UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
December 20, 2002
_________________
(Date of earliest event reported)
SCIENTIFIC INDUSTRIES, INC.
___________________________
(Exact name of registrant as specified in its charter)
Delaware 0-6658 04-2217279
________ ______ __________
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
Airport International Plaza, 70 Orville Drive, Bohemia, New York 11716-2512
___________________________________________________________________________
(Address of principal executive offices)
(631) 567-4700
______________
(Registrant's telephone number, including area code)
Not Applicable
______________
(Former name or former address,
if changed since last report)
Item 5: Other Events
The Board of Directors of Scientific Industries, Inc. (the "Company")
at its Annual Meeting held on December 20, 2002 authorized or approved,
among other things, (i) the continued employment of its two executive
officers, Ms. Helena R. Santos, President, Chief Executive Officer,
Chief Financial Officer and Treasurer, and Mr. Robert P. Nichols,
Executive Vice President pursuant to employment agreements, (ii) a
consulting agreement with Mr. Joseph G. Cremonese, (iii) the
employment of a sales and marketing director and (iv) the adoption
of Amended and Restated By-Laws.
Employment Agreements
Each employment agreement is to provide for the individual's full time
employment as a senior executive with the Company for the period ending
December 31, 2004. The agreement with Ms. Santos is to provide for a
base salary through December 31, 2003 at the per annum rate of $100,000
with the base salary for the following year to be determined by the
Board of Directors but to be not less than the prior year's base salary
and for annual bonuses which may be paid with respect to her performance
to be at the discretion of the Board of Directors. Each agreement is to
contain non-competition and confidentiality covenants.
Consulting Agreement
The Company has entered into a consulting agreement with Mr. Cremonese,
who was elected a Class C Director at the Annual Meeting of Stockholders
in 2002 and has been providing the Company with consulting services as
an independent marketing consultant for approximately seven years.
The consulting agreement provides that Mr. Cremonese and his affiliate,
Laboratory Innovation Company, Ltd. will, at the request of the Company,
render for the period January 1, 2003 through December 31, 2004 marketing
consulting services of at least 80, but not more than 96, days per year
at the rate of $450 per day with a monthly cap of $3,000, with the
Company's obligation reduced to the extent the consulting services are
less than 80 days for the 12 month period. The agreement contains
confidentiality and non-competition covenants.
Marketing Director
Implementing its business plan to devote greater efforts to the
development and marketing of products, the Company has hired a
sales and marketing director, who has prior experience in
a similar capacity, most recently with Brinkman Corp. The sales and
marketing director is to devote her efforts to expanding the Company's
sales of existing and future products, which among other items, shall
include advertising and promotion, contacting and interfacing with
existing and potential customers and independent sales representatives,
introducing new products and ascertaining information from customers to
assist in the Company's product development efforts.
Amended and Restated By-Laws
The principal changes effected by the Amended and Restated By-Laws are
(i) inclusion of provisions for indemnification of officers, directors
and agents of the Company including advances of related expenses,
consistent with the provisions of the Company's Certificate of
Incorporation as amended and the Delaware General Corporation Law;
(ii) expansion of executive officers who may be appointed by the Board
of Directors to include a Chief Executive Officer and a Chief Financial
Officer; (iii) inclusion of provisions recognizing the classification
of Directors and their staggered terms provided by the Certificate of
Incorporation, as amended, including providing that stockholders may
remove a director during his or her term only for cause; (iv) allowance
for payment of fees to Directors in consideration of the performance of
special duties authorized by the Board; (v) expansion of the officers
entitled to call a special meeting of stockholders to include the Chief
Executive Officer; (vi) deletion of provisions requiring that annual
meetings of stockholders be held in New York City and that no change
of the time or place of a meeting for election of directors may be made
within 60 days of the date such election is scheduled to occur; (vii)
provision for requiring an administration fee for replacement of lost
certificates; and (viii) inclusion of provisions relating to stockholders
meetings consistent with related provisions under the Delaware General
Corporation Law and Section 14 of the Securities Exchange Act of 1934,
as amended.
Item 7: Financial Statement and Exhibits
Exhibit 3(ii) Amended and Restated By Laws, adopted December 20, 2002
Exhibit 10(a) Copy of employment agreement with Helena R. Santos*
Exhibit 10(b) Copy of consultant agreement with Joseph Cremonese and
Laboratory Innovation Company, Ltd.
_____________
* To be filed by amendment.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SCIENTIFIC INDUSTRIES, INC.
(Registrant)
/s/ Helena R. Santos
_____________________
Helena R. Santos
President, Chief Executive Officer
Officer
Date: January 6, 2003
_____________________________________________________________________
Exhibit 3(ii)
AMENDED AND RESTATED
BY-LAWS
OF
SCIENTIFIC INDUSTRIES, INC.
(THE "CORPORATION")
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation
shall be established and maintained at the office of the United States
Corporation Company, in the City of Dover, in the County of Kent, in the
State of Delaware, and said corporation shall be the resident agent of
this Corporation in charge thereof.
Section 2. Other Offices. The Corporation may have other offices,
either within or outside of the State of Delaware, at such place or
places as the Board of Directors may from time to time appoint or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. The annual meeting of the stockholders
shall be held at the principal offices of the Corporation or at such
place, within or without the State of Delaware, as may from time to
time be designated for that purpose by the Board of Directors of the
Corporation.
Section 2. Annual Election of Directors. The Annual Meeting of
Stockholders for the election of Directors and the transaction of
other business shall be held on such date and at such time as may be
designated, from time to time, by the Board of Directors. At each
annual meeting the stockholders entitled to vote shall elect a Board
of Directors and may transact such other corporate business as shall
be stated in the notice of the meeting.
Section 3. Voting. Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance
with the provisions of these By-Laws shall be entitled to one vote,
in person or by proxy, for each share of stock entitled to vote held
by such stockholder, but no proxy shall be voted after three years
from its date unless such proxy provides for a longer period. Upon
the demand of any stockholder, the vote for directors and the vote
upon any question before the meeting, shall be by ballot. All
elections for directors shall be decided by plurality vote; all
other questions shall be decided by a majority of the votes cast
(including, without limitation, abstentions but excluding broker
non-votes) except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware. A complete
list of the stockholders entitled to vote at the ensuing election,
arranged in alphabetical order, with the residence of each, and the
number of voting shares held by each, shall be prepared by the
Secretary and made available for examination by any stockholder
during ordinary business hours at the principal place of business
of the Corporation, for a period of at least ten days prior to
every meeting of stockholders. If the meeting is to be held at
another place, then the list shall be produced and kept at the
time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
Section 4. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence,
in person or by proxy, of stockholders holding a majority of the
shares of the Corporation entitled to vote shall constitute a
quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meetings, a majority in interest of
the stockholders entitled to vote thereat, present in person or
by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any
business may be transacted which might have been transacted at
the meeting as originally noticed; but only those stockholders
entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
Section 5. Special Meetings. Special meetings of the stockholders
for any purpose or purposes may be called by the President or
Secretary, and shall be called upon a requisition in writing
therefor, stating the purpose or purposes thereof, delivered to
the President or Secretary, signed by a majority of the directors
or by 66-2/3 percent in interest of the stockholders entitled to
vote, or by resolution of the directors.
Section 6. Notice of Meetings. Written or printed notice, stating
the place and the time of the meeting, and the general nature of
the business to be considered, shall be given to each stockholder
entitled to vote thereat at his last known post-office address, at
least ten days but no more than 60 days before the meeting. Such
notice shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which
the meeting is called. If a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the
adjournment is taken. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 7. Action Without Meeting. Whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken in connection
with any corporate action by any provisions of a statute or of the
Certificate of Incorporation or of these By-Laws, the meeting and
vote of stockholders may be dispensed with, if all the stockholders
who would have been entitled to vote upon the action if such meeting
were held, shall consent in writing to such corporate action being taken.
ARTICLE III
DIRECTORS
Section 1. Number and Term. The number of directors shall be not less
than three nor more than nine, as may be fixed from time to time by the
stockholders at any annual or special meeting of stockholders or by the
Board of Directors at any regular or special meeting of the Board of
Directors. If required by the Certificate of Incorporation, as amended,
the Directors shall be divided into three classes, designated Class A,
Class B and Class C and shall be elected for a three-year term. Any
increase or decrease shall be apportioned among the classes by the
directors to maintain the number of directors in each class as nearly
equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold
office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten
the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his term expires or thereafter
when his successor shall be elected and shall qualify, subject, however,
to prior death, resignation, retirement, disqualification or removal
from office. Any vacancy on the Board of Directors that results from
an increase in the number of directors may be filled by a majority of
the Board of Directors then in office, and any other vacancy occurring
in the Board of Directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from
an increase in the number of directors shall have the same remaining
term as that of his predecessor. Directors need not be stockholders.
Section 2. Resignations. Any director, member of a committee or other
office may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary.
The acceptance of a resignation shall not be necessary to make it effective.
Section 3. Vacancies. If the office of any director, or member of a
committee becomes vacant, the remaining directors in office, by a
majority vote, may appoint any qualified person to fill such vacancy,
who shall hold office for the unexpired term and until his successor
shall be duly chosen.
Section 4. Removal. Except as otherwise provided by law, any director
or the entire Board of Directors, may be removed, with cause, by the
holders of a majority of the shares then entitled to vote, at an
election of directors.
Section 5. Powers. The Board of Directors shall exercise all of the
powers of the Corporation except such as are by law, or by the
Certificate of Incorporation of the Corporation, or by these By-Laws
conferred upon or reserved to the stockholders.
Section 6. Committees. The Board of Directors may by resolution or
resolutions, approved by a majority of the whole Board of Directors,
designate one or more committees, each committee to consist of two or
more of the directors of the Corporation, which, to the extent
provided in said resolution or resolutions or in these By-Laws, shall
have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. Such committee or committees shall
have such name or names as may be stated in these By-Laws or as such
may be determined from time to time by resolution adopted by the
Board of Directors. The committees shall keep regular minutes of
their proceeding and report the same to the Board of Directors when
required.
Section 7. Chairman of the Board. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors,
elect a director to be Chairman of the Board of Directors. The
Chairman of the Board, if one be elected, shall preside at all
meetings of the Board of Directors and of the stockholders of the
Company and shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors. The
Chairman of the Board is not required to be and, unless otherwise
specifically designated such, shall not be deemed an officer of
the Corporation.
Section 8. Meetings. The newly elected directors may hold their
first meeting for the purpose of organization and the transaction
of business, if a quorum be present, immediately after the annual
meeting of the stockholders; or the time and place of such meeting
may be fixed by consent in writing by a majority of the directors.
Regular meetings of the directors may be held without notice at
such places and times as shall be determined from time to time by
resolution of the directors.
Special meetings of the Board of Directors may be called by the
President or by the Secretary on the written request of the Chairman
of the Board (or in the absence of a Chairman of the Board, the Chief
Executive Officer), the President, or by the Secretary at the request
of any two directors on at least two days' notice to each director and
shall be held at such place or places as may be determined by the
directors, or as shall be stated in the call of the meeting.
Section 10. Quorum. A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the
Board of Directors there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time until a
quorum is obtained, and no further notice thereof need be given other
than by announcement at the meeting which shall be so adjourned.
Section 11. Compensation. By resolution of the Board of Directors,
a fixed fee and expenses of attendance may be allowed for attendance
at each meeting by each member of the Board of Directors in addition
to any compensation determined by the Board of Directors, in its
discretion, to be paid to a member for the execution of special
duties by such member.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Corporation shall be a
President, one or more Vice-Presidents, a Chief Financial Officer,
a Treasurer, and a Secretary, and such Assistant Treasurers and
Assistant Secretaries as the Board of Directors may deem proper.
In addition, the Board of Directors may elect a Chief Executive
Officer. Each officer shall have the positions and duties set
forth in these Bylaws and any resolution of the Board of Directors
appointing such officer, and to the extent not so provided, as
generally pertain to their respective officer, subject to the
control of the Board of Directors. Each such officer shall hold
office until his or her successor is elected and qualified or until
his or her earlier resignation or removal. All of such officers shall
be elected by the Board of Directors. None of the officers, need be
directors. More than one office may be held by the same person.
Section 2. Other Officers and Agents. The Board of Directors may
appoint such other officers and agents as it may deem advisable, who
shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to
time by the Board of Directors.
Section 3. Chief Executive Officer. The Chief Executive Officer,
if such an officer be elected, shall, subject to the control of the
Board of Directors, have general supervision, direction and control
of the business and the officers of the Corporation. The Chief
Executive Officer shall exercise and perform such other powers and
duties as may be from time to time assigned to such person by the
Board, consistent with such person's position as Chief Executive
Officer. In the absence of the presence of a Chairman of the Board,
the Chief Executive Officer shall preside at all meetings of the
Stockholders if present thereat and shall have general supervision,
direction and control of the business of the Corporation.
Section 4. President. Subject to the control of the Board of
Directors and such supervisory powers, if any, as may be given by
the Board to the Chief Executive Officer, the President shall be
the chief operating officer of the Corporation and, subject to the
control of the Board of Directors, shall have (other than as vested
in the Chief Executive Officer) general supervision, direction and
control of the business and the officers of the Corporation and shall
exercise such other powers and duties as may be assigned to such
person by the Board, consistent with such person's position as
President. In the event that neither the Chairman of the Board
or Chief Executive Officer is present at a meeting of Stockholders,
the President shall preside.
Section 5. Vice President. Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by
the Board of Directors.
Section 6. Chief Financial Officer. The Chief Financial Officer
shall, subject to the control of the Board of Directors, shall keep
and maintain, or cause to be kept and maintained, adequate and
correct books and records of accounts of the properties and business
transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares, and shall send or cause to be sent to
the stockholders of the Corporation such financial statements and
reports as are by law or these Bylaws required to be sent to them.
He or she shall render to the Chief Executive Officer, President
and to Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his
or her transactions as Chief Financial Officer and of the financial
condition of the Corporation.
Section 7. Treasurer. Subject to such supervisory powers, if any
as may be given by the Board to the Chief Financial Officer, the
Treasurer shall assist the Chief Financial Officer in keeping and
maintaining, or causing to be kept and maintained, adequate and
correct books and records of accounts of the properties and
business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses,
capital, retained earnings and shares, and in sending or causing
to be sent to the stockholders of the Corporation such financial
statements and reports as are by law or these Bylaws required to
be sent to them. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
account of receipts and disbursements in books belonging to the
Corporation. He shall deposit all moneys and other valuables in
the name and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, or the Chief Executive Officer,
President or Chief Financial Officer taking proper vouchers for
such disbursements. He or she shall render to the Chief Executive
Officer, President and to Board of Directors at the regular
meetings of the Board of Directors, or whenever they may request
it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the
Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount
as with such surety as the Board shall prescribe.
Section 8. Secretary. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and
all other notices required by law or by these By-Laws, and in case
of his or her absence or refusal or neglect to do so, any such
notice may be given by any person thereunto directed by the
President, or by the directors, or stockholders, upon whose
requisition the meeting is called as provided in these By-Laws.
The Secretary shall record all the proceedings of the meeting of
the Corporation and of the directors in a book to be kept for that
purpose and shall perform such other duties as may be assigned to
him or her by the directors or the President. He or she shall
have the custody of the seal of the Corporation and shall affix
the same to all instruments requiring it, when authorized by the
directors or the President, and attest the same.
Section 9. Assistant Treasurers and Assistant Secretaries.
Assistant Treasurers and Assistant Secretaries, if any, shall be
elected and shall have such powers and shall perform such duties
as shall be assigned to them, respectively, by the directors.
ARTICLE V
MISCELLANEOUS
Section 1. Certificates of Stock. Certificates of stock,
numbered and with the seal of the Corporation affixed, signed
by any of the Chief Executive Officer, President or Vice-President,
and any of the Chief Financial Officer, the Treasurer or an
Assistant Treasurer, or Secretary or an Assistant Secretary,
shall be issued to each stockholder certifying the number of
shares owned by him in the Corporation. When such certificates
are signed by a transfer agent or an assistant transfer agent or
by a transfer clerk acting on behalf of the Corporation and a
registrar, the signatures of such officers of the Corporation
may be facsimiles.
Section 2. Lost Certificates. A new certificate of stock may be
issued in the place of any certificate theretofore issued by the
Corporation, alleged to have been lost or destroyed, and the
directors may, in their discretion, require the owner of the lost or
destroyed certificate, or his legal representatives, to give the
Corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss
of any such certificate, or the issuance of any such new certificate.
The Corporation, in its discretion, may require payment of an
administrative fee in connection with the issuance of a replacement
stock certificate pursuant to these Bylaws.
Section 3. Transfer of Shares. The shares of stock of the
Corporation shall be transferable only upon its books by the holders
thereof in person or by their duly authorized attorneys or legal
representatives, and upon such transfer the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person
in charge of the stock and transfer books and ledgers, or to such
other person as the directors may designate, by whom they shall be
canceled, and new certificates shall thereupon be issued. A record
shall be made of each transfer, and a duplicate thereof mailed to the
Delaware office, and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry
of the transfer.
Section 4. Closing of Transfer Books. The Board of Directors shall
have power to close the stock transfer books of the Corporation for a
period not exceeding sixty days preceding the date any meeting of
stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or
exchange of capital stock shall go into effect; provided, however, that
in lieu of closing the stock transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty days preceding
the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when
any change or conversion or exchange of capital stock shall go into
effect, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any such meeting, or entitled
to receive payment of any such dividends or to any such allotment of
rights or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, and in such case such
stockholders only as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or to receive such
allotment of rights or to exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 5. Dividends. Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally
available therefor at any regular or special meeting, declare dividends
upon the capital stock of the Corporation as and when they deem
expedient. Subject to the immediately preceding sentence, dividends
declared by the Board of Directors shall be payable in cash, in-kind
or in other assets, at the sole discretion of the Board of Directors.
Before declaring any dividend there may be set apart out of any funds
of the Corporation available for dividends, such sum or sums as the
directors from time to time in their discretion deem proper for
working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the directors
shall deem conducive to the interests of the Corporation.
Section 6. Seal. The corporate seal shall be circular in form and
shall contain the name of the Corporation, the year of its creation
and the words "CORPORATE SEAL DELAWARE". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Fiscal Year. The fiscal year of the Corporation shall
end on June 30 of each year.
Section 8. Checks. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation, and in such manner so
shall be determined from time to time by resolution of the Board of
Directors.
Section 9. Notice and Waiver of Notice. Whenever any notice is
required by these By-Laws to be given, personal notice is not meant
unless expressly so stated, and any notice so required shall be
deemed to be sufficient if given by depositing the same in a
post-office box in a sealed post-paid wrapper, addressed to the
person entitled thereto at his last known post office address, and
such notice shall be deemed to have been given on the day of such
mailing. Stockholders not entitled to vote shall not be entitled
to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatsoever is required to be given under the
provisions of any law, or under the provisions of the Certificate
of Incorporation of the Corporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting
thereof if notice of the proposed alteration or repeal of By-Law
or By-Laws to be made be contained in the notice of such special
meeting, by the affirmative vote of a majority of the stock
issued and outstanding and entitled to vote thereat, or by the
affirmative vote of a majority of the Board of Directors, or at
any meeting of the Board of Directors, if notice of the proposed
alteration or repeal, of By-Law or By-Laws to be made, be
contained in the notice of such meeting.
ARTICLE VII
DIRECTOR LIABILITY AND INDEMNIFICATION OF AGENTS
Section 1. Limitation of Liability. A director of the Corporation
shall not be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director,
except for liability to the extent provided by applicable law under
Section 174 of the General Corporation Law of the State of Delaware.
If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware as
so amended. Any repeal or modification of any of the provisions that
are set forth in either or both of the immediately preceding sentences
by the stockholders or directors of the Corporation shall not adversely
affect any right or protection of any director of the Corporation
existing at the time of such repeal or modification or increase the
liability of any director of the Corporation with respect to any acts
or omissions of such director occurring prior to such repeal or
modification.
Section 2. Indemnification. Every person who was or is a party or is
threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he or a person of whom he is the legal
representative is or was a director or officer of the corporation
or is or was serving at the request of the corporation of for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other
enterprise, whether the basis of such action, suit or proceeding is
alleged action in an official capacity as a director, officer or
representative, or in any other capacity while serving as a director,
officer or representative, shall be protected and held harmless by the
Corporation to the fullest extent permissible under the General
Corporation Law of the State of Delaware, as from time to time
amended, against all expenses, liability and loss (including attorneys'
fees, judgments, fines and amounts paid or to be paid in settlement)
threatened against him or her or reasonably incurred or suffered by
him or her in connection therewith. Such rights shall include the
right to be protected by the corporation against expenses incurred
in defending any action, suit or proceeding in advance of its final
disposition upon delivery to the Corporation of an undertaking to
repay all amounts so advanced if it should be determined ultimately
that such person is not entitled to be so protected under this
Article or otherwise.
To the fullest extent permitted by applicable law, the Corporation
is authorized to provide indemnification of (and advance expenses to)
directors, officers and other agents of the Corporation (and any other
persons except to the extent not permitted by Delaware law) through
Bylaw provisions, agreements with such directors, officers, agents
and other persons, votes of stockholders or disinterested directors
or otherwise, in excess of the indemnification and advances of
expenses otherwise permitted by Section 145 of the General Corporation
Law of the State of Delaware, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to
actions for breach of duty to the Corporation, its stockholders and
others. Any repeal or modification of any of the provisions that are
set forth in the immediately preceding sentence by the stockholders
or directors of the Corporation shall not adversely affect any right
or protection of a director, officer, agent or other person existing
at the time of such repeal or modification.
Section 3. Prepayment of Claims. If a claim under this Article is not
paid in full by the Corporation within ninety days after a written claim
has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and if successful in whole or in part, the expense
of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred
in defending any action, suit or proceeding in advance of its final
disposition where the required undertaking has been tendered to the
Corporation) that the claimant has not met the standards of conduct
which make it permissible under the General Corporation Law of the
State of Delaware for the corporation to indemnify the claimant for
the amount claimed but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper, nor an actual determination
by the Corporation that the claimant had not met such applicable
standard of conduct shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of
conduct. Such rights shall be exclusive of any right which such
person may have or hereafter acquire under any statute, provision
of the certificate of incorporation, these Bylaws, agreement, vote
of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was
a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising
out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability
under the provisions of this Article VII.
Section 5. Contractual Rights. The indemnification and advancement
of expenses provided by, or granted pursuant to, the other sections
of this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may
be entitled under any other Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity
while holding such office and shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
____________________________________________________________________
Exhibit 10(b)
CONSULTING AGREEMENT
Agreement between Scientific Industries, Inc., a Delaware Corporation,
(the "Company") and Joseph G. Cremonese ("JC") and Laboratory Innovation
Company, Ltd., a Pennsylvania sub-chapter S corporation, of which JC is
President, director and sole stockholder ("LIC").
Whereas, JC through LIC (collectively the "Consultants") for several
years has provided consulting services to the Company and the Company
desires the Consultant to continue to provide such services.
IT IS HEREBY AGREED as follows:
1. For two consecutive 12 month periods, commencing January 1, 2003
(the "Commencement Date"), Consultants will provide consulting services
at the request of the Company with respect to the development and
marketing of products of the Company for a minimum of 80 days, but
not more than 96 days, per each 12 month period, at the guaranteed
rate of $450.00 per day. Any days of service in excess of 96 days
during such 12 month period shall be subject to Consultant's
availability and the Company and the Consultants agreeing to a rate
of compensation for such additional days.
2. Consultants will provide a minimum of five days in any given
month with a goal of 7 days per month on average. As special
requirements (i.e. trade shows) are presented, Consultants will make
available as many days as needed in any month provided that the
Company provides Consultants at least 21 days prior notice.
3. (a) Payment for the foregoing service should be made to
Laboratory Innovation Company, P.O. Box 1907, Greensburg, PA 15601-6907,
at the rate of $3000.00 per month, payable within 10 days of the
calendar month in which the services are rendered.
(b) To the extent that on an anniversary date of the Commencement
Date the number of days of Consultant's services for the 12 months
then ended pursuant to the agreement is less or more than 80 days the
following shall apply:
(i) if less, the Company shall be entitled to a credit equal to the
product of the number of days less than 80 and the guaranteed rate,
with the credit to be applied to the monthly payments and unreimbursed
expenses payable pursuant to Paragraph 4 for the immediately following
month or months of service under the Agreement, with any balance
outstanding as of the termination or expiration of this Agreement
to be paid in full by Consultants to the Company with 30 days
following such expiration or termination; and
(ii) If more, the Company shall pay LIC within 30 days of such
determination, the product of the number of days which exceed 80
and the guaranteed rate.
(c) In the event of a termination of this Agreement on a date
other than an anniversary date of the Commencement Date, the
determination of the credit or deficiency shall be based on a pro rata
portion determined by the number of months and fraction of a month,
if any, from the immediately preceding anniversary date to the
termination date.
4. Expenses will be submitted on an expense report with original
receipts. Routine expenses will include; public transportation, taxi
fares, hotels, parking, tolls and auto mileage at the rate of 0.345/mile.
Meals will only be submitted as an expense item during trade shows or
required company meetings. All expenses are subject to approval by an
authorized officer of The Company. Air travel will be pre-approved by
Scientific Industries. All other expenditures will be pre-approved.
5. A Summary Plan of Consulting services and duties will be provided
at the beginning of each quarter and will be defined and agreed upon at
a monthly conference telephone call with the President and Executive
Vice President. Broad based objectives, as outlined in the Company's
Business Plan, will be implemented routinely, without the need for a
specific conference, and a monthly summary report will be submitted to
account for the time spent on such routine activities.
6. Consultants agree to execute and deliver to the Company the
Confidentiality Information Agreement and NonCompetition Agreements,
in the form of Exhibits A and B hereto which agreements shall survive
the expiration or termination of the Agreement for whatever reason.
7. The term of this Agreement shall end of December 31, 2004
unless terminated by either the Company or the Consultants on at
least 60 days prior written notice.
/s/ Joseph G. Cremonese
_______________________
Joseph G. Cremonese
Laboratory Innovation Company
By:
/s/ Joseph G. Cremonese
_______________________
Joseph G. Cremonese
Agreed:
Scientific Industries, Inc.
By:
/s/ Helena Santos
_________________
Helena Santos, President and
Chief Executive Officer
__________________________________________________________________
Exhibit A
Confidential Information Agreement
January 1, 2003
Mr. Joseph G. Cremonese
Laboratory Innovation Company
P.O. Box 1907
Greensburg, Pennsylvania 15601-6907
Dear Joseph:
This letter, when executed by the parties hereto, will constitute an
agreement between Scientific Industries, Inc. (the "Company") and
Joseph G. Cremonese and Laboratory Innovation Company (collectively
"Consultants"), at P.O. Box 1907, Greensburg, Pennsylvania 15601-6907
with respect to certain aspects of their continuing consulting
relationship under the terms and conditions set forth below.
1. The Company has engaged Consultants to perform consulting
services for the Company, and Consultants desire to perform such
services, on the terms and conditions which are the subject of a
separate agreement (the "Consulting Agreement"), for a period of
time (the "Term of Engagement") as more fully set forth in such
separate agreement. In addition to the compensation to which
Consultants are already entitled, as a further inducement to the
Company to engage Consultants as aforesaid, the parties hereto
set forth the following additional terms and conditions.
2. (a) During and after the Term of Engagement, Consultants
will not, directly or indirectly, disclose to any person, or use or
otherwise exploit for the benefit of Consultants or for the benefit
of anyone other than the Company, any Confidential Information
(as defined below). Consultants shall have no obligation hereunder
to keep confidential any Confidential Information if and to the
extent disclosure of any therefor is specifically required by law;
provided, however, that in the event disclosure is required by
applicable law, Consultants shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so
that the Company may seek an appropriate protective order.
(b) At the request of the Company, Consultants agree to deliver
to the Company, at any time during the Term of Engagement, or
thereafter, all Confidential Information which Consultants may
possess or control. Consultants agree that all Confidential
Information of the Company (whether now or hereafter existing)
conceived, discovered or made by Consultants during the Term of
Engagement exclusively belongs to the Company (and not to Consultants).
Consultants will promptly disclose such Confidential Information to
the Company and perform all actions reasonably requested by the
Company to establish and confirm such exclusive ownership.
"Confidential Information" means any confidential information
including, without limitation, any patent, patent application,
copyright, trademark, trade name, service mark, service name,
"know-how", trade secrets, customer lists, vendor lists, customer
pricing and or terms, details of client or consultant contracts,
pricing policies, cost information, operational methods, marketing
plans or strategies, product development techniques or plans,
business acquisition plans or any portion or phase of any business,
scientific or technical information, ideas, discoveries, designs,
computer programs (including source or object codes), processes,
procedures, formulae, improvements, information relating to the
products currently being sold, developed or contemplated, by the
Company, or which hereinafter may be sold, developed or contemplated,
by the Company through the date of termination of the Term of
Engagement, including, but not limited to, mixers, including vortex
mixers, rotating, shaking or oscillating apparatus; thermoelectric
apparatus; or any industrial or laboratory processes, apparatus or
equipment relating thereto (the "Products") or other proprietary or
intellectual property of the Company, whether or not in written or
tangible form, and whether or not registered, and including all
memoranda, notes, summaries, plans, reports, records, documents
and other evidence thereof. The term "Confidential Information"
does not include, and there shall be no obligation hereunder with
respect to, information that becomes generally available to the
public other than as a result of a disclosure by Consultants not
permissible hereunder.
3. Consultants agree to indemnify and save the Company, its
directors, officers, stockholders, agents, representatives,
employees and consultants (and such persons' respective affiliates)
harmless from any and all loss, damage, claims, liabilities, judgments
and other cost and expense of every kind and nature which may be
incurred by such persons by reason of the transactions contemplated
by the Consulting Agreement or this Agreement or the breach of any
representation, warranty, covenant or agreement contained or refined
to therein or herein (including, without limitation, reasonable attorneys'
fees and expenses), except in the case of such persons own willful
default or gross negligence.
4. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive termination
of Consultants' engagement, irrespective of any investigation made by or
on behalf of any party. If any restriction contained in this Agreement
shall be deemed to be invalid, illegal, or unenforceable by reason of
the extent, duration, or geographical scope thereof, or otherwise, then
the court making such determination shall have the right to reduce such
extent, duration, geographical scope, or other provisions hereof, and
in its reduced form such restriction shall then be enforceable in the
manner contemplated hereby.
5. This Agreement shall be deemed to have been made and fully
performed in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without
regard to conflict of law rules thereof. Any action, suit or proceeding
arising out of, or in connection with, this Agreement shall be adjudicated
in a court of competent jurisdiction located in Nassau or Suffolk County,
State of New York. The parties hereto unconditionally waive any right to
a trial by jury and any objection which either of them may now or
hereafter have to the establishment of venue as aforementioned or that
any action, suit or proceeding has been brought in an inconvenient forum.
If Consultants are in agreement with the foregoing, please execute two
copies of this letter in the space provided below and return them to
the undersigned.
Very truly yours,
Scientific Industries, Inc.
By: /s/Helena R. Santos
___________________
Helena R. Santos, President
ACCEPTED AND AGREED TO:
/s/ Joseph G. Cremonese
________________________
Joseph G. Cremonese, individually
Laboratory Innovation Company
By:
/s/Joseph G. Cremonese
______________________
Joseph G. Cremonese
Date: January 1, 2003
______________________________________________________________________
Exhibit B
Non Competition Agreement
January 1, 2003
Mr. Joseph G. Cremonese
Laboratory Innovation Company
P.O. Box 1907
Greensburg, Pennsylvania 15601-6907
Dear Joseph:
This letter, when executed by the parties hereto, will constitute an
agreement between Scientific Industries, Inc. (the "Company") and
Joseph G. Cremonese and Laboratory Innovation Company ("Consultants"),
at P.O. Box 1907, Greensburg, Pennsylvania 15601-6907, with respect to
certain aspects of their continuing employment/consulting relationship
under the terms and conditions set forth below.
1. The Company has engaged Consultants to perform services for the
Company and Consultants desire to perform such services, on the terms
and conditions which are the subject of a Consulting Agreement, for a
period of time (the "Term of Engagement") as more fully set forth in
such Consulting Agreement. In addition to the compensation to which
Consultants are already entitled, as a further inducement to the
Company to engage Consultants as aforesaid, the parties hereto set
forth the following additional terms and conditions.
2. Consultants acknowledge that services to be provided by Consultants
are unique and that obtaining or use of same by a competitive business or
business similar to that of the Company would cause irreparable injury to
the Company. Consultants covenant and agree that:
(a) From the date hereof through the date of termination of the Term of
Engagement, Consultants will not, without the express written approval of
the Board of Directors or the President of the Company, directly or
indirectly, own, manage, operate, control, invest or acquire an interest
in, or otherwise engage or participate in, or be associated with in any
way, any business which competes directly or indirectly with the business
or proposed business of the Company (a "Competitive Business"); provided,
however, that Consultants may, directly or indirectly, own, invest or
acquire an interest in the aggregate of up to two percent (2%) of the
capital stock of a corporation whose capital stock is traded publicly.
(b) Additionally, from the date hereof through the date which is 18
months after the date of termination of the Term of Engagement (the
"Restricted Period"), Consultants will not, without the express written
approval of the Board of Directors or the President of the Company,
directly or indirectly, become associated with a Competitive Business,
or otherwise engage in or assist in any enterprise, which develops,
markets, sells, manufactures or designs products currently being sold,
developed or contemplated, by the Company, or which hereinafter may be
sold, developed or contemplated, by the Company as of the date of
termination of the Term of Engagement, including, but not limited to,
mixers; including vortex mixers, rotating, shaking or oscillating
apparatus; thermoelectric apparatus; or any industrial or laboratory
processes, apparatus or equipment relating thereto (the "Products").
Consultants may, during the Restricted Period, become associated with
a Competitive Business to the extent association of the Consultants is
not related in any way to the development, manufacture, design,
marketing or sale of the Products or products which are intended to
compete with the Products.
(c) During the Restricted Period, Consultants will not without the
express prior written approval of the Board of Directors or President of
the Company (i) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor,
partner, stockholder, lender, director, officer, employee, sales agent,
joint venturer, investor, lessor, supplier, customer, consultant, agent,
representative or any other person which has a business relationship with
the Company to discontinue, reduce or modify such employment, agency or
business relationship with the Company, or (ii) employ or seek to employ
or cause any Competitive Business to employ or seek to employ any person
or agent who is then (or was at any time within one (1) year prior to the
date Consultants or the Competitive Business employs or seeks to employ
such person) engaged or retained by the Company.
(d) Since a breach of the provisions of this paragraph 2 could not
adequately be compensated by money damages, the Company shall be entitled,
in addition to any other right and remedy available to it, to an
appropriate order from a court of competent jurisdiction restraining
such breach or a threatened breach, and in any such case no bond or
other security shall be required to be posted in connection therewith,
and Consultants hereby consent to the issuance of such order. Consultants
agree that the provisions of this paragraph 2 are necessary and reasonable
to protect the Company in the conduct of its business. If any restriction
contained in this paragraph 2 shall be deemed to be invalid, illegal, or
unenforceable by reason of the extent, duration, or geographical scope
thereof, or otherwise, then the court making such determination shall
have the right to reduce such extent, duration, geographical scope, or
other provisions hereof, and in its reduced form such restriction shall
then be enforceable in the manner contemplated hereby.
3. Consultants agree that from the date of this Agreement and continuing
indefinitely thereafter, Consultants shall not say or do anything which
could disparage, undermine or be reasonably interpreted to denigrate the
capabilities, performance, integrity or reputation of the Company or any
of its directors, officers, stockholders, agents, employees, representatives
or consultants.
4. Consultants agree to indemnify and save the Company, its directors,
officers, stockholders, agents, representatives, employees and consultants
(and such persons' respective affiliates) harmless from any and all loss,
damage, claims, liabilities, judgments and other cost and expense of every
kind and nature which may be incurred by such persons by reason of the
breach of any representation, warranty, covenant or agreement contained
herein (including, without limitation, reasonable attorneys' fees and
expenses), except in the case of such persons own willful default or gross
negligence.
5. The covenants, agreements, representations, and warranties contained
in or made pursuant to this Agreement shall survive the termination of the
Term of Engagement, irrespective of any investigation made by or on behalf
of any party. If any restriction contained in this Agreement shall be
deemed to be invalid, illegal, or unenforceable by reason of the extent,
duration, or geographical scope thereof, or otherwise, then the court making
such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form
such restriction shall then be enforceable in the manner contemplated hereby.
6. This Agreement shall be deemed to have been made and fully performed
in the State of New York and shall be governed by and construed in accordance
with the laws of the State of New York without regard to conflict of law
rules thereof. Any action, suit or proceeding arising out of, or in
connection with, this Agreement shall be adjudicated in a court of
competent jurisdiction located in Nassau or Suffolk County, State of
New York. The parties hereto unconditionally waive any right to a trial
by jury and any objection which either of them may now or hereafter have
to the establishment of venue as aforementioned or that any action, suit
or proceeding has been brought in an inconvenient forum.
If you are in agreement with the foregoing, please execute two copies of
this letter in the space provided below and return them to the undersigned.
Very truly yours,
Scientific Industries, Inc.
By: /s/ Helena R. Santos
_________________________
Helena R. Santos, President
ACCEPTED AND AGREED TO:
/s/ Joseph G. Cremonese
_______________________
Joseph G. Cremonese, individually
Laboratory Innovation Company
By: /s/ Joseph G. Cremonese
_____________________________
Joseph G. Cremonese
Date: January 1, 2003