UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
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 240.14a-12
EPOLIN, 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 the table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A (5) Total fee
paid: N/A
[ ] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
EPOLIN, INC.
358-364 Adams Street
Newark, New Jersey 07105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 16, 2007
To the Stockholders:
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders (the "Annual
Meeting") of Epolin, Inc. (the "Company") will be held on August 16, 2007, at
3:00 p.m., local time, at the principal executive offices of the Company,
358-364 Adams Street, Newark, New Jersey 07105, for the following purposes:
1. To elect five Directors to serve as the Board of Directors of
the Company until the next Annual Meeting of Stockholders and until their
successors shall be elected and shall qualify; and
2. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The close of business on June 26, 2007 has been fixed as the record
date for determining stockholders entitled to receive notice of and to vote at
the Annual Meeting and at any adjournment thereof.
Your attention is called to the proxy statement on the following pages.
We hope that you will attend the Annual Meeting. If you do not plan to attend,
please sign, date and mail the enclosed proxy card in the enclosed envelope,
which requires no postage if mailed in the United States.
By Order of the Board of Directors,
Murray S. Cohen, Ph.D.,
Chairman
Newark, New Jersey
July 10, 2007
EPOLIN, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 16, 2007
________________________________
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Epolin,
Inc., a New Jersey corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors") for use at an Annual Meeting of Stockholders of the Company to be
held on August 16, 2007, at 3:00 p.m., local time, at the principal executive
offices of the Company, 358-364 Adams Street, Newark, New Jersey 07105, and at
any adjournment thereof (the "Annual Meeting").
The Board has fixed the close of business on June 26, 2007 as the
record date for the determination of stockholders entitled to receive notice of,
and vote at, the Annual Meeting (the "Record Date"). Accordingly, only
stockholders of record on the books of the Company at the close of business on
the Record Date will be entitled to vote at the Annual Meeting. On the Record
Date, the Company had outstanding approximately 11,966,355 shares of Common
Stock, no par value per share (the "Common Stock") which are the only
outstanding voting securities of the Company. On all matters, each share of
Common Stock is entitled to one vote.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, officers, directors and other employees of the
Company may solicit proxies by personal contact, telephone, facsimile or other
electronic means without additional compensation. This Proxy Statement and the
accompanying proxy card are first being mailed to stockholders on or about July
10, 2007.
Proxies in the accompanying form which are properly executed, duly
returned and not revoked, will be voted in accordance with the instructions
thereon. If no instructions are indicated thereon, proxies will be voted FOR all
matters listed in the Notice of Annual Meeting of Stockholders and in accordance
with the discretion of the person(s) voting the proxies with respect to all
other matters properly presented at the Annual Meeting. Execution of a proxy
will not prevent a stockholder from attending the Annual Meeting and voting in
person. Any stockholder giving a proxy may revoke it at any time before it is
voted by delivering to the Secretary of the Company written notice of revocation
bearing a later date than the proxy, by delivering a later-dated proxy, or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not, in and of itself, constitute revocation of a proxy. The holders of a
majority of the shares of Common Stock outstanding and entitled to vote as of
the Record Date, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the Annual Meeting. A plurality of the
votes cast at the Annual Meeting will be required for the election of directors.
If a stockholder, present in person or represented by proxy, abstains on any
matter, the stockholder's shares will not be voted on such matter. Thus, an
abstention from voting on a matter has the same legal effect as a vote "against"
the matter, even though the stockholder may interpret such action differently.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with regard to the record and beneficial ownership of the Company's
Common Stock by (i) each stockholder owning of record or beneficially 5% or more
of the Company's Common Stock, (ii) each director of the Company, (iii) the
Company's Chief Executive Officer and other executive officers, if any, of the
Company whose total compensation was in excess of $100,000 (the "named executive
officers"), and (iv) all officers and directors of the Company as a group:
1
Amount and Nature Percent
Name of Beneficial Owner of Beneficial Ownership of Class
Murray S. Cohen(1)* 1,930,958 16.1%
James Ivchenko(2)* 1,529,587 12.7%
Morris Dunkel(3)* 280,000 2.3%
James R. Torpey, Jr.(4)* 92,500 **
Herve A. Meillat* 4,000 **
Greg Amato(5)* 200,000 1.7%
Claire Bluestein(6)* 970,155 8.1%
Santa Monica Partners, L.P.(7) 825,900 6.9%
Sandra Lifschitz(8) 605,000 5.1%
All Executive Officers and
Directors as a Group (6 persons) 4,037,045 32.8%
________________________________
* The address for each is 358-364 Adams Street, Newark, New Jersey 07105.
** Less than 1%.
(1) Includes 1,845,958 shares held by Dr. Cohen and 25,000 shares held by the
wife of Dr. Cohen. Also, includes 60,000 shares which Dr. Cohen has the
right to acquire within 60 days pursuant to the exercise of options granted
under the 1998 Plan. In addition, Dr. Cohen has options granted under the
1998 Plan to acquire an additional 10,000 shares which are not exercisable
within 60 days.
(2) Includes 1,005,000 shares held by Mr. Ivchenko and 464,587 held by Mr.
Ivchenko and his wife, as joint tenants. Also, includes 60,000 shares which
Mr. Ivchenko has the right to acquire within 60 days pursuant to the
exercise of options granted under the 1998 Plan. In addition, Mr. Ivchenko
has options granted under the 1998 Plan to acquire an additional 10,000
shares which are not exercisable within 60 days.
(3) Includes 55,000 shares which Mr. Dunkel has the right to acquire within 60
days pursuant to the exercise of options granted under the 1998 Plan. In
addition, Mr. Dunkel has options granted under the 1998 Plan to acquire an
additional 5,000 shares which are not exercisable within 60 days.
(4) Includes 55,000 shares which Mr. Torpey has the right to acquire within 60
days pursuant to the exercise of options granted under the 1998 Plan. In
addition, Mr. Torpey has options granted under the 1998 Plan to acquire an
additional 5,000 shares which are not exercisable within 60 days.
(5) Includes 100,000 shares which Mr. Amato has the right to acquire within 60
days pursuant to the exercise of options granted to him.
(6) Ms. Bluestein is a former director of the Company.
(7) This information is based solely upon information reported in filings made
to the SEC on behalf of Santa Monica Partners, L.P. The address for Santa
Monica Partners, L.P. is 1865 Palmer Avenue, Larchmont, New York.
(8) This information is based solely upon information reported in filings made
to the SEC on behalf of Sandra Lifschitz. Her address is 7 Tulane Drive,
Livingston, New Jersey.
The Stockholders Agreement
Pursuant to a Stockholders Agreement executed in October 2002, each of
the then members of the Board of Directors (Dr. Cohen and Messrs. Ivchenko,
Dunkel and Torpey, as well as Claire Bluestein and Peter Kenny) has provided the
Company with certain rights of refusal in the event any of such individuals
desire to sell any of the shares of the Company's Common Stock which any of them
hold of record or beneficially. Excluded from such restrictions are gifts in
which the proposed donee agrees to be bound to the Stockholders Agreement and
transfers by will or the laws of descent, provided the shares remain subject to
2
said restrictions. In addition, shares may be transferred by such individuals
with the prior approval of the Board of Directors of the Company (or any
committee authorized by the Board to give such approval).
ELECTION OF DIRECTORS
A Board of Directors consisting of five members is to be elected by the
stockholders, to hold office until the next Annual Meeting of Stockholders and
until their successors are duly elected and qualify.
Unless authority is withheld, it is intended that proxies will be voted
for the election of the five nominees below, all of whom are currently serving
as directors. The Board of Directors does not contemplate that any of these
nominees will be unable or will decline to serve. However, if any of them is
unable or declines to serve, the persons named in the accompanying proxy may
vote for another person or persons in their discretion.
The following table sets forth certain information with respect to the
five nominees for election to the Board of Directors.
Present Position Has Served as
Name Age and Offices Director Since
Murray S. Cohen 81 Chairman of the 1984
Board, Chief Scientist,
Secretary and Director
James Ivchenko 67 President and Director 1993
Morris Dunkel 78 Director 1984
James R. Torpey, Jr. 57 Director 2001
Herve A. Meillat 51 Director 2005
None of the directors and officers is related to any other director or
officer of the Company.
Set forth below are brief accounts of the business experience during
the past five years of each director and executive officer of the Company and
each significant employee of the Company.
MURRAY S. COHEN has served as Director and Chairman of the Board of the
Company since June 1984 and Secretary since March 2001. From June 1984 to
January 2006, Dr. Cohen was Chief Executive Officer, and from June 1984 to
August 1994, he was also President. Dr. Cohen also currently serves as Chief
Scientist. From January 1978 through May 1983, Dr. Cohen was the Director of
Research and Development for Apollo Technologies Inc., a company engaged in the
development of pollution control procedures and devices. Dr. Cohen was employed
as a Vice President and Technical Director of Borg-Warner Chemicals from 1973
through January 1978, where his responsibilities included the organization,
project selection and project director of a 76 person technical staff which
developed materials for a variety of plastic products. He received a Bachelor of
Science Degree from the University of Missouri in 1949 and a Ph.D. in Organic
Chemistry from the same institution in 1953.
JAMES IVCHENKO has served as Director of the Company since September
1993, President since August 1994, and from February 1992 to August 1994, he was
Technical Director and Vice President of Operations. Prior thereto, Mr. Ivchenko
was employed by Ungerer & Co. as Plant Manager for the Totowa, New Jersey and
Bethlehem, Pennsylvania facilities from May 1988 to May 1991. Mr. Ivchenko has
over 30 years of experience in the flavor, fragrance and pharmaceutical
intermediate industry. He received his Bachelor of Arts Degree, Masters of
Science and Masters of Business Administration from Fairleigh Dickinson
University in New Jersey.
MORRIS DUNKEL has served as Director of the Company since June 1984.
Since 1992, he has been Vice President and Technical Director of Elan Chemical
Inc., a chemical company in the flavor and fragrances industry. From 1976
3
through 1983, Dr. Dunkel was employed by Tenneco Chemicals, Inc., a firm engaged
in chemical production activities, in the capacities of manager and director of
Tenneco's organic chemicals research and development division. Dr. Dunkel has
been issued several United States patents and has published numerous articles
relating to chemical processes. He received a Bachelor of Science Degree in 1950
from Long Island University. Dr. Dunkel received a Master of Science Degree from
Brooklyn College in 1954 and Ph.D. in Organic Chemistry from the University of
Arkansas in 1956.
JAMES R. TORPEY, JR. has served as Director of the Company since July
2001. Mr. Torpey is President of Madison Energy Consultants. From 1995 to 2002,
he was Director of Technology Initiatives at First Energy/GPU, Chairman of the
Solar Electric Power Association, and President and member of the Board of
Directors of GPU Solar, Inc. He was a member of the U.S. Department of Energy
Solar Industry Advisory Board from 2001 to 2005. Mr. Torpey received his Masters
of Business Administration from Rutgers University in 1991.
HERVE A. MEILLAT has served as Director of the Company since July 2005.
Since September 2006, Mr. Meillat has been the sole owner and CEO of Christian
Dalloz Sunoptics, a company located in France which develops, manufactures and
sells worldwide non-prescription ocular lenses and shields for premium
sunglasses in all market segments including luxury, fashion and sports eyewear.
Mr. Meillat is a former Senior Vice President of the Bacou-Dalloz Group, a world
leader in the design, manufacturing and sales of personal protection equipment.
While with Bacou-Dalloz, he was Senior Vice President of its eye and face
business unit from 2001 to 2004, the President of Dalloz Safety Inc. from 1996
to 2001 and Chief Operating Officer of Christian Dalloz in France from 1989 to
1995.
GREG AMATO, age 50, has been employed by the Company since November
2004 and has been Chief Executive Officer since January 2006. From, January 2005
to January 2006, he was Vice President of Sales and Marketing. From 1993 to
2004, Mr. Amato was with Elementis, PLC and certain of its subsidiaries,
divisions and predecessors, which company is a specialty chemical manufacturer.
During such period, Mr. Amato was Vice President, Specialty Markets of Elementis
Specialties, Inc., located in Hightstown, New Jersey from 2000 to 2004;
President and CEO of Elementis Performance Polymers, located of Belleville, New
Jersey from 1998 to 2000; and from 1993 to 1998, Sales Manager of Rheox, which
was acquired by Elementis in 1998. Mr. Amato received a Bachelor of Chemical
Engineering from Georgia Institute of Technology in 1978.
There are no executive officers of the Company other than those named
above.
Audit Committee Financial Expert
The Company does not have an audit committee financial expert, as such
term is defined in Item 401(e) of Regulation S-B, serving on its audit committee
because it has no audit committee and is not required to have an audit committee
because it is not a listed security.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership of
Common Stock of the Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on the Company's review of such forms received by it, or
written representations from certain of such persons, the Company believes that,
with respect to the fiscal year ended February 28, 2007, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with except that James Ivchenko filed one report
late relating to a one transaction.
Code of Ethics
The Board of Directors has adopted a Code of Ethics applicable to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, which is
designed to promote honest and ethical conduct; full, fair, accurate, timely and
understandable disclosure; and compliance with applicable laws, rules and
4
regulations. A copy of the Code of Ethics will be provided to any person without
charge upon written request to the Secretary of the Company at its executive
offices, 358-364 Adams Street, Newark, New Jersey 07105.
Executive Compensation
The following summary compensation tables set forth information
concerning the annual and long-term compensation for services in all capacities
to the Company for the fiscal years ended February 28, 2007 and February 28,
2006 of those persons who were, at February 28, 2007, (i) the chief executive
officer and (ii) the other most highly compensated executive officers of the
Company, whose total compensation was in excess of $100,000 (the named executive
officers):
Summary Compensation Table
- -------------------- ------ --------- --------- ----------- ---------- ------------- -------------- --------------- ----------
Name and Principal Year Salary Bonus Stock Option Non-Equity Nonqualified All Other Total
Position ($) ($) Awards Awards Incentive Deferred Compensation
($) ($) Plan Compensation ($)
Compensation Earnings ($)
($)
- -------------------- ------ --------- --------- ----------- ---------- ------------- -------------- --------------- ----------
Greg Amato(1) 2007 $170,677 $9,090 $33,000(2) $2,625(2) $0 $0 $15,329(3) $230,721
Chief Executive 2006 $153,461 $15,000 $0 $0 $0 $0 $12,629(3) $181,090
Officer
- -------------------- ------ --------- --------- ----------- ---------- ------------- -------------- --------------- ----------
Murray S. Cohen(4) 2007 $160,292 $0 $0 $4,043(2) $105,000(5) $0 $7,384(6) $276,719
Chairman of the 2006 $202,587 $40,000 $0 $0 $93,604(5) $0 $11,969(6) $348,160
Board
- -------------------- ------ --------- --------- ----------- ---------- ------------- -------------- --------------- ----------
James Ivchenko 2007 $202,998 $0 $0 $4,043(2) $90,000(7) $32,000(8) $11,648(9) $340,689
President 2006 $194,796 $35,000 $0 $0 $79,203(7) $32,000(8) $11,969(9) $352,968
- -------------------- ------ --------- --------- ----------- ---------- ------------- -------------- --------------- ----------
(1) Mr. Amato has been employed by the Company since November 2004 and Chief
Executive Officer since January 2006.
(2) Represents the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with SFAS 123R.
(3) Represents a health insurance reimbursement.
(4) Since January 2006, Dr. Cohen has been Chief Scientist of the Company.
Prior to January 2006, Dr. Cohen was Chief Executive Officer of the
Company.
(5) Dr. Cohen received additional compensation of $105,000 and $93,604 in 2007
and 2006, respectively, based upon the Company's sales for fiscal 2006 and
2005, as determined under his employment contract. Does not include
additional compensation due to Dr. Cohen based upon the Company's sales for
fiscal 2007 as determined under his employment contract which will be paid
in fiscal 2008 which will be in the amount of $112,500.
(6) Represents a health insurance reimbursement of $6,634 and $8,969 in 2007
and 2006, respectively, and directors fee of $750 and $3,000 paid in 2007
and 2006, respectively, to Dr. Cohen.
(7) Mr. Ivchenko received additional compensation of $90,000 and $79,203 in
2007 and 2006, respectively, based upon the Company's sales for fiscal 2006
and 2005, as determined under his employment contract. Does not include
additional compensation due to Mr. Ivchenko based upon the Company's sales
for fiscal 2007 as determined under his employment contract which will be
paid in fiscal 2008 which will be in the amount of $97,500.
(8) Represents the amount paid to Mr. Ivchenko in fiscal 2007 and 2006 pursuant
to his deferred compensation agreement in which he will be paid $32,000 per
year for ten consecutive years commencing the first day of the month
following Mr. Ivchenko reaching the age of 65.
(9) Represents a health insurance reimbursement of $10,898 and $8,969 in 2007
and 2006, respectively, and directors fee of $750 and $3,000 paid in 2007
and 2006, respectively, to Mr. Ivchenko.
5
Equity Awards
The following table provides certain information concerning equity
awards held by the named executive officers as of February 28, 2007.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards Stock Awards
- ------------------------------------------------------------------------------------------------------------------------------------
Name No. of Number of Option Option Number of Equity
Securities Securities Exercise Expiration Shares or Incentive Plan
Underlying Underlying Price ($) Date Units of Stock Awards:
Unexercised Unexercised That Have Not Number of
Options (#) Options (#) Vested (#) Unearned
Exercisable Unexercisable Shares, Units
Or Other
Rights That
Have Not
Vested(#)
- ---------------------------- ---------------- --------------- ---------------- ---------------- --------------- --------------------
Greg Amato 100,000 -0- $0.51 11/1/2009 -0- -0-
- ---------------------------- ---------------- --------------- ---------------- ---------------- --------------- --------------------
Murray S. Cohen 10,000 10,000 $0.41 2/9/2014 -0- -0-
25,000 25,000 $0.54 6/20/2010 -0- -0-
- ---------------------------- ---------------- --------------- ---------------- ---------------- --------------- --------------------
James Ivchenko 10,000 10,000 $0.41 2/9/2014 -0- -0-
25,000 25,000 $0.54 6/20/2010 -0- -0-
- ---------------------------- ---------------- --------------- ---------------- ---------------- --------------- --------------------
Stock Option Plans
The Company previously adopted the 1986 Employees' Stock Option Plan
(the "1986 Plan"). As of April 1996, options may no longer be granted under the
1986 Plan. Under the terms of the 1986 Plan, options granted thereunder could be
designated as options which qualify for incentive stock option treatment under
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), or
options which do not so qualify. In December 1995, options to acquire up to
490,000 shares of the Company's Common Stock were granted under the 1986 Plan.
Such options had an expiration date of December 1, 2005. In fiscal 2002, options
to acquire 185,000 shares of the Company's Common Stock were exercised under the
1986 Plan. In prior years, options to acquire 270,000 shares of the Company's
Common Stock were exercised under the 1986 Plan. In addition, options to acquire
35,000 shares under the 1986 Plan have lapsed. As a result, there are no
outstanding options under the 1986 Plan.
In December 1998, the Company adopted the 1998 Stock Option Plan (the
"1998 Plan") for employees, officers, consultants or directors of the Company to
purchase up to 750,000 shares of Common Stock of the Company (the "1998 Plan
Option Pool"). In September 2001, the Board of Directors increased the size of
the 1998 Plan Option Pool to 1,500,000 shares. Options granted under the 1998
Plan shall be non-statutory stock options which do not meet the requirements of
Section 422 of the Code. Under the terms of the 1998 Plan, participants may
receive options to purchase Common Stock in such amounts and for such prices as
may be established by the Board of Directors or a committee appointed by the
Board to administer the 1998 Plan. Options exercised through February 28, 2007
total 686,000. Options cancelled or expired for all years totaled 240,000, which
under the 1998 Plan are available for future grant, and as of February 28, 2007,
there are options outstanding to acquire 316,000 shares, leaving 498,000 options
available for future grant.
Compensation of Directors
Since fiscal 2002, the Company has paid directors $750 for each board
meeting attended. Commencing in fiscal 2007, only non-employee directors are
paid such amount. In addition, commencing in fiscal 2007, non-employee directors
are also paid $750 for each committee meeting attended. Directors have always
been and will continue to be reimbursed for reasonable expenses incurred on
behalf of the Company.
The following table provides certain summary information concerning the
compensation paid to directors, other than Murray S. Cohen (our Chairman of the
Board) and James Ivchenko (our President), during fiscal 2007. All compensation
paid to Dr. Cohen and Mr. Ivchenko is set forth in the table under "Executive
Compensation".
6
Director Compensation
- ----------------------------------------------------------------------------------------------------------------------
Name Fees Stock Option All Other Total ($)
Earned or Awards (S) Awards ($)(1) Compensation
Paid in ($)
Cash ($)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Morris Dunkel $2,250 -0- $3,038 -0- $5,288
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
James R. Torpey, Jr. $4,500 -0- $2,010 -0- $6,510
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Herve A. Meillat $4,500 -0- -0- -0- $4,500
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
(1) Represents the dollar amount recognized in fiscal 2007 for financial
reporting purposes of stock options awarded computed in accordance with
Financial Accounting Standards 123R.
Deferred Compensation/Employment Contracts and Change in Control Arrangements
Effective as of November 1, 2004, the Company entered into an
employment agreement with Greg Amato. Such agreement provided that Mr. Amato
would be employed "at-will" and that such employment can be terminated by either
party at any time without reason or cause provided at least six months prior
written notice is given. The employment agreement also provides that Mr. Amato
would receive bonus compensation for 2004 based upon a formula and would be
entitled to receive, following the fiscal year ending February 28, 2006, bonus
compensation equal to 10% of the increase in the Company's net income for the
fiscal year ending February 28, 2006 compared to February 28, 2005. For
subsequent fiscal years, Mr. Amato shall be entitled to receive annual cash
bonuses as the Compensation Committee shall determine with performance
objectives determined prior to the start of the applicable year. Pursuant to the
employment agreement, the Company also agreed to grant Mr. Amato an option to
purchase 100,000 shares of Common Stock of the Company at an exercise price
equal to the fair market value of the Company's Common Stock on November 1, 2004
which option shall be exercisable only after the completion of Mr. Amato's
second year of employment under his employment agreement. In addition, pursuant
to the employment agreement, the Company agreed to grant to Mr. Amato, one year
from the date of his employment agreement provided he is then employed by the
Company, 100,000 shares of restricted Common Stock of the Company.
Pursuant to a deferred compensation agreement, as amended, entered into
with James Ivchenko, President of the Company, the Company has agreed to pay Mr.
Ivchenko $32,000 per year for ten consecutive years commencing the first day of
the month following Mr. Ivchenko reaching the age of 65. To date, three payments
of $32,000 each have been paid to Mr. Ivchenko.
Effective as of March 1, 1999, the Company entered into a ten year
employment agreement with Mr. Ivchenko. Pursuant thereto, Mr. Ivchenko shall be
paid an annual salary of not less than the greater of his annual base salary in
effect immediately prior to the effective date of the agreement or any
subsequently established annual base salary. In addition thereto, Mr. Ivchenko
shall receive as additional compensation a certain percentage (as set forth
below) of the Company's annual gross sales up to but not exceeding annual gross
sales of $3 million. Such percentage starts at 1.50% for the fiscal year ended
February 29, 2000 and increases by 0.25% per year during the term of the
agreement. In the event of death or disability, the agreement provides that Mr.
Ivchenko or his estate will receive 100% of his annual salary and additional
compensation as described above for the fiscal year during which he died or
became disabled, and 50% of his annual salary and annual additional compensation
which he would have received (if not for his death or disability) for the
remainder of the ten year term.
The obligations to Mr. Ivchenko under his deferred compensation
agreement are partially funded with a life insurance policy owned by the
Company. Such funds, however, are not legally restricted and are considered part
of the Company's general assets subject to claims of creditors. In addition,
amounts due to Mr. Ivchenko under his employment agreement are unfunded.
Accordingly, there can be no assurance that any such amounts due to Mr. Ivchenko
will be paid.
Effective as of March 1, 1999, the Company also entered into a ten year
employment agreement with Murray S. Cohen, Chairman of the Board of the Company.
Pursuant thereto, Dr. Cohen shall be paid an annual salary of not less than the
greater of his annual base salary in effect immediately prior to the effective
date of the agreement or any subsequently established annual base salary. In
addition thereto, Dr. Cohen shall receive as additional compensation a certain
percentage (as set forth below) of the Company's annual gross sales up to but
not exceeding annual gross sales of $3 million. Such percentage starts at 2.00%
for the fiscal year ended February 29, 2000 and increases by 0.25% per year
during the term of the agreement. Pursuant to an amendment to the employment
7
agreement entered into on March 30, 2006, Dr. Cohen shall have the option to
partially retire pursuant to which Dr. Cohen will devote approximately 50% of
his time to the Company in which event he will be paid 50% of his annual base
salary and 100% of the additional compensation for the remainder of the term. He
shall also have the option to either (i) substantially retire pursuant to which
Dr. Cohen will devote approximately 25% of his time to the Company in which
event he will be paid 25% of his annual base salary and 100% of the additional
compensation for the remainder of the term, or (ii) fully retire in which event
he will be paid no annual base salary and 50% of the additional compensation for
the remainder of the term. In the event of death or disability, the amendment
provides that Dr. Cohen or his estate will receive 100% of his annual salary and
additional compensation as described above for the fiscal year during which he
died or became disabled, and 50% of his annual salary and annual additional
compensation which he would have received (if not for his death or disability)
for the remainder of the ten year term, provided at the time of death or
disability Dr. Cohen was a full-time employee. If at the time of death or
disability Dr. Cohen was fully, partially or substantially retired, then other
percentage rates are provided in the amendment for the payment of the annual
salary and annual additional compensation to Dr. Cohen or his estate for the
balance of the term.
The Company had previously entered into a deferred compensation
agreement in June 1998 with Dr. Cohen which provided for the payment of certain
funds to Dr. Cohen for a period of ten years beginning two weeks after the date
of his retirement. Such agreement was terminated in connection with the
execution of the employment agreement with Dr. Cohen. In addition to the
foregoing, Dr. Cohen will be entitled to receive $79,041 upon his retirement in
connection with a deferred compensation agreement entered into in January 1996
which was terminated in June 1998. Such amount will be paid to Dr. Cohen upon
retirement either in equal consecutive monthly payments for a period not
exceeding 60 months or a single payment which will be at the discretion of the
Company.
The obligation to pay Dr. Cohen $79,041 under his deferred compensation
agreement is unfunded. In addition, amounts due to Dr. Cohen under his
employment agreement are also unfunded. Accordingly, there can be no assurance
that any such amounts due to Dr. Cohen will be paid.
The Company does not have any termination or change in control
arrangements with any of its named executive officers.
Transactions with Management and Others
See "Deferred Compensation/Employment Contracts and Change in Control
Arrangements" above for information on the transactions described therein.
Material Proceedings
There are no material proceedings to which any director, officer or
affiliate of the Company, any owner of record or beneficially of more than five
percent of any class of voting securities of the Company, or any associate of
any such director, officer, affiliate of the Company, or security holder is a
party adverse to the Company or has a material interest adverse to the Company.
Director Independence
We have determined that three of our five directors are independent
directors. Messrs. Dunkel, Torpey and Meillat are our independent directors. We
have determined their independence using the definition of independence set
forth in NASD Rule 4200.
Additional Information
During the fiscal year ended February 28, 2007, the Board of Directors
of the Company held four formal meetings. In addition, the Board of Directors
took action by unanimous written consent and met informally on other occasions
during the period. Each of the incumbent directors was in attendance at all
meetings of the Board of Directors during fiscal 2007, except that Morris Dunkel
was unable to attend two of the four meetings.
8
The Compensation Committee of the Board of Directors held two formal
meeting during the last fiscal year and met informally on other occasions during
the period. Since March 2006, the Compensation Committee consists of Messrs.
Dunkel, Torpey and Meillat, each a non-employee director of the Company. The
Compensation Committee assists the Board of Directors in discharging its
responsibilities relating to the compensation of the Company's directors and
executive officers, including approving individual executive officer
compensation, reviewing and recommending to the Board compensation plans,
policies and benefit programs for employees generally, and performing such other
duties relating to the Committee's purpose as the Board shall from time to time
prescribe. Each of the incumbent directors serving on the Compensation Committee
was in attendance at all meetings of the Compensation Committee during fiscal
2007, except that Morris Dunkel was unable to attend one of the two meetings.
The Company does not have a standing audit or nominating committee or
any committee performing similar functions. These functions are fulfilled by the
entire Board of Directors which we believe is adequate based on the present size
of the Company and the relatively small size of the Board.
The Board considers recommendations for director nominees from a wide
variety of sources, including business contacts and members of management. The
Board will also consider stockholder recommendations for director nominees that
are properly received in accordance with applicable rules and regulations of the
Securities and Exchange Commission. The Board believes that all of its directors
should have the highest personal integrity and have a record of exceptional
ability and judgment. The Board also believes that its directors should ideally
reflect a mix of experience and other qualifications. There is no firm
requirement of minimum qualifications or skills that candidates must possess.
The Board evaluates director candidates based on a number of qualifications,
including but not limited to their judgment, leadership ability, expertise in
the industry, experience developing and analyzing business strategies, and, for
incumbent directors, his or her past performance. The Board initially evaluates
a prospective nominee on the basis of his or her resume and other background
information that has been made available to them. The Board will not evaluate
director candidates recommended by stockholders differently than director
candidates recommended from other sources. A member of the Board will contact
for further review those candidates who they believes are qualified, who may
fulfill a specific Board need and who would otherwise best make a contribution
to the Board.
INDEPENDENT AUDITORS
The Company has selected Weismann Associates LLC as its principal
independent accountants for fiscal 2008. It is expected that a representative of
Weismann Associates LLC will be present at the Annual Meeting, with the
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions. Weismann Associates LLC were the
principal independent accountants for the Company during fiscal 2007.
The following is a summary of the fees billed to us by the principal
accountants to the Company for professional services rendered for the fiscal
years ended February 28, 2007 and February 28, 2006:
Fiscal 2007 Fiscal 2006
Fee Category Fees Fees
Audit Fees $48,795 $46,200
Audit Related Fees $0 $0
Tax Fees $3,000 $3,200
All Other Fees $0 $0
Total Fees $51,795 $49,400
Audit Fees. Consists of fees billed for professional services rendered
for the audit of our financial statements and review of interim consolidated
financial statements included in quarterly reports and services that are
normally provided by the principal accountants in connection with statutory and
regulatory filings or engagements.
9
Audit Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under "Audit
Fees".
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include preparation of
federal and state income tax returns.
All Other Fees. Consists of fees for product and services other than
the services reported above.
Pre-Approval Policies and Procedures
Prior to engaging its accountants to perform a particular service, the
Company's Board of Directors obtains an estimate for the service to be
performed. All of the services described above were approved by the Board of
Directors in accordance with its procedures.
MISCELLANEOUS INFORMATION
Stockholders' Proposals
Any stockholder who wishes to present a proposal for action at the next
Annual Meeting of Stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by management must notify
management of the Company so that such notice is received by management at its
principal executive offices at 358-364 Adams Street, Newark, New Jersey 07105 by
February 26, 2008 and is in such form as is required under the rules and
regulations promulgated by the Securities and Exchange Commission.
Stockholder Communications with the Board of Directors
Historically, we have not adopted a formal process for stockholder
communications with the Board of Directors. Nevertheless, every effort is made
to ensure that the Board or individual directors, as applicable, hear the views
of stockholders and that appropriate responses are provided to stockholders in a
timely manner. Any matter intended for the Board of Directors, or for any
individual member or members of the Board, should be directed to our Secretary,
at the Company's address with a request to forward the same to the intended
recipient.
Director Attendance Policy
The Company does not have a policy with regard to board members'
attendance at annual meetings of stockholders. Two of our directors attended the
prior year's annual meeting of stockholders which was held in July 2006.
Other Business
The Board of Directors knows of no other business to be presented at
the Annual Meeting but if other matters properly do come before the meeting, it
is intended that the persons named in the accompanying proxy will vote the
shares for which they hold proxies in accordance with their judgment.
Annual Report of Form 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
February 28, 2007 is being delivered to the Company's stockholders with this
Proxy Statement. Such report is not to be considered part of the soliciting
material.
By Order of the Board of Directors,
Murray S. Cohen, Ph.D.,
Chairman
Dated: July 10, 2007
Newark, New Jersey
10
APPENDIX
FORM OF PROXY CARD
PROXY
EPOLIN, INC.
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 16, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Murray S. Cohen and James Ivchenko, and
each of them, with power of substitution as proxies for the undersigned to act
and vote at the Annual Meeting of Stockholders of Epolin, Inc. (the "Company")
to be held on August 16, 2007, at 3:00 p.m., local time, at the principal
executive offices of the Company, 358-364 Adams Street, Newark, New Jersey
07105, and any adjournments thereof for the following purposes:
1. Election of Directors - Nominees: Murray S. Cohen, James
Ivchenko, Morris Dunkel, James R. Torpey, Jr. and Herve A.
Meillat.
[ ] FOR [ ] FOR ALL EXCEPT [ ] WITHHOLD
INSTRUCTION: To withhold your vote for any nominee(s), mark "For All
Except" and write that nominee's name on the line below.
_______________________________________________________________________
2. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE SPECIFIED, THE
SHARES WILL BE VOTED FOR PROPOSAL 1.
Dated: ______________________________, 2007
____________________________________________
Signature of Stockholder
____________________________________________
NOTE: Please sign your name exactly as it appears on this Proxy. Jointly held
shares require only one signature. If you are signing this Proxy as an attorney,
administrator, agent, corporation, officer, executor, trustee or guardian, etc.,
please add your full title to your signature.
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN
ALL CARDS IN THE ACCOMPANYING ENVELOPE.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY TODAY