg Klein & Wolpow, LLP, as
the Company's independent registered public accounting firm for
the fiscal year ending June 30, 2012.
Any stockholder who executes and delivers a proxy may revoke it
at any time before it is voted by delivering a written notice of such
revocation to the Secretary of the Company at the address of the Company
set forth in this proxy statement, by submitting a properly executed
proxy bearing a later date, or by appearing at the Annual Meeting and
requesting the return of the proxy or by voting in person. In accordance
with applicable rules, boxes and designated spaces are provided on the
proxy card for stockholders to mark if they wish either to vote for or
withhold authority to vote for the nominees for Directors, or to vote
for, against or to abstain from voting for: the proposal to approve the
Company's 2012 Stock Option Plan and the proposal to ratify the
appointment by the Board of Directors of the Company's independent
registered public accounting firm.
A stockholder's attendance at the Annual Meeting will not,
by itself, revoke a proxy given by that stockholder. Stockholders vote
at the Annual Meeting by casting ballots (in person or by proxy), which
are tabulated by a person who is appointed by the Board of Directors
before the Annual Meeting to serve as inspector of election at the Annual
Meeting and who has executed and verified an oath of office.
It is anticipated that this proxy statement, the enclosed proxy
card and the Company's Annual Report will be mailed to the Company's
stockholders on or about December 7, 2011.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of November 11, 2011 certain
information as to each person who to the Company's knowledge, based
upon such person's representations or publicly available filings,
beneficially owned more than 5% of the outstanding shares of the
Company's Common Stock as of that date:
Name and Address of Shares Beneficially Percent of
Beneficial Owner Owned** Class***
__________________ __________________ __________
James S. Segasture* 171,500(1) 14.3
Lowell A. Kleiman 139,581(2) 11.7
16 Walnut Street
Glen Head, NY 11545
Spectrum Laboratories, Inc. 127,986(3) 10.7
18617 Broadwick Street
Rancho Dominquez, CA 90220
Grace S. Morin* 89,450(4) 7.4
Brookman P. March* 89,450(5) 7.4
Joseph G. Cremonese* 79,097(6) 6.5
Estate of Joseph I. Kesselman* 64,120(7) 5.3
* His or her address is c/o Scientific Industries, Inc., 70 Orville
Drive, Bohemia, New York 11716.
** Beneficial ownership, as such term is used herein, is determined
in accordance with Rule 13d-3(d)(1) promulgated under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and includes
voting and/or investment power with respect to shares of Common Stock
of the Company. Unless otherwise indicated, the named person possesses
sole voting and investment power with respect to the shares. The shares
shown include shares issuable pursuant to options held by the named
person that may be exercised within 60 days of the date indicated above.
*** Percentages of ownership are based upon the number of shares of
Common Stock issued and outstanding. Shares of Common Stock that may be
acquired pursuant to options that are exercisable within 60 days of the
date indicated above are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for the percentage ownership of any other person.
(1) Includes 4,000 shares issuable upon exercise of options.
(2) Based on information reported on Schedule 13D filed with the
Securities and Exchange Commission on October 30, 2002.
(3) Based on information reported on Schedule 13G filed with the
Securities and Exchange Commission on June 15, 2009.
(4) Includes 6,500 shares issuable upon exercise of options held by
her husband, Mr. March.
(5) Represents 82,950 shares owned by his wife, Grace S. Morin and
6,500 shares issuable upon exercise of options.
(6) 49,097 shares are owned jointly with his wife, and 30,000 shares
are issuable upon exercise of options.
(7) Includes 16,735 shares owned by Mrs. Kesselman and 4,000 shares
issuable upon exercise of options.
PROPOSAL 1
ELECTION OF DIRECTORS
General
The Company's Certificate of Incorporation provides for a
classified Board of Directors, consisting of three classes, each class
serving a three-year term on a staggered basis. The number of Directors
constituting the Board was reduced from six to five upon the death in
July, 2011 of a Director, Mr. Joseph I. Kesselman. Two are Class A
Directors, one is a Class B Director and two are Class C Directors. At
the Annual Meeting, the two Class C Directors are to be elected to serve
until the annual meeting of stockholders with respect to the fiscal year
ending June 30, 2014, and until their successors are duly elected and
qualified. During fiscal 2011, the Board held six meetings, at each of
which all Directors were present. Shares of Common Stock represented
by executed and returned proxies solicited by the Board of Directors
will be voted for the nominees hereinafter named if authority to do so
is not specifically
withheld. If for any reason said nominees shall become unavailable for
election, which is not now anticipated, the proxies will be voted for a
substitute nominee designated by the Board of Directors.
The Directors of the Company are elected by the affirmative
vote of the holders of a plurality of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to
vote. A plurality means that the nominee with the largest number of
votes is elected as Director. In tabulating the vote, abstentions and
broker "non-votes" will be disregarded and will have no effect on the
outcome of the vote.
The Board of Directors recommends that stockholders vote FOR the
election of the nominees identified below to the Board of Directors.
Nominees
The Board of Directors has designated Mr. Joseph G. Cremonese
and Mr. Roger B. Knowles, both currently Class C Directors, as their
nominees for election.
Joseph G. Cremonese (age 75), a Director since November 2002 and
Chairman of the Board since February 2006, has been a marketing consultant
to the Company since 1996. Mr. Cremonese has been since 1991, President
of Laboratory Innovation Company, Ltd., which is a vehicle for technology
transfer and consulting services for companies, including the Company,
engaged in the production and sale of products for science and
biotechnology. Since March 2003, he has been a director of Proteomics,
Inc., a producer of recombinant proteins for medical research. Prior to
1991, he had been employed by Fisher Scientific, the largest U.S.
distributor of laboratory equipment.
Roger B. Knowles (age 86), a Director since 1965, has been retired
for more than five years.
Other Directors
Class A Directors:
Helena R. Santos (age 47), a Director since 2009, has been
employed by the Company since 1994, and has served since August 2002 as
its President, Chief Executive Officer and Treasurer. Prior thereto, she
served as Vice President, Controller from 1997 and as Secretary from
May 2001. Ms. Santos was an internal auditor with a major defense
contractor from March 1991 to April 1994. She had been previously
employed in public accounting.
James S. Segasture (age 75), a Director since 1991, has been
a private investor since February 1990.
Class B Director:
Grace S. Morin (age 63), a Director since December 4, 2006,
had been President, Director and principal stockholder of Altamira
Instruments, Inc. from December 2003 until its acquisition in November
2006 by the Company. Ms. Morin had been employed by Altamira to
supervise its administrative functions at the Pittsburgh, Pennsylvania
facility as a full-time employee through March 31, 2009 and since that
date as a part-time consultant. She was for two years ending December
2003, a general business consultant, and for approximately four years
prior thereto a member of senior management of a designer of gas flow
environmental engineered products.
Stock Ownership
The following table sets forth, as of November 11, 2011,
relevant information as to the shares of Common Stock beneficially
owned by (i) each Director of the Company, (ii) each executive officer
of the Company identified in the Summary Compensation Table under
"Executive Officers and Key Personnel," and (iii) all directors and
executive officers as a group.
Beneficial Owner Number Percentage
___________________ ____________ ________________
Joseph G. Cremonese 79,097 (1) 6.5%
Roger B. Knowles 4,000 (2) .3%
Grace S. Morin 89,450 (3) 7.4%
James S. Segasture 171,500 (4) 14.3%
Helena R. Santos 15,779 1.3%
Robert P. Nichols 21,446 (5) 1.8%
Brookman P. March 89,450 (6) 7.4%
All current directors and
executive officers as a group 381,272 (7) 31.6%
(7 persons)
(1) 49,097 shares are owned jointly with his wife, and 30,000 shares
are issuable upon exercise of options.
(2) Represents shares issuable upon exercise of options.
(3) Includes 6,500 shares issuable upon exercise of options held by
her husband, Mr. March.
(4) Includes 4,000 shares issuable upon exercise of options.
(5) Includes 5,000 shares issuable upon exercise of options.
(6) Represents 82,950 shares owned by his wife, Ms. Morin, and 6,500
shares issuable upon exercise of stock options.
(7) Includes 49,500 shares issuable upon exercise of options.
Board Committees
Joseph I. Kesselman had been until his death in July 2011 a member
of the Stock Option Committee and the Compensation Committee.
The Company's Stock Option Committee administers the Company's 2002
Stock Option Plan ("2002 Plan") and will administer the 2012 Stock Option
Plan, if the Plan is approved by the stockholders. The members of the
committee are to be non-management Directors of the company - Mr. James
S. Segasture and since November 18, 2011, Joseph G. Cremonese, as successor
to Mr. Kesselman. The members of the Committee serve at the discretion
of the Board. During the fiscal year ended June 30, 2011 ("fiscal 2011")
the Stock Option Committee held two meetings.
Grace S. Morin, and James S. Segasture are the current members of
the Company's Compensation Committee serving at the discretion of the
Board. The Committee administers the Company's compensation policies.
During fiscal 2011, the Compensation Committee held one meeting.
The Board of Directors acts as the Company's Audit Committee, which
in its function as the Committee, held two meetings during fiscal 2011.
Ms. Santos, who is not "independent" and Ms. Morin are "financial experts"
as defined by the Securities and Exchange Commission.
Directors' Compensation and Options
DIRECTORS' COMPENSATION
For the Year Ended June 30, 2011
Non-
Equity
Fees Incentive
Earned Plan
or Paid Stock Option Comp-
in Cash Awards Awards ensation
Name ($) ($) ($) ($)
(a) (b) (c) (d) (e)
_____________________________________________________________________
Joseph G.
Cremonese 25,700 0 16,200(2) 0
Joseph
Kesselman(1) 12,700 0 0 0
Roger B.
Knowles 12,700 0 0 0
Grace S.
Morin 12,700 0 0 0
James S.
Segasture 12,700 0 0 0
____________________________________________________________________
DIRECTORS' COMPENSATION (CONTINUED)
Changes
in
Pension
Value and
Non- Non-
qualified qualified
Deferred Deferred All
Compens- Comp- Other
ation ensation Comp-
Earnings Earnings ensation Total
Name ($) ($) ($) ($)
(a) (f) (g) (h) (i)
____________________________________________________________________
Joseph G.
Cremonese 0 0 36,000(3) 77,900
Joseph I.
Kesselman(1) 0 0 0 12,700
Roger B.
Knowles 0 0 0 12,700
Grace S.
Morin 0 0 9,000(4) 21,700
James S.
Segasture 0 0 0 12,700
____________________________________________________________________
(1) Mr. Kesselman died in July 2011.
(2) The amount represents consulting expense recorded in fiscal 2011
for stock options granted in fiscal 2010 and 2011 valued and expensed
utilizing the Black-Scholes-Merton options pricing model.
(3) Represents amount paid to his affiliate pursuant to a marketing
consulting agreement.
(4) Represents compensation received for her administrative services
as a consultant for Altamira.
The Company pays each Director who is not an employee of the
Company or a subsidiary a quarterly retainer fee of $1,800 (increased
in January 2011 from $1,500) and $1,200 (increased from $1,000 in
January 2011) for each meeting attended. In addition, the Company
reimburses each Director for out-of-pocket expenses incurred in
connection with attendance at board meetings in the amount of $50 or
the Director's itemized expenses, whichever is greater. Mr. Cremonese,
as Chairman of the Board receives an additional fee of $1,200 (increased
in January 2011 from $1,000) per month. During fiscal 2011, total
director compensation to non-employee Directors aggregated $137,700,
including the consulting fees paid to Mr. Cremonese's affiliate, and to
Ms. Morin.
Under the Company's 2002 Plan, none of the Directors at the time
of the adoption by the Board of Directors of the 2002 Plan were eligible
to receive option grants thereunder. Each of Roger B. Knowles and James
S. Segasture hold options expiring on December 31, 2011 granted under the
Company's 1992 Stock Option Plan to purchase 4,000 shares of Common S
tock at the exercise price of $2.40 per share. Mr. Joseph G. Cremonese
who was elected a Director at the 2002 Annual Meeting of Stockholders,
was granted ten year options on December 1, 2003 to purchase 5,000
shares of Common Stock at the exercise price of $1.35
per share and on February 20, 2007 to purchase 5,000 shares of Common
Stock at the exercise price of $3.10 per share, and five-year options
on September 17, 2009 to purchase 10,000 shares at the exercise price
of $1.88 per share, and on January 7, 2011 to purchase 10,000 shares
at the exercise price of $1.53 per share. The $1.53 option had a total
fair value (as determined by the Black-Scholes-Merton option-pricing
model) of $15,300 which was all recognized as consulting expense in
fiscal 2011. None of the options have been exercised to date.
Executive Officers and Key Personnel
Ms. Helena R. Santos and Mr. Robert P. Nichols are the executive
officers of the Company. Mr. Brookman P. March is President and
Director of Sales and Marketing of the Company's subsidiary, Altamira
Instruments, Inc.
See "Election of Directors" for the employment history of
Ms. Santos.
Robert P. Nichols (age 50), employed by the Company since February
1998, has served since August 2002 as Executive Vice President.
Previously, he had been since May 2001 Vice President, Engineering.
Prior to joining the Company, Mr. Nichols was an Engineer Manager
with Bay Side Motion Group, a precision motion equipment manufacturer
from January 1996 to February 1998.
Brookman P. March (age 66) has been Director of Sales and Marketing
of Altamira, which conducts the Catalyst Research Instruments operation
since November 30, 2006 and its President since July 2008. He had been
Vice President and a Director of Altamira from December 2003 until it
was acquired by the Company. Mr. March is the husband of Ms. Morin,
a Director.
The executive officers of the Company are elected by the Board
of Directors of the corporation for which they serve and hold office
until their respective successors are elected and qualified or until
his or her earlier resignation or removal. None of the officers need
to be Directors, and more than one office may be held by the same
person. There is no arrangement or understanding between any executive
officer and any person other than the Company regarding election as
an officer.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation to be paid to each executive officer. In
making a determination, the Committee and the Board give material
consideration to the Company's results of operations and financial
condition, competitive factors and the Company's resources. The
compensation at times includes grants of options under its stock option
plan to the named executives. Each officer is employed pursuant to a
long-term employment agreement, containing terms proposed by the
Committee and approved as reasonable by the Board of Directors. The
Board is cognizant that as a relatively small company, the Company has
limited resources and opportunities with respect to recruiting and
retaining key executives. Accordingly, the Company has relied upon
long-term employment agreements and grants of stock options to retain
qualified personnel.
In September 2011, The Company entered into new employment
agreements with Ms. Helena R. Santos and Robert P. Nichols extending
their terms of employment to June 30, 2013. The new agreements increased
their annual base salaries for the fiscal years ending June 30,
2012 and June 30, 2013 - for Ms. Santos from $135,000 for the fiscal year
ended June 30, 2011 to $138,000 and $141,000 respectively; and for Mr.
Nichols from $123,600 for the fiscal year ended June 30, 2011 to $126,320
and $129,100 respectively. Bonuses, if any, are to be awarded at the
discretion of the Board of Directors for each of the fiscal years ending
June 30, 2012 and June 30, 2013. For the six month period ended June
30, 2010 and the year ended June 30, 2011, the Board of Directors
authorized bonuses of $8,000 and $4,000, respectively for Ms. Santos
and $4,400 and $3,000, respectively for Mr. Nichols.
In October 2010, the Company entered into a new employment
agreement with Mr. March extending the term through June 30, 2012,
which may be further extended by mutual consent for an additional 12
month period. The agreement provides for an annual base salary of
$121,900 through November 30, 2010 and $128,000 thereafter. Bonuses,
if any, may be awarded at the discretion of the Board of Directors.
A bonus of $5,000 was paid to Mr. March during fiscal 2011 for his
services during the twelve month period ended November 30, 2010.
Mr. March is the husband of Grace S. Morin, a Director of the
Company and of Altamira and a former principal stockholder of Altamira.
Each of the foregoing employment agreements contains
confidentiality and non-competition covenants. The employment agreements
for Ms. Santos and Mr. March contain termination provisions stipulating
that if the Company terminates the employment other than for death,
disability, or cause (defined as (i) conviction of a felony or (ii) gross
neglect or gross misconduct (including conflict of interest), the Company
shall pay severance payments equal to one year's salary at the rate of
the compensation at the time of termination, and continue to pay the
regular benefits provided by the Company for a period of two years from
termination.
Compensation for each of its executive officers provided by their
employment agreements were based on the foregoing factors and the
operating and financial results of the segments under their management.
The following table summarizes all compensation paid by the Company
to each of its executive officers for the fiscal years ended June 30, 2011
and 2010.
SUMMARY COMPENSATION TABLE
______________________________________________________________________
Non- Non-
Equity Qualified
Incentive Deferred
Name Plan Comp-
and Stock Option Comp- ensation
Principal Fiscal Salary Bonus Awards Awards ensation Earnings
Position Year ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h)
______________________________________________________________________
Helena R. 2011 135,000 8,000(1) 0 0 0 0
Santos, 2010 131,500 5,000 0 0 0 0
CEO,
President,
CFO
______________________________________________________________________
Robert P. 2011 123,600 4,400(1 0 0 0 0
Nichols, 2010 121,300 5,000 0 0 0 0
Exec.
V.P.
______________________________________________________________________
Brookman 2011 122,650 5,000(1) 0 2,900(3) 0 0
P. March, 2010 116,900 0 0 8,100(3) 0 0
Director
of Sales
and
Marketing,
and
President of
Altamira
______________________________________________________________________
SUMMARY COMPENSATION TABLE (CONTINUED)
______________________________________________________________________
Changes
in
Pension
Value
and Non-
Qualified All
Name Deferred Other
and Comp- Comp-
Principal Fiscal ensation ensation Total
Position Year Earnings ($) ($)
(a) (b) (i) (j)
______________________________________________________________________
Helena R. 2011 0 2,900(2) 145,900
Santos, 2010 0 2,600(2) 139,100
CEO,
President,
CFO
______________________________________________________________________
Robert P. 2011 0 2,600(2) 130,600
Nichols, 2010 0 2,450(2) 128,700
Exec.
V.P.
______________________________________________________________________
Brookman 2011 0 5,100(2) 135,650
P. March, 2010 0 4,700(2) 129,700
Director
of Sales
and
Marketing,
and
President of
Altamira
______________________________________________________________________
(1) Represents amounts paid during fiscal 2011 earned for fiscal 2010.
(2) The amounts represent the Company's matching contribution under the
Company's 401(k) Plans.
(3) The amounts represent compensation expense for stock options granted
valued utilizing the Black-Scholes-Merton options pricing model,
disregarding estimates of forfeitures related to service-based vesting
considerations. The fiscal 2010 amount includes a 2,000 share stock
option granted as a bonus during fiscal 2010 valued at $4,300.
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED JUNE 30, 2011
There were no options granted to officers during fiscal 2011.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
_______________________________________________________________________
Option Awards
_______________________________________________________________________
Number Equity
Number of Incerntive
of Securities Plan Awards:
Securities Under- Number of
Under- lying Securities
lying Un- Unexercised Underlying Option
exercised Options(#) Unexercised Exercise Option
Options(#) Unexerci- Unearned Price Expiration
Name Exercisable sable Options(#) ($) Date
(a) (b) (c) (d) (e) (f)
______________________________________________________________________
Robert P.
Nichols 5,000 0 0 1.25 10/2012
______________________________________________________________________
Brookman P. 4,833 1,667 0 3.07 11/2014
March
_____________________________________________________________________
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
______________________________________________________________________
Stock Awards
______________________________________________________________________
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Number of Value of
Market Unearned Unearned
Number Value Shares, Shares,
of Shares of Shares Units or Units or
or Units or Units Other Other
of Stock of Stock Rights Rights
That That That That
Have not Have not Have not Have not
Vested Vested Vested Vested
(#) ($) (#) ($)
(g) (h) (i) (j)
______________________________________________________________________
Robert P.
Nichols 0 0 0 0
______________________________________________________________________
Brookman P. 0 0 0 0
March
______________________________________________________________________
No executive officer exercised any options during fiscal 2011.
Related Transactions
Mr. Joseph G. Cremonese, a Director since November 2002, through
his affiliate, Laboratory Innovation Company, Ltd., has been providing
independent marketing consulting services to the Company for over ten
years. The services have been rendered since January 1, 2003 pursuant
to a consulting agreement which was extended in January, 2011 through
December 31, 2011. The agreement as amended and restated currently
provides that Mr. Cremonese and his affiliate shall render, at the
request of the Company, marketing consulting services of at least 60,
but not more than 96, days per year at the rate of $600 per day with a
monthly payment of $3,000, with the Company's obligation reduced to
the extent the consulting services are less than 60 days for the 12
month period. The agreement contains confidentiality and non-competition
covenants. The Company paid the affiliate pursuant to the agreement
$36,000 for each of fiscal 2011 and fiscal 2010.
Ms. Grace S. Morin, was elected a Director in December 2006 upon
the sale of her 90.36% ownership interest in Altamira to the Company in
November 2006. Under the purchase agreement Ms. Morin received (in
addition to $361,000 in cash paid and an aggregate of 112,950 shares of
the Company's Common Stock issued at the time of acquisition), an amount
equal to a 90.36% share of 5% of net sales of Altamira for each of five
designated periods, subject to possible described adjustment.
Accordingly, she received $59,700 for the period which ran from
December 1, 2006 through June 30, 2007, $131,000 for the year ended
June 30, 2008; $97,000 for the year ended June 30, 2009; $126,400
for the year ended June 30, 2010; and $38,000 for the five months ended
November 30, 2010. She also received in fiscal 2008 $36,400 as
reimbursement for the Company's treatment of the transaction as a
purchase of assets for tax purposes.
Until March 31, 2009, Ms. Morin had been employed full-time by
Altamira as an administrative employee. Since April 1, 2009, she has
provided consulting services on a part-time basis pursuant to an
agreement expiring March 31, 2012 at the rate of $85 per hour, which
resulted in a payment of $9,000 for fiscal 2011. The agreement
contains confidentiality and non-competition covenants.
Section 16(a) Reporting
The Company believes that, for the year ended June 30, 2011, its
officers, directors and 10% stockholders timely complied with all filing
requirements of Section 16(a) of the Securities Exchange Act of 1934, as
amended.
PROPOSAL 2
PROPOSAL TO APPROVE
THE 2012 STOCK OPTION PLAN
On November 18, 2011 the Board of Directors adopted the 2012
Stock Option Plan of the Company (the "2012 Plan") subject to stockholder
approval. The 2012 Plan is based on the Company's Stock Option Plan
which was adopted in 2002 (the "2002 Plan") with certain revisions,
principally as to the number of shares and termination date, and to
comply with applicable rules and regulations. The 2012 Plan authorizes
the grant of options to employees and directors of the Company or its
subsidiaries and individuals performing consulting services to the
Company or a subsidiary.
There are 261,000 shares of Common Stock subject to the 2002
Plan which by its terms terminates on February 10, 2012; thereby
terminating the authority to grant options under the Plan after such
date. As of November 18, 2011, an aggregate of 57,000 shares were
reserved for issuance upon exercise of outstanding options granted
under the 2002 Plan.
The 2012 Plan relates to 100,000 shares of Common Stock plus s
uch number of shares, not to exceed 57,000, which are currently subject
to the outstanding options granted under the 2002 Plan, but which are
not subsequently required to be issued because of the termination or
expiration of such options without their having been exercised.
The Company believes that the 2012 Plan will be important in
attracting and retaining individuals with good ability to service the
Company, motivating their efforts and serving the business interests of
the Company, while reducing the cash payments which the Company would
otherwise be required to make to accomplish such purposes.
The following table sets forth information regarding options
granted under the 2002 Plan to each of the Company's executive officers
named under the Summary Compensation Table under "Executive Compensation",
all current executive officers as a group, all current Directors who are
not executive officers as a group, and all employees other than executive
officers as a group:
Number of
Stock Options
Name and Position Granted
_________________ _____________
Brookman P. March 6,500
Robert P. Nichols 5,000
Executive Officer Group (2 persons) 11,500
Non-Executive Directors Group (1 person) 30,000
Non-Executive Officer Employee Group (2 persons) 3,500
The last reported sale price of the Company's Common Stock
(symbol SCND) on the OTC Electronic Bulletin Board on October 31, 2011
was $2.66 per share. The proceeds to be received upon the exercise of
the stock options granted under the 2012 Plan will be used for general
corporate purposes.
Summary of the 2012 Plan
The full text of the 2012 Plan is set forth in Appendix A to this
Proxy Statement. The following summary of the provisions of the 2012 Plan
is qualified in its entirety by reference to the text of the 2012
Plan.
Options Authorized
The 2012 Plan permits, as did the 2002 Plan, the Company to grant
both incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the Code, and other options which do not qualify as
Incentive Stock Options ("Non-Qualified Options").
The aggregate number of shares of Common Stock reserved for
issuance under the 2012 Plan is 157,000, which includes 57,000 shares
which, as of November 18, 2011, were reserved for issuance upon the
exercise of outstanding stock options granted pursuant to the 2002 Plan.
To the extent that any of the stock options previously granted under the
2002 Plan expire or terminate for any reason without having been exercised,
then stock options exercisable for that same number of shares of Common
Stock may be granted under the 2012 Plan. Accordingly, to the extent any
of the outstanding options granted under the 2002 Plan are exercised,
the number of shares for which options may be granted under the 2012
Plan will be reduced.
Unless earlier terminated by the Board of Directors, the 2012 Plan
(but not outstanding options) will terminate on February 10, 2022, after
which no further awards may be granted under the 2012 Plan. The 2012
Plan will be administered by the full Board of Directors or, at the
Board's discretion, by a committee of the Board (the "Committee")
consisting of at least two persons.
Recipients of options under the 2012 Plan ("optionees") are to
be selected by the Board or the Committee. Unless otherwise provided
by the Board or the Committee, options shall be exercisable in three
equal, cumulative installments commencing respectively on the first,
second, and third anniversary of the date of grant. The purchase price
will be based on the fair market value of a share of Common Stock on
the date of grant as determined pursuant to Section 422 (c)(7) of the
Internal Revenue Code (the "Code"). The Board or the Committee
determines the terms of each option grant including (1) the purchase
price of shares subject to options, (2) the dates on which options
become exercisable; (3) the expiration date of each option (which may
not exceed ten years from the date of grant except for an incentive
stock option granted to an employee who is also at least a 10%
stockholder five years from the date of grant) and (4) any restriction
to which the options are subject. The minimum per share purchase price
for Incentive Stock Options and options granted to any director of the
Company or a subsidiary who is not an employee of the Company or
subsidiary ("Director") is the fair market value or 110% of the fair
market value for an Incentive Stock Option granted to an employee who
owns at least 10% of the outstanding shares of Common Stock.
Optionees will have no voting, dividend or other rights as
stockholders with respect to shares of Common Stock covered by options
prior to becoming the holders of record of such shares. The purchase
price upon the exercise of options may be paid in cash, by certified
bank or cashier's check or by tendering stock held by the optionee or
by cashless exercise through a broker. The total number of shares of
Common Stock available under the 2012 Plan, and the number of shares
and per share exercise price under outstanding options will be
appropriately adjusted in the event of any reorganization, merger or
recapitalization of the Company or similar corporate event.
The Board of Directors may at any time terminate the 2012 Plan
or from time to time make such modifications or amendments to the 2012
Plan as it may deem advisable and the Board or Committee (other than
with respect to options held by a Director) may adjust, reduce, cancel
and regrant an unexercised option if the fair market value declines below
the exercise price subject to Section 409A of the Code. In no event may
the Board, without the approval of stockholders, amend the 2012 Plan to
increase the maximum number of shares of Common Stock for which options
may be granted under the 2012 Plan or change the class of persons
eligible to receive options under the 2012 Plan, or change the manner
of determining the option prices, or extend the period during which an
option may be granted or exercised.
Subject to limitations set forth in the 2012 Plan, the terms
of option agreements will be determined by the Board or Committee, and
need not be uniform among optionees.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief
discussion of the Federal income tax consequences of transactions under
the 2012 Plan. This discussion is not intended to be exhaustive and does
not describe state or local tax consequences.
Incentive Stock Options
No taxable income is realized by the optionee upon the grant or
exercise of an Incentive Stock Option. If Common Stock is issued to an
optionee pursuant to the exercise of an Incentive Stock Option, and if
no disqualifying disposition of such shares is made by such optionee
within two years after the date of grant or within one year after the
transfer of such shares to such optionee, then (1) upon sale of such
shares, any amount realized in excess of the option price will be taxed
to such optionee as a long-term capital gain and any loss sustained will
be a long-term capital loss, and (2) no deduction will be allowed to the
optionee's employer for Federal income tax purposes.
Except as noted below for corporate "insiders," if the Common
Stock acquired upon the exercise of an Incentive Stock Option is disposed
of prior to the expiration of the holding period described above,
generally (1) 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 such shares at exercise (or, if less, the amount realized on
the disposition of such shares) over the option price paid for such
shares and (2) the Company will be entitled to deduct such amount for
Federal income tax purposes if the amount represents an ordinary and
necessary business expense. Any further gain (or loss) realized by the
optionee will be taxed as short-term or long-term capital gain (or loss),
as the case may be, and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an
Incentive Stock Option is exercised more than three months following
termination of employment, the exercise of the option will generally be
taxed as the exercise for a Non-Qualified Option.
For purposes of determining whether an optionee is subject to
any alternative minimum tax liability, an optionee who exercises an
Incentive Stock Option generally would be required to increase his or
her alternative minimum taxable income, and compute the tax basis in the
stock so acquired, in the same manner as if the optionee had exercised a
Non-Qualified Option. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay
the higher of his/her alternative minimum tax liability or his/her
"regular" income tax liability. As a result, a taxpayer has to
determine his potential liability under the alternative minimum tax.
Non-Qualified Options
Except as noted below for corporate "insiders," with respect to
Non-Qualified Options: (1) no income is realized by the optionee at the
time the option is granted; (2) generally, at exercise, ordinary income
is realized by the optionee in an amount equal to the difference between
the option price paid for the shares and the fair market value of the
shares, if unrestricted, on the date of exercise, and the Company is
generally entitled to a tax deduction in the same amount subject to
applicable tax withholding requirements; and (3) at sale, appreciation
(or depreciation) after the date of exercise is treated as either
short-term or long-term capital gain (or loss) depending on how long
the shares have been held.
Special Rules Applicable To Corporate Insiders
As a result of the rules under Section 16(b) of the Exchange Act,
"insiders" (as defined in the Exchange Act), depending upon the particular
exemption from the provisions of Section 16(b) utilized, may not receive
the same tax treatment as set forth above with respect to the grant and/or
exercise of options. Generally, insiders will not be subject to taxation
until the expiration of any period during which they are subject to the
liability provisions of Section 16(b) with respect to any particular option.
Insiders should check with their own tax advisers to ascertain the
appropriate tax treatment for any particular option.
BENEFITS. Compensation paid and other benefits granted in
respect of the fiscal year ended June 30, 2011 to the named executive
officers are set forth under "Executive Officers and Key Personnel".
Proposed Action
Approval of the adoption of the 2012 Plan will require the
affirmative vote of the holders of a majority of the shares of the Common
Stock of the Company present, in person or by proxy, at the Annual Meeting.
Abstentions will be included in determining the number of shares of Common
Stock present or represented and entitled to vote for purposes of approval
and will have the effect of votes "against" the proposal. Broker "non-
votes" will not be counted in determining the number of shares of Common
Stock present or represented and entitled to vote to approve the proposal
and will therefore not have the effect of votes either "for" or "against".
The Board of Directors unanimously recommends that stockholders
vote their shares FOR the proposal to approve the 2012 Stock Option Plan.
PROPOSAL 3
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors, subject to stockholders' approval,
appointed Nussbaum Yates Berg Klein & Wolpow, LLP (the "Firm") as the
Company's independent registered public accounting firm for the fiscal
year ending June 30, 2012. The Firm has audited the consolidated
financial statements of the Company since 1991. A representative of
the Firm is expected to be present at the Annual Meeting, and will have
an opportunity to make a statement to the stockholders and will be
available to respond to appropriate questions. The ratification of the
appointment will require the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote.
Abstentions will be included in determining the number of shares of
Common Stock present or represented and entitled to vote for purposes
of approval and will have the effect of votes "against" the proposal.
Broker "non-votes" will not be counted in determining the number of
shares of Common Stock present or represented and entitled to vote to
approve the proposal and will therefore not have the effect of votes
either "for" or "against".
Stockholder ratification of the appointment is not required by the
Company's Certificate of Incorporation or By-laws or otherwise. If the
stockholders fail to ratify the appointment, the Board of Directors will
reconsider whether to retain that firm. Even if the appointment is
ratified, the Board of Directors in its discretion may direct the
appointment of a different independent registered public accounting firm
at any time during the year if the Audit Committee, currently the entire
Board of Directors determines that such a change would be in the best
interest of the Company and its stockholders.
The following is a description of the fees incurred by the Company
for services by the Firm during fiscal 2011 and fiscal 2010:
The Company incurred for the services of the Firm for fiscal 2011
and fiscal 2010: fees of approximately $54,000 and $52,500, respectively,
in connection with the audit of the Company's annual financial statements
and quarterly reviews; and $5,000 for each fiscal year for the preparation
of the Company's corporate tax returns. There were no other audit related
fees or other fees paid to the Firm for the two fiscal years.
In approving the engagement of the independent registered public
accounting firm to perform the audit and non-audit services, the Board of
Directors as the Company's audit committee evaluates the scope and cost
of each of the services to be performed including a determination that the
performance of the non-audit services will not affect the independence of
the firm in the performance of the audit services.
The Board of Directors unanimously recommends that the stockholders vote
FOR the ratification of the appointment of Nussbaum Yates Berg Klein &
Wolpow, LLP as the independent registered public accounting firm of the
Company for the fiscal year ending June 30, 2012.
OTHER MATTERS
The Board of Directors is not aware of any matters other than those
set forth in this proxy statement that will be presented for action at the
Annual Meeting; however, if any other matters properly come before the
Annual Meeting, the persons named as proxies intend to vote the shares
of Common Stock they represent in accordance with their judgment on such
matters.
ADDITIONAL INFORMATION
The Company's Annual Report to Stockholders for the fiscal year
ended June 30, 2011, includes its Annual Report on Form 10-K for the year
which was filed with the U.S. Securities and Exchange Commission on
September 16, 2011. The Annual Report to Stockholders on Form 10-K is
not part of this proxy material, but is being mailed to stockholders with
this proxy solicitation.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company intended to be presented
at the Company's Annual Meeting of Stockholders following the year ending
June 30, 2012 must be received by the Secretary of the Company for
inclusion in the appropriate proxy materials no later than August 7,
2012.
EXPENSES AND SOLICITATION
The entire cost of soliciting proxies will be borne by the Company.
In addition to the use of the mails, proxies may be solicited by officers,
directors and regular employees of the Company personally or by telephone.
No additional compensation will be paid to such persons for any additional
solicitations. The Company will also request securities brokers, custodians,
nominees and fiduciaries who hold shares of Common Stock of record to
forward solicitation material to the beneficial owners of such shares, and
will reimburse them for their reasonable out-of-pocket expenses in forwarding
such soliciting materials.
By Order of your Board of Directors,
/s/ Robert P. Nichols
Robert P. Nichols
Secretary
Bohemia, New York
November 21, 2011
________________________________________________________________________
Exhibit A
SCIENTIFIC INDUSTRIES, INC.
2012 STOCK OPTION PLAN
(Effective as of February 11, 2012)
1. Purpose.
The purposes of this 2012 Stock Option Plan (the "Plan") are to
induce certain individuals to remain in the employ or service of Scientific
Industries, Inc. (the "Company") and its present and future subsidiary
corporations (each a "Subsidiary"), as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), to attract new
individuals to enter into such employment and service and to encourage
such individuals to secure or increase on reasonable terms their stock
ownership in the Company. The Board of Directors of the Company (the
"Board") believes that the granting of stock options (the "Options")
under the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company and aid
in securing its continued growth and financial success. Options will be
either (a) "incentive stock options" (which term, when used herein, shall
have the meaning ascribed thereto by the provisions of Section 422 (b) of
the Code) or (b) options which are not incentive stock options ("non-
incentive stock options"), as determined at the time of the grant thereof
by the Administrator referred to in Section 3(A) hereof.
2. Shares Subject to Plan.
Options may be granted to purchase up to one hundred thousand
(100,000) shares of the common stock, par value $0.05 per share (the
"Common Stock") of the Company. In addition, to the extent that options
previously granted under the 2002 Stock Option Plan of the Company (the
"Prior Plan") expire or terminate for any reason without having been
exercised, then options exercisable for that same number of shares of
Common Stock, up to a maximum of Fifty-Seven Thousand (57,000) shares,
may be granted pursuant to the Plan. For the purpose of this Section 2,
the number of shares purchased upon the exercise of an Option shall be
determined without giving effect to the use by a Participant of the right
set forth in Section 7(C) hereof to deliver shares of the Common Stock in
payment of all or a portion of the option price or the use by a Participant
of the right set forth in Section 11(C) hereof to cause the Company to
withhold from the shares of the Common Stock otherwise deliverable to him or
her upon the exercise of an Option shares of the Common Stock in payment
of all or a portion of his or her's withholding obligation arising from
such exercise. If any Options expire or terminate for any reason without
having been exercised in full, new Options may thereafter be granted to
purchase the unpurchased shares subject to such expired or terminated
Options. Subject to the provisions of Section 10, the maximum number of
shares of Common Stock which may be issued in accordance with the
provisions of this Section 2 shall be One Hundred and Fifty-Seven Thousand
(157,000) shares.
3. Administration.
(A) The Plan shall be administered by either the Board or, at
the option of the Board, a Committee which shall consist of two or more
members of the Board, both or all of whom shall be "disinterested persons"
if required under Section 16(b) of the Securities Exchange Act of 1934
(the "Exchange Act"). The Committee, if appointed, shall be appointed
annually by the Board, which may at any time and from time to time remove
any member or members of the Committee, with or without cause, appoint
additional members to the Committee and fill vacancies, however caused,
in the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made
by a majority of its
members present at a meeting duly called and held. Any decision or
determination of the Committee reduced to writing and signed by all of
the members of the Committee shall be fully as effective as if it had
been made at a meeting duly called and held. The Committee, or if a
Committee has not been appointed, the Board, in its capacity as
administrator of the Plan, is hereinafter referred to as the
"Administrator".
(B) Subject to the express provisions of the Plan, the
Administrator shall have complete authority, in its discretion, to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective
option agreements or certificates (which need not be identical), to
determine the individuals (each a "Participant") to whom and the times
and the prices at which Options shall be granted, the periods during
which each Option shall be exercisable, the number of shares of the Common
Stock to be subject to each Option and whether such Option shall be an
incentive stock option or a non-incentive stock option and to make all
other determinations necessary or advisable for the administration of
the Plan. In making such determinations, the Administrator may take into
account the nature of the services rendered by the respective Participants,
their present and potential contributions to the success of the Company
and the Subsidiaries and such other factors as the Administrator in its
discretion shall deem relevant. The Administrator's determination on the
matters referred to in this section 3(B) shall be conclusive. Any dispute
or disagreement which may arise under or as a result of or with respect
to any Option shall be determined by the Administrator, in its sole
discretion, and any interpretations by the Administrator of the terms
of any Option shall be final, binding and conclusive.
4. Eligibility.
Subject, in the case of incentive stock options, to the further
restrictions set forth in Section 5, an Option may be granted only to
(1) employees and key consultants of the Company or a Subsidiary, (2)
directors of the Company or a Subsidiary, and (3) employees and key
consultants of a corporation which has been acquired by the Company or
a Subsidiary, whether by way of exchange or purchase of stock, purchase
of assets, merger or reverse merger, or otherwise, who hold options with
respect to the stock of such corporation which the Company has agreed to
assume.
5. Option Terms.
The terms of each Option shall be fixed by the Administrator and
specified in the applicable Option Certificate. Option Certificates may
vary from one another. Each Option Certificate shall specify (i) the
number of Option Shares to be covered by the Option, (ii) the exercise
price per Option Share covered by the Option; provided, however, that the
initial per share option price of any Option which is an incentive stock
option shall not be less than the fair market value of a share of the
Common Stock on the date of grant, determined pursuant to Section 422(c)(7)
of the Code, unless the Participant owns more than 10% of the total
combined voting power of the Common Stock at the time an option is granted,
the initial per share option price shall not be less than 110% of the fair
market value of a share of the Common Stock on the date of grant, or in
the case of an non-incentive stock option, shall not be less than fair
market value determined pursuant to Section 409A of the Code and Treasury
Regulation Section 1.409A-1(b)(5)(iv) or corresponding provisions of
future regulations, (iii) the conditions and restrictions, if any,
applicable to the exercise of the Option, including any applicable
vesting schedule, (iv) that in no event shall an Option be exercisable
more than ten years from the relevant date of grant, or in the case of
a Participant who owns more than 10% of the total combined voting power
of the Common Stock, five years from the relevant date of grant, and
that the Option cannot be transferred other than by will or the laws of
descent and distribution.
6. Limitations on Grant of Incentive Stock Options.
(a) Employment Requirement. Incentive stock options may only
be awarded to employees (including officers) of the Company or an
entity that, with respect to the Company, is a "parent company" or
"subsidiary company" within the meaning of Code Sections 424(f).
Furthermore, except as otherwise provided in Code Section 422, if an
Optionee is no longer employed by the Company or a Subsidiary, the
Optionee's Option shall cease to be treated as an incentive stock
option.
(b) Except as otherwise provided in Section 16 hereof, the
aggregate fair market value of the shares of the Common Stock for which
any Participant may be granted incentive stock options which are
exercisable for the first time in any calendar year (whether under the
terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000.
7. Exercise of Options.
(A) Except as otherwise provided in Section 16 hereof, or as
otherwise determined by the Administrator at the time of the grant
thereof, in the case of an Option granted to an employee or key
consultant, a Participant may (i) during the period commencing on the
first anniversary of the date of the granting of an Option to him or
her and ending on the day preceding the second anniversary of such
date, exercise such Option with respect to one-third of the shares
granted thereby, (ii) during the period commencing on such second
anniversary and ending on the day preceding the third anniversary of
the date of the granting of such Option, exercise such Option with
respect to such number of shares as when added to the number of shares
previously purchased under the Option does not exceed two-thirds of the
shares granted thereby, and (iii) during the period commencing on such
third anniversary, exercise such Option with respect to all of the
shares granted thereby and which previously have not been exercised.
(B) To the extent exercisable, an Option may be exercised
either in whole at any time or in part form time to time.
(C) An Option may be exercised only by a written notice of
intent to exercise such Option with respect to a specific number of
shares of Common Stock and payment to the Company of the amount of the
option price for the number of shares of the Common Stock so specified;
provided, however, that all or any portion of such payment may be made
in kind by the delivery of shares of the Common Stock having a fair
market value on the date of delivery equal to the portion of the option
price so paid; provided, further, however, that, subject to the
requirements of Regulation T promulgated under the Exchange Act, the
Administrator may implement procedures to allow a broker chosen by a
Participant to make payment of all or any portion of the option price
payable upon the exercise of an Option and receive, on behalf of such
Participant, all or any portion of the shares of the Common Stock
issuable upon such exercise.
(D) Except in the case of an Option granted to a Director, the
Administrator may, in its discretion, permit any Option to be exercised,
in whole or in part, prior to the time when it would otherwise be
exercisable.
8. Transferability.
No Option shall be assignable or transferable except by will
and/or by the laws of descent and distribution and, during the life of
any Participant, each Option granted to the Participant may be exercised
only by the Optionee.
9. Termination of Service.
(A) In the event that prior to his 65th birthday, other than by
reason of death, a Participant leaves the employ or service of the Company
or a Subsidiary or, in the case of a Director, does not stand for
re-election or is not reelected, whether voluntarily or otherwise,
each Option theretofore granted to him or her shall be exercisable to the
extent exercisable immediately prior to the date of termination of
employment or service (or the date the Director does not stand for
reelection or is not reelected) within the period ending the earlier
to occur of (i) the expiration of the period of three months after the
date of such termination of services or failure to stand for or be
reelected a Director and (ii) the date specified in such Option.
(B) In the event a Participant's employment or service
(including service as a Director) with the Company or a Subsidiary
terminates by reason of the Participant's death, each Option theretofore
granted to the Optionee shall become immediately exercisable in full and
shall terminate upon the earlier to occur of (i) the expiration of the
period of one year after the date of such Participant's death and (ii)
the date specified in such Option.
(C) In the event that on or after his or her 65th birthday, a
Participant leaves the employ or service of the Company and its
Subsidiaries by reason of his or her disability (as such term is
defined in Section 22(e)(3) of the Code) or, in the case of a Director
who is not an employee or consultant, resigns or does not stand for
re-election or is not reelected, each Option theretofore granted to the
Participant shall become immediately exercisable in full and shall
terminate upon the earlier to occur of (i) the expiration of the period
of three months after the date of such termination, resignation or
failure to stand for election or to be reelected and (ii) the date
specified in such Option.
10. Adjustment of Number of Shares.
(A) In the event that a dividend shall be declared upon the
Common Stock payable in shares of the Common Stock, the number of shares
of the Common Stock then subject to any Option and the number of shares
of the Common Stock which may be purchased upon the exercise of Options
granted under the Plan but not yet covered by an Option shall be adjusted
by adding to each share the number of shares which would be distributable
thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend. In
the event that the outstanding shares of the Common Stock shall be
changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination
of shares, sale of assets, merger or consolidation in which the Company
is the surviving corporation, then, there shall be substituted for each
share of the Common Stock then subject to any Option and for each share
of the Common Stock which may be purchased upon the exercise of Options
granted under the Plan but not yet covered by an Option, the number and
kind of shares of stock or other securities into which each outstanding
share of the Common Stock shall be so changed or for which each such share
shall be exchanged.
(B) In the event that there shall be any change, other than as
specified in Section 10(A) hereof, in the number or kind of outstanding
shares of the Common Stock, or of any stock or other securities into
which the Common Stock, shall have been changed, or for which it shall
have been exchanged, then, if the Administrator shall, in its sole
discretion, determine that such change equitably requires an adjustment
in the number or kind of shares then subject to any Option and the number
or kind of shares available for issuance in accordance with the provisions
of the Plan but not yet covered by an Option, such adjustment shall be
made by the Administrator and shall be effective and binding for all
purposes of the Plan and of each Option.
(C) In the case or any substitution or adjustment in accordance
with the provisions of this Section 10, the option price in each Option
for each share covered thereby prior to such substitution or adjustment
shall be the option price for all shares of stock or other securities
which shall have been substituted for such share or to which such share
shall have been adjusted in accordance with the provisions of this
Section 10.
(D) No adjustment or substitution provided for in this Section
10 shall require the Company to sell a fractional share under any Option.
(E) In the event of the dissolution or liquidation of the
Company, the Board, in its discretion, may accelerate the exercisability
of each Option and/or terminate the same within a reasonable time
thereafter.
11. Purchase for Investment, Withholding and Waivers.
(A) Unless the delivery of the shares upon the exercise of an
Option by a Participant shall be registered under the Securities Act of
1933, such Participant shall, as a condition of the Company's obligation
to deliver such shares, be required to give a representation in writing
that he or she is acquiring such shares for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any thereof.
(B) In the event of the death of a Participant, an additional
condition of exercising any Option shall be the delivery to the Company
of such tax waivers and other documents as the Administrator shall
determine.
(C) An additional condition of exercising any non-incentive
stock option shall be the entry by the Participant into such arrangements
with the Company with respect to withholding as the Administrator shall
determine; provided, however, that such Participant may direct the
Company to satisfy all or a portion of such withholding obligation by
withholding from the shares of the Common Stock issuable to him on such
exercise shares of the Common Stock having a fair market value equal to
the portion of the withholding obligation so satisfied.
12. Declining Market Price.
Subject to Section 409A of the Code, except in the case of an
Option granted to a Director, in the event the fair market value of the
Common Stock declines below the option price set forth in any Option,
the Administrator may, subject to the approval of the Board, at any time,
adjust, reduce, cancel and re-grant any unexercised Option or take any
similar action it deems to be for the benefit of the Participant in
light of the declining fair market value of the Common Stock.
13. No Stockholder Status; No Restrictions on Corporate Acts; No
Employment Right.
(A) Neither any Participant nor his or her legal representatives,
legatees or distributees shall be or be deemed to be the holder of any
share of the Common Stock covered by an Option unless and until a
certificate for such share has been issued. Upon payment of the purchase
price therefore, a share issued upon exercise of an Option shall be fully
paid and non-assessable.
(B) Neither the existence of the Plan nor any Option shall in
any way affect the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights
thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding whether of a similar character or otherwise.
(C) Neither the existence of the Plan nor the grant or existence
of any Option shall require the Company or any Subsidiary to continue any
Participant in the employ or service of the Company or such Subsidiary.
14. Termination and Amendment of the Plan.
The Board may at any time terminate the Plan or make such
modifications of the Plan as it shall deem advisable; provided, however,
that the Board may not, without further approval of the holders of a
majority of the shares of the Common Stock legally voting on the proposal,
increase the number of shares of the Common Stock as to which Options may be
granted under the Plan (as adjusted in accordance with the provisions of
Section 10 hereof), or change the class of persons eligible to participate
in the Plan, or change the manner of determining the Option prices, or
extend the period during which an Option may be granted or exercised.
Except as otherwise provided in Section 15 hereof, no termination or
amendment of the Plan may, without the consent of the Participant to whom
any Option shall theretofore have been granted, adversely affect the
rights of such Participant under such Option.
15. Expiration and Termination of the Plan.
The Plan shall terminate on February 10, 2022 or at such
earlier time as the Board may determine. Options may be granted under
the Plan at any time and from time to time prior to its termination. Any
Option outstanding under the Plan at the time of termination of the Plan
shall remain in effect until such Option shall have been exercised or
shall have expired in accordance with its terms.
16. Options Granted in Connection With Acquisitions.
The Administrator may determine, in connection with the
acquisition by the Company or a Subsidiary of another corporation which
will become a Subsidiary or division of the Company (such corporation being
hereafter referred to as an "Acquired Subsidiary"), that Options may be
granted hereunder to employees and other personnel of an Acquired Subsidiary
in exchange for then outstanding options to purchase securities of the
Acquired Subsidiary. The Administrator, at its discretion shall determine
as to such Options, the option prices, whether they may be exercisable
immediately or at any time or times either in whole or in part, and such
other provisions not inconsistent with the Plan, or the requirements set
forth in Section 14 hereof that certain amendments to the Plan be approved
by the stockholders of the Company.
__________________________________________________________________________
PROXY CARD:
SCIENTIFIC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
January 12, 2012
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Segasture and Helena R. Santos,
and each of them, with full power of substitution, to vote, as a holder
of the common stock, par value $0.05 per share ("Common Stock"), of
Scientific Industries, Inc., a Delaware corporation (the "Company"),
all the shares of Common Stock which the undersigned is entitled to vote,
through the execution of a proxy with respect to the 2011 Annual Meeting
of Stockholders of the Company (the "Annual Meeting"), to be held at
La Quinta Inn & Suites, 10 Aero Road, Bohemia, New York, on Thursday,
January 12, 2012 at 11:00 a.m. New York time, and any and all
adjournments or postponements thereof, and authorizes and instructs said
proxies to vote in the manner directed below.
1. Election of Class C Directors:
JOSEPH G. CREMONESE ROGER B. KNOWLES
FOR both nominees ( ) WITHHOLD for both nominees ( )
If you do not wish your shares voted FOR one of the nominees, draw a
line through that person's name above.
2. Approve the Company's 2012 Stock Option Plan.
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. Ratify the appointment of Nussbaum Yates Berg Klein & Wolpow, LLP,
as the Company's independent registered public accounting firm for the
fiscal year ending June 30, 2012.
FOR ( ) AGAINST ( ) ABSTAIN ( )
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before such meeting or adjournment or
postponement thereof.
The Board of Directors recommends the vote FOR the election of the
nominees for Class C Directors and proposals 2 and 3.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE, SIGN AND DATE ON
REVERSE SIDE AND RETURN PROMPTLY.
__________________________________________________________________________
(BACK OF CARD)
PROPERLY EXECUTED AND RETURNED PROXY CARDS WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS TO THE
CONTRARY ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE
NAMED NOMINEES AND APPROVE PROPOSALS NOs. 2 AND 3.
You may revoke this proxy at any time before it is voted by (i) filing
a revocation with the Secretary of the Company, (ii) submitting a duly
executed proxy bearing a later date or time than the date or time of
the proxy being revoked; or (iii) attending the Annual Meeting and
voting in person. A stockholder's attendance at the Annual
Meeting will not by itself revoke a proxy given by the stockholder.
(Please sign exactly as the name appears
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, please sign with full
corporate name by the president or other
authorized officer. If a partnership, please
sign in the partnership name by an authorized
person.)
Dated:_________________ _______________________________
Signature
PLEASE COMPLETE, SIGN, DATE __________________________________
AND RETURN THE PROXY CARD Signature, if held by joint owners
PROMPTLY USING THE
ENCLOSED ENVELOPE.