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-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: 2 MISONIX, INC. ------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ------------------------- MARCH 6, 2003 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 Huntington Hilton Hotel, 598 Broad Hollow Road, Melville, New York 11747 on Thursday, March 6, 2003 at 10:00 a.m., or at any adjournment thereof, for the following purposes: 1. To elect five Directors to the Board of Directors; 2. To ratify the selection of Ernst & Young LLP as the Company's independent auditors; 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 January 20, 2003 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, RICHARD ZAREMBA Secretary Dated: February 7, 2003 Farmingdale, New York MISONIX, INC. 1938 New Highway Farmingdale, New York 11735 ------------------------------------ PROXY STATEMENT ------------------------------------ ANNUAL MEETING OF SHAREHOLDERS Thursday, March 6, 2003 The Annual Meeting of Shareholders of MISONIX, INC. (the "Company") will be held on Thursday, March 6, 2003, at the Huntington Hilton Hotel, 598 Broad Hollow 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 MARCH 6, 2003 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 February 10, 2003. 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 January 20, 2003 (the "Record Date"), the Company had outstanding 6,644,365 shares of its only class of voting securities, namely common stock, $.01 par value per share (the "Common Stock"). Shareholders are entitled to one vote for each share registered in their names at the close of business on the Record Date. Directors are elected by a plurality of the votes cast by the shares present at the Annual Meeting. The affirmative vote of a majority of the votes cast at the Annual Meeting is required for the ratification of Ernst & Young LLP as the Company's independent auditors. 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 will have no effect on the vote for the election of Directors or ratification of Ernst & Young. SECURITY OWNERSHIP The following table sets forth as of January 31, 2003 certain information with regard to the ownership of the Company's Common Stock by (i) each beneficial owner of more than 5% of the Company's Common Stock; (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 Stock shown as beneficially owned by them. COMMON STOCK PERCENT NAME AND ADDRESS(1) BENEFICIALLY OWNED OF CLASS - ------------------- ------------------ -------- Gary Gelman ........................... 740,750(2) 11.0 Michael A. McManus, Jr. ............... 798,950(3) 10.9 Howard Alliger ........................ 728,608(4) 10.8 V4 Inc. ............................... 674,000(5) 10.0 DePrince, Race & Zollo, Inc. .......... 494,600(6) 7.3 Ronald Manna .......................... 125,394(7) 1.9 Arthur Gerstenfeld .................... 98,600(8) 1.5 Richard Zaremba ....................... 65,037(9) 1.0 Kenneth Coviello ...................... 17,200(10) * Bernhard Berger ....................... 6,667(11) * Daniel Voic ........................... 33,667(12) * T. Guy Minetti ........................ 0 N/A Thomas F. O'Neill ..................... 0 N/A All executive officers and Directors as a group (ten people) .............. 2,672,635(13) 34.4(14) - ---------- *Less than 1% (1) Except as otherwise stated, the business address of each of the named individuals in this table is do MISONIX, INC., 1938 New Highway, Farmingdale, New York 11735. (2) Includes 65,000 shares of Common Stock which Mr. Gelman has the right to acquire upon exercise of stock options, which are currently exercisable. (3) Includes 700,000 shares of Common Stock which Mr. McManus has the right to acquire upon exercise of stock options, which are currently exercisable. (4) Includes 115,000 shares of Common Stock which Mr. Alliger has the right to acquire upon exercise of stock options, which are currently exercisable. (5) The business address of V4, Inc. is 201 S. Orange Avenue, Florida 32801. (6) The business address of DePrince, Race & Zollo, Inc. is 201 S. Orange Avenue, Orlando, Florida, 32801. (7) Includes 72,500 shares of Common Stock which Mr. Manna as the right to acquire upon exercise of stock options, which are currently exercisable. (8) Includes 58,000 shares of Common Stock which Mr. Gerstenfeld has the right to acquire upon exercise of stock options, which are currently exercisable. (9) Includes 48,167 shares of Common Stock which Mr. Zaremba has the right to acquire upon exercise of stock options, which are currently exercisable. (10) Includes 15,000 shares which Mr. Coviello has the right to acquire upon exercise of stock options which are currently exercisable. (11) Represents 6,667 shares which Mr. Berger has the right to acquire upon exercise of stock options which are currently exercisable. (12) Includes 33,667 shares which Mr. Voic has the right to acquire upon exercise of stock options which are currently exercisable. (13) Includes the shares of Common Stock indicated in notes (2), (3), (4), (7), (8), (9), (10), (11) and (12). (14) Based upon 6,644,365 outstanding shares of Common Stock and presently exercisable options to acquire 1,114,001 shares of Common Stock held by the persons noted. 2 PROPOSAL ONE ELECTION OF DIRECTORS The Company currently has four Directors. Arthur Gerstenfeld has decided not to stand for reelection. The Board recommends adding two new directors for a total of five directors, all of whom are to be elected at the Annual Meeting. The term of each Director expires at the Annual Meeting, with Messrs. Alliger, Gelman and McManus standing for reelection for a term of one year. The following table contains information regarding all Directors and executive officers of the Company: DIRECTOR NAME AGE POSITION WITH COMPANY SINCE SINCE - ---- --- --------------------------- -------- Gary Gelman ..................... 56 Chairman of the Board of Directors 1995 Howard Alliger .................. 75 Director 1971 T. Guy Minetti .................. 51 Director -- Thomas F. O'Neill ............... 62 Director -- Michael A. McManus, Jr. ......... 59 Director, President and Chief Executive 1998 Officer Richard Zaremba ................. 47 Vice President, Chief Financial Officer, -- Secretary and Treasurer Kenneth Coviello ................ 50 Vice President, Medical Marketing and Sales -- Dan Voic ........................ 40 Vice President of R&D and Engineering -- Bernhard Berger ................. 40 Vice President -- Industrial/Scientific -- Products Ronald Manna .................... 48 Vice President -- New Product Development -- and Regulatory Affairs 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: GARY GELMAN, the founder of American Claims Evaluation, Inc., a publicly-traded company engaged in auditing hospital bills and providing vocational rehabilitation 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 BA degree from Queens College. Mr. Gelman became Chairman of the Board of the Company in March 1996. 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 25 patents and has published various papers on ultrasonic technology. In 1959, Mr. Alliger sold the first sonicator in the United States. For three years, ending in 1991, Mr. Alliger was the President of the Ultrasonic Industry Association. Mr. Alliger holds a BA degree in economics from Allegheny College and 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. T. GUY MINETTI currently serves as the Vice Chairman of the Board of Directors of 1-800-Flowers.Com, a public-held specialty gift retailer based in Westbury, New York. Before joining 1-800-Flowers.Com in 2000, Mr. Minetti was the Managing Director of Bayberry Advisors, an investment-banking boutique he founded in 1989 to provide corporate finance advisory services to small-to-medium-sized businesses. From 1981 through 1989, Mr. Minetti was a Managing Director of the investment-banking firm, Kidder, Peabody & Company. While at Kidder, Peabody, Mr. Minetti worked in the investment banking and high yield bond departments. Mr. Minetti is a graduate of St. Michael's College. 3 THOMAS F. O'NEILL, a founding principal of Sandler O'Neil & Partners L.P., an investment-banking firm, began his Wall Street career at L.F. Rothschild in 1972. At Rothschild, Mr. O'Neill specialized in working with financial institutions in Rothschild's Bank Service Group. He was appointed Managing Director of the Bank Service Group; a group comprised of fifty-five professionals, in 1985 and became a Bear Stearns Managing Director and Co-Manager of the Group. Mr. O'Neill is a graduate of New York University and a veteran of the United States Air Force. 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 held positions with Pfizer Inc. and Revlon Group. Mr. McManus received a BA in economics from the University of Notre Dame and a JD 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. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES AS DIRECTORS. The following is a brief account of the business experience for the past five years of the Company's executive officers: 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 held positions with Pfizer Inc. and Revlon Group. Mr. McManus received a BA in economics from the University of Notre Dame and a JD 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. RICHARD ZAREMBA became Vice President and Chief Financial Officer in February 1999. Mr. Zaremba became Secretary and Treasurer in March 1999. From March 1995 to February 1999, he was the Vice President and Chief Financial Officer of Comverse Information Systems, Inc., a manufacturer of digital voice recording systems. Previously, Mr. Zaremba was Vice President and Chief Financial Officer of Miltope Group, Inc., a manufacturer of electronic equipment. Mr. Zaremba is a licensed certified public accountant in the State of New York and holds BBA and MBA degrees in Accounting from Hofstra University. KENNETH COVIELLO became Vice President, Medical Marketing and Sales in June 2000. Prior to joining the Company, he was Vice President -- Sales and Marketing at FNC Medical Corp. Mr. Coviello was Vice President of Graham Field Health Products, Inc. from 1992 -- 1998 and President of Lumex, a medical products manufacturer and a division of Lumex/Cybex Inc., from 1986 to 1991. Mr. Coviello holds a BS degree in Marketing from Long Island University. DAN VOIC became Vice President of R&D and Engineering in January 2002. Prior thereto, he served as Engineering Manager and Director of Engineering with the Company. Mr. Voic has approximately 14 years experience in both medical and industrial product development. Mr. Voic holds a M.S. degree in mechanical engineering from Polytech University "Traian Vuia" of Timisoara, Romainia and a MS degree in applied mechanics from Polytechnic University of New York. 4 BERNHARD BERGER became Vice President -- Industrial/Scientific Products in May 2001. Mr. Berger has approximately 20 years of sales and engineering experience in Ultrasound Products and Process Control Instrumentation. From 1995 through 2000, he was Sales Manager -- Worldwide for the Ultrasonic Product Division of Introltek International, an Edgewood, New York-based manufacturer of process instrumentation. Mr. Berger holds a BS degree in Chemistry from Adelphi University. RONALD MANNA became Vice President -- New Product Development and Regulatory Affairs of the Company in July 2002. For more than five years prior thereto, Mr. Manna served as the Vice President -- Operations of the Company. Mr. Manna holds a BS degree in mechanical engineering from Hofstra University. * * * MEETINGS OF THE BOARD OF DIRECTORS During the fiscal year ended June 30, 2002, the Board of Directors held four meetings and the Stock Option Committees held one meeting. The Audit Committee met four times and the Compensation Committee met once during the last fiscal year. 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 he was a member that were held during the Company's last fiscal year. COMMITTEES OF THE BOARD Currently, the only standing committees of the Board of Directors of the Company are its Stock Option Committees, the Audit Committee and the Compensation Committee. The Stock Option Committee for the 1996 Employee Stock Option Plan, the 1998 Employee Stock Option Plan and the 2001 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, McManus, Alliger and Gerstenfeld, the entire Board of Directors. The Stock Option Committees are responsible for administering the Company's stock option plans. The Audit Committee currently consists of Messrs. Gelman, Gerstenfeld and Alliger. A replacement for Mr. Gerstenfeld will be selected immediately after the Annual Meeting. The functions of the Audit committee are to recommend to the Board of Directors the selection, retention, or termination of its independent accountants; determine through consultation with management the appropriateness of the scope of the various professional services provided by the independent accountants, and consider the possible effect of the performance of such services on the independence of the accountants; review the arrangements and the proposed overall scope of the annual audit with management and the independent accountants; discuss matters of concern to the Audit Committee with the independent accountants and management relating to the annual financial statements and results of the audit; obtain from management, the independent accountants and the Chief Financial Officer their separate opinions as to the adequacy of the Company's system of internal accounting control; review with management and the independent accounts the recommendations made by the accountants with respect to changes in accounting procedures and internal accounting control; discuss with management any concerns the Audit Committee may have with regard to the Company's business practices; hold regularly scheduled meetings, separately and jointly, with representatives of management, the independent accountants and the Chief Financial Officer to make inquiries into and discuss their activities; and review the overall activities of the Company's internal auditors. Our Board of Directors has determined that all members of the Audit Committee are "independent" as defined by the standards of the NASDAQ National Market. Our Board of Directors has adopted a written charter for the Audit Committee. The Compensation Committee consists of Messrs. Gelman and Alliger. The Compensation Committee is responsible for considering and authorizing remuneration arrangements for senior management. DIRECTOR COMPENSATION Each non-employee Director receives an annual fee of $15,000. In addition, Mr. Gelman receives a special Chairman's fee of $15,000 per year. For the fiscal year ended June 30, 2002, there were no stock options granted to non-employee Directors. 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. 5 AUDIT COMMITTEE The Audit Committee has furnished the following report. The information contained in the "Audit Committee Report" is not to be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission, nor is such information to be incorporated by reference into any future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into such filings. AUDIT COMMITTEE REPORT The Audit Committee has reviewed and discussed the audited financial statements contained in our Annual Report on Form 10-K for the year ended June 30, 2002 with our management; has discussed with the independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards AU 380); has discussed with the independent accountants the independent accounts' independence; and has the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). Based on the review and discussions of the above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended June 30, 2002 for filing with the Securities and Exchange Commission. Reported upon by the Audit Committee Gary Gelman Arthur Gerstenfeld Howard Alliger EXECUTIVE COMPENSATION The following report and the performance graph on page 11 do not constitute soliciting materials and are not considered filed or incorporated by reference into any other of the Company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, unless the Company states otherwise. REPORT OF THE COMPENSATION COMMITTEE COMPENSATION POLICIES. The principal goal of the Company's compensation program as adminis-tered by the Board of Directors is to help the Company attract, motivate and retain the executive talent required to develop and achieve the Company's strategic and operating goals with a view to maximizing shareholder value. The key elements of this program and the objectives of each element are as follows: BASE SALARY. Base salaries paid to the Company's executive officers are intended to be competitive with those paid to executives holding comparable positions in the marketplace. Individual performance and the Company's performance are considered when setting salaries within the range for each position. Annual reviews are held and adjustments are made based on attainment of individual goals in a manner consistent with operating and financial performance. BONUSES. Annual cash bonuses are intended to motivate performance by creating the potential to earn incentive awards that are contingent upon personal and business performance. The Company sets goals of revenue and profitability for each group. LONG TERM INCENTIVES. The Company provides its executive officers with long-term incentive compensation through grants of stock options under the Company's stock option plans. The grant of stock options aligns the executive's interest with those of the Company's shareholders by providing the executive with an opportunity to purchase and maintain an equity interest in the Company's stock and to share in the appreciation of its value. In fiscal 2002 options to purchase 229,000 shares of Common Stock were granted to the Company's executive officers. 6 CEO'S COMPENSATION. Michael A McManus is entitled to receive an annual base salary of $275,000 and agreed to take a reduced bonus of $100,000 on September 30, 2002. Mr. McManus is entitled to receive a minimum bonus of $250,000 and a maximum bonus of $350,000 per year based on the Company's pretax operating earnings. Mr. McManus also received options to purchase 150,000 shares of Common Stock at a purchase price of $5.10 per share. The factors involved in determining the CEO'S compensation are the Company's revenues and profits, his lengthy experience and business acumen, his responsibilities, and the efforts exerted by him in performance of his duties. The options to purchase the 150,000 shares vest as follows: 50% of the options vested immediately and the balance vest on September 30, 2003. The options expire on the tenth anniversary of the date of grant. Reported upon by the Compensation Committee Gary Gelman Howard Alliger * * * 7 The following table sets forth for the fiscal years indicated the compensation paid by the Company to its Chief Executive Officer and other executive officers with annual compensation exceeding $100,000: SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION (1) LONG TERM COMPENSATION ------------------------------ -------------------------- SECURITIES FISCAL YEAR UNDERLYING NAME AND PRINCIPAL POSITION ENDED JUNE 30 SALARY ($) BONUS ($) OPTIONS (#) - ----------------------------------------- --------------- ------------ ----------- ------------ Michael A. McManus, Jr. 2002 275,000 150,000 150,000 President and Chief 2001 266,687 250,000 250,000 Executive Officer 2000 250,000 250,000 0 Richard Zaremba 2002 150,000 28,000 32,000 Vice President, Chief 2001 135,610 33,000 30,000 Financial Officer, Secretary 2000 129,096 5,000 0 and Treasurer Kenneth Coviello 2002 130,000 15,000 15,000 Vice President -- Medical Marketing 2001 126,620 0 10,000 and Sales 2000 4,808 0 0 Dan Voic 2002 97,729 10,000 6,500 Vice President of R&D and 2001 92,519 6,000 7,500 Engineering 2000 74,642 5,000 0 Bernhard Berger 2002 105,000 3,000 5,000 Vice President of Industrial/Scientific 2001 15,952 0 10,000 Products 2000 0 0 0 Ronald Manna 2002 121,072 10,000 10,000 Vice President of New Product 2001 116,340 25,000 0 Development and Regulatory Affairs 2000 113,808 15,000 0 Christopher Thomas 2002 100,000 30,000 17,000 Vice President Sales of Mystaire 2001 95,201 22,000 15,000 Products 2000 87,348 10,000 0 - ---------- (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 has entered into an employment agreement with Mr. McManus providing for his employment as President and Chief Executive Officer. The term of the agreement expires on October 31, 2003 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 $275,000 and a Company provided automobile. The agreement also provides for an annual bonus based on the Company's pretax operating earnings of up to $350,000 with a minimum guaranteed bonus of $250,000. On September 30, 2002, Mr. McManus agreed to take a reduced bonus of $100,000. Mr. McManus also was granted options to purchase 150,000 shares of the Company's Common Stock at an exercise price of $5.10 per share. The options vest as follows: 50% vested immediately and the balance 8 vests on September 30, 2003. 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 his annual base salary and a bonus of no less than $250,000. In conformity with the Company's policy, all of its Directors, officers and employees execute confidentiality and nondisclosure agreements upon the commencement of employment with the Com-pany. The agreements generally provide that all inventions or discoveries by the employee related to the Company's business and all confidential information developed or made known to the employee during the term of employment shall be the exclusive property of the Company and shall not be disclosed to third parties without prior approval of the Company. Mr. Manna has an agreement with the Company which provides for the payment of six months severance upon his termination for any reason. Mr. Zaremba has an agreement for payment of six months annual base salary upon a change in control of the Company. The Company's employment agreement with Mr. McManus also contains non-competition provisions that preclude him from competing with the Company for a period of 18 months from the date of his termination of employment. OPTION GRANTS IN LAST FISCAL YEAR The following table contains information concerning options granted to executive officers named in the Summary Compensation Table during the fiscal year ended June 30, 2002: INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL NUMBER OF RATES OF STOCK PRICE SECURITIES % OF TOTAL APPRECIATION FOR UNDERLYING OPTIONS GRANTED OPTION TERM OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ------------------------ NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($) - ----------------------------- ------------ ----------------- -------------- ------------ --------- ----------- Michael A. McManus, Jr. ..... 150,000 48.5 6.07 10/17/2011 571,500 1,450,500 Richard Zaremba ............. 32,000 10.3 6.07 10/17/2011 121,920 309,440 Ken Coviello ................ 15,000 4.9 6.07 10/17/2011 57,150 145,050 Dan Voic .................... 6,500 2.1 6.07 10/17/2011 24,765 62,855 Bernhard Berger ............. 5,000 3.2 6.07 10/17/2011 19,050 48,350 Ronald Manna ................ 10,000 1.6 6.07 10/17/2011 38,100 96,700 Christopher Thomas .......... 17,000 5.5 6.07 10/17/2011 64,770 164,390 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, 2002. The following table contains information concerning the number and value, at June 30, 2002, of unexercised options held by executive officers named in the Summary Compensation Table: VALUE OF UNEXERCISED NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS UNEXERCISED OPTIONS AT FY-END (#) AT FY-END ($) NAME (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1) - --------------------------------- ----------------------------------- ------------------------------- Michael A. McManus, Jr. ......... 550,000/150,000 468,500/33,000 Richard Zaremba ................. 37,500/39,500 49,575/8,315 Kenneth Coviello ................ 10,000/15,000 0/3,300 Ronald Manna .................... 67,500/10,000 69,425/2,200 Christopher Thomas .............. 42,000/17,000 51,780/3,740 Dan Voic ........................ 31,500/6,500 15,773/1,430 Bernhard Berger ................. 5,000/10,000 850/1,950 - ---------- (1) Fair market value of underlying securities (the closing price of the Company's Common Stock on the National Association of Securities Dealers Automated Quotation System) at fiscal year end (June 30, 2002) minus the exercise price. 9 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 covers up to 375,000 shares of Common Stock. Pursuant to the 1991 Plan, officers, Directors, consultants and key employees of the Company are eligible to receive incentive and/or non-incentive stock options. At June 30, 2002, options to purchase 33,000 shares of Common Stock were outstanding under the 1991 Plan at exercise prices ranging from $2.17 to $7.38 per share with a vesting period ranging from immediate to three years, options to purchase 327,750 shares of Common Stock had been exercised and options to purchase 44,250 shares have been canceled (of which options to purchase 30,000 shares have been reissued). In March 1996, the Board of Directors approved the 1996 Employee Incentive Stock Option Plan covering an aggregate of 450,000 shares of Common Stock (the "1996 Plan") and the 1996 Non-Employee Director Stock Option Plan (the "1996 Directors Plan") covering an aggregate of 1,125,000 shares of Common Stock of the Company. At June 30, 2002, options to purchase 339,494 shares of Common Stock were outstanding at exercise prices ranging from $3.07 to $18.50 with a vesting period of immediate to three years under the 1996 Plan and options to acquire 773,500 shares of Common Stock were outstanding at exercise prices ranging from $0.73 to $7.10 with a vesting period of immediate to two years under the 1996 Directors Plan. At June 30, 2002, options to purchase 97,195 shares of Common Stock under the 1996 Plan have been exercised and options to purchase 155,256 shares of Common Stock have been cancelled, of which options to purchase 141,945 shares have been reissued. At June 30, 2002, options to purchase 150,000 shares of Common Stock outstanding under the 1996 Directors Plan have been exercised or canceled. In October 1998, the Board of Directors adopted and in January 1999, the shareholders approved the 1998 Employee Stock Option Plan (the "1998 Plan") covering an aggregate of 500,000 shares of Common Stock of the Company. At June 30, 2002, options to purchase 480,825 shares of Common Stock were outstanding under the 1998 Plan at exercise prices ranging from $3.07 to $7.31 per share with a vesting period of immediate to two years. At June 30, 2002, options to purchase 40,350 shares of Common Stock under the 1998 Plan have been canceled (of which options to purchase 28,925 shares have been reissued and options to purchase 7,750 shares of Common Stock have been exercised). In October 2000, the Board of Directors adopted and in February 2001, the shareholders approved the 2001 Employee Stock Option Plan (the "2001 Plan") covering an aggregate of 1,000,000 shares of Common Stock of the Company. At June 30, 2002, options to purchase 307,394 shares of Common Stock were outstanding under the 2001 plan at exercise price of $6.07 per share with a vesting period of one to three years. At June 30, 2002, options to purchase 2,010 shares of Common Stock have been cancelled and no options have been exercised. The plans are administered by the Stock Option Committees. The selection of participants, allotments of shares, determination of price and other conditions relating to options are determined by the Stock Option Committees, in their sole discretion. Incentive 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 Stock on the date of the grant, except that the term of an incentive stock option granted under the plans to a shareholder owning more than 10% of the outstanding Common Stock may not exceed five years and its exercise price may not be less than 110% of the fair market value of the Common Stock on the date of grant. Options shall become exercisable at such time and in such installments as the Board of Directors shall provide in the terms of each option agreement. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Mr. Gelman, the Chairman of the Board of Directors, and Mr. Alliger are the members of the Compensation Committee. No Company executive officer currently serves on the Compensation Committee or any similar committee of another public company, one of whose executive officers sits on the Compensation Committee of the Company. 10 SHARE PERFORMANCE GRAPH The following graph compares the cumulative total return on the Company's Common Stock during the last five fiscal years with the NASDAQ Total U.S. and Foreign Return Index and the NASDAQ Medical Devices, Instruments and Supplies Index during the same period. The graph shows the value, at the end of each of the last five fiscal years, of $100 invested in the Common Stock or the indices on June 30, 1998. The graph depicts the change in value of the Company's Common Stock relative to the noted indices as of the end of each fiscal year and not for any interim period. Historical stock price performance is not necessarily indicative of future stock price performance. 1998 1999 2000 2001 2002 ------ ------ ------ ------ ----- MISONIX, INC. ..................................... 100 79 97 89 77 NASDAQ Total U.S. & Foreign Return Index .......... 100 147 210 114 77 NASDAQ Medical Devices, Instruments and Supplies Index ................................... 100 134 154 144 131 [GRAPHIC OMITTED] SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities 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 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 2002. 11 PROPOSAL TWO ACCOUNTANTS On January 9, 2002, the Company notified KPMG, LLP, the principal accountant engaged to audit the Company's financial statements, that the Company would not retain KPMG to audit the Company's financial statements for the 2002 fiscal year. KMPG's report on the Company's financial statements for the 2001 fiscal year did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The Company's decision to change accountants was consented to by the Company's Audit Committee. During the Company's 2001 fiscal year and the subsequent interim period preceding dismissal there was no disagreement with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of KPMG, would have caused KPMG to make a reference to the subject matter of the disagreement in connection with its report. On January 14, 2002, the Company engaged the accounting firm of Ernst & Young LLP as the principal accountant to audit the Company's financial statements for the 2002 fiscal year. The Board of Directors has selected the firm of Ernst & Young LLP to act as the Company's independent accountants, subject to ratification by the shareholders. A representative of Ernst & Young LLP 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. AUDIT FEES: Ernst & Young LLP billed the Company $96,000 in the aggregate for services rendered for the audit of the Company's annual financial statements for the Company's 2002 fiscal year and the review of the interim financial statements included in the Company's Quarterly Reports on Form 10-Q for the Company's 2002 fiscal year. ALL OTHER FEES: Ernst & Young LLP has billed the Company $15,000 in the aggregate for professional services rendered for all other services other than those covered in the section captioned "Audit Fees" for the Company's 2002 fiscal year. These other services include (i) assistance with regulatory filings, (ii) audit of the Company's 401K plan and (iii) consultations on the effects of various accounting issues and changes in professional statements. The Audit Committee, after consideration of the issue, does not believe that provision of these services is incompatible with Ernst & Young LLP's maintaining its independence. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE RETENTION OF ERNST & YOUNG LLP. 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. 12 SHAREHOLDER PROPOSALS Shareholder proposals with respect to the Company's next Annual Meeting of Shareholders must be received by the Company no later than October 9, 2003 to be considered for inclusion in the Company's next Proxy Statement. Under the Securities and Exchange Commission's proxy rules, proxies solicited by the Board of Directors for the 2003 Annual Meeting may be voted at the discretion of the persons named in such proxies (or their substitutes) with respect to any shareholder proposal not included in the Company's proxy statement if the Company does not receive notice of such proposal on or before December 23, 2003, unless the 2003 Annual Meting is not held within 30 days before or after the anniversary date of the 2002 Annual Meeting. A copy of the Company's Annual Report to Shareholders for the fiscal year ended June 30, 2002 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 part of the proxy soliciting material. By Order of the Board of Directors, Dated: February 7, 2003 Farmingdale, New York RICHARD ZAREMBA Secretary 13 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 January 20, 2003 at the Annual Meeting of Shareholders to be held on March 6, 2003 or any adjournment thereof. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED 1. Election of Directors: GARY GELMAN, MICHAEL A. MCMANUS, JR., HOWARD ALLIGER, T. GUY MINETTI, THOMAS F. O'NEILL FOR all Nominees WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority listed (except as to vote to vote for one or more individual marked to the contrary) for all Nominees listed nominees write the nominee's name(s) [ ] [ ] in the line provided below). - ------------------------------------------------------------------------------------------------ 2. Ratification of the selection of Ernst & Young LLP as independent accountants. 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) ----------------------------------------------- (Signature if held jointly) Dated: ----------------------------------------------- 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.