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 Rule 14a-11(c) or Rule 14a-12
NOCOPI TECHNOLOGIES, INC.
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(Name of Registrant as Specified in its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOCOPI TECHNOLOGIES, INC.
230 Sugartown Road
Wayne, Pennsylvania 19087
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders (the "Meeting") of Nocopi
Technologies, Inc., a Maryland corporation (the "Company") will be held at the
Desmond Great Valley Hotel and Conference Center, One Liberty Boulevard,
Malvern, Pennsylvania 19355 at 9:30 a.m. Eastern Daylight Savings Time on June
9, 1997 for the following purposes:
1. To elect 6 directors for a one year term to expire at the next
annual meeting of shareholders of the Company;
2. To approve the selection of Coopers & Lybrand L.L.P. as
independent auditors; and
3. To take action upon any other matters which may properly come
before the meeting.
Shareholders of record at the close of business on April 14, 1997 are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
It is important that your shares be represented at the Meeting. I urge
you to sign, date and promptly return the enclosed proxy card in the enclosed
postage paid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Joel A. Pinsky,
Secretary
April 30, 1997
NOCOPI TECHNOLOGIES, INC.
230 Sugartown Road
Wayne, Pennsylvania 19087
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1997
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Nocopi Technologies, Inc., a Maryland corporation
(the "Company") of proxies to be voted at the Company's Annual Meeting of
Shareholders (the "Meeting") to be held on June 9, 1997 at the Desmond Great
Valley Hotel and Conference Center, One Liberty Boulevard, Malvern, Pennsylvania
19355 at 9:30 a.m., Eastern Daylight Savings Time, and at any adjournment
thereof. It is anticipated that this Proxy Statement and the accompanying proxy
will be mailed to the Company's shareholders on or about April 30, 1997.
If the enclosed proxy is properly executed and returned, the shares
represented by the proxy will be voted at the Meeting. If a shareholder
indicates in his proxy a choice with respect to any matter to be acted upon, his
shares will be voted in accordance with that shareholder's choice. If no choice
is indicated, the shares will be voted "FOR" the election of the nominees
identified herein to the Board of Directors, "FOR" ratification of the
appointment of the firm of Coopers & Lybrand L.L.P., Certified Public
Accountants, to audit the accounts and records of the Company for the fiscal
year ending December 31, 1997, and in the discretion of the proxies, "FOR" or
"AGAINST" any other proposals which may be submitted at the Meeting. A
shareholder giving a proxy may revoke it at any time by giving written notice to
the Secretary of the Company at any time before the proxy is voted, by executing
a proxy bearing a later date, or by attending the Meeting and voting in person.
PERSONS MAKING THE SOLICITATION
This Proxy Statement solicits proxies on behalf of the Board of
Directors of the Company. The total expense of such solicitation, including the
cost of preparing, assembling and mailing the proxy materials to shareholders,
will be borne by the Company. It is anticipated that solicitations of proxies
for the Meeting will be made only by use of the mails; however, the Company may
use the services of its directors, officers, and employees to solicit proxies
personally or by telephone, without additional salary or compensation to them.
Brokerage houses, custodians, nominees, and fiduciaries will be required to
forward the proxy soliciting
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materials to the beneficial owners of the Company's shares held of record by
such persons and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
SHARES OUTSTANDING AND VOTING RIGHTS
Only shareholders of record at the close of business on April 14, 1997,
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
A list of shareholders entitled to notice of and to vote at the Meeting
will be made available during regular business hours at the offices of the
Company, 230 Sugartown Road, Wayne, Pennsylvania 19087 from May 1, 1997 through
June 9, 1997, for inspection by any shareholder for any purpose germane to the
Meeting.
Shareholder Voting
All voting rights with respect to the election of six (6) directors of
the Company (Proposal No. 1 below) and with respect to all other proposals
coming before the Meeting are vested exclusively in the holders of the Company's
$0.01 par value voting common stock (the "Common Stock"), with each share
entitled to one vote. Cumulative voting in the election of directors is not
allowed. On April 14, 1997, the Company had 14,080,654 shares of Common Stock
outstanding.
One-third of the Company's outstanding Common Stock represented in
person or by proxy shall constitute a quorum at the Meeting. The nominees
receiving a plurality of votes cast at the Meeting, assuming a quorum is
present, will be elected as directors. The affirmative vote of a majority of the
votes cast, provided a quorum is present, is necessary to ratify the appointment
of Coopers & Lybrand L.L.P., Certified Public Accountants, to audit the accounts
and records of the Company for the fiscal year ending December 31, 1997. To the
Company's knowledge, no single person or entity, and no group of persons,
controls sufficient votes to determine the outcome of any of the proposals being
voted upon by the shareholders.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 14, 1997, the stock
ownership of each person known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock.
Common Stock
-----------------------------------
Number
of Shares
Name and Beneficially Percentage
Address of Beneficial Owner Owned of Class
--------------------------- ------------ -----------
Ray B. Mundt(1) 2,100,998 14.7%
230 Sugartown Road
Wayne, PA 19087
Norman A. Gardner(2) 2,100,998 14.7%
230 Sugartown Road
Wayne, PA 19087
Account Management Corp.(3) 993,600 7.1%
2 Newbury Street
Boston, MA 02116
- -----------------------------
(1) Mr. Mundt is the record owner of 1,165,198 shares of the Company's Common
Stock. In addition, 730,000 shares of Common Stock beneficially owned by
Mr. Gardner and options to purchase 243,000 shares of Common Stock granted
to Mr. Gardner are subject to a pooling agreement between Messrs. Mundt and
Gardner. Of such options, 205,800 are presently exercisable. For purposes
of beneficial ownership, these shares and the presently exercisable options
have been attributed to Mr. Mundt. Does not include options to purchase
37,200 shares held by Mr. Gardner subject to the aforementioned pooling
agreement, which are not presently exercisable. Also does not include
86,000 shares of Common Stock owned by various persons related to Mr.
Mundt, as to which he disclaims beneficial ownership.
(2 Mr. Gardner directly holds 10,000 shares of Common Stock and indirectly
holds beneficially an additional 720,000 shares of Common Stock by virtue
of his ownership of 100% of the issued and outstanding common stock of
A.Z.O.I. International, Inc. For purposes of beneficial ownership, all
shares of the Company's Common Stock held A.Z.O.I. International, Inc. have
been attributed to Mr. Gardner. In addition, 1,165,198 shares owned by Mr.
Mundt are subject to a pooling agreement between Messrs. Mundt and Gardner.
For purposes of beneficial ownership, these shares have been attributed to
Mr. Gardner. Includes presently exercisable options to purchase 205,800
shares of the Company. Does not include options to purchase 37,200 shares
of Common Stock, which options are not presently exercisable.
(3) According to the Schedule 13-G filed by Account Management Corp., it holds
these shares on behalf of investment advisory clients and possesses
dispositive power but not voting power with respect thereto.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 14, 1997, the stock
ownership of each director, director nominee and Named Executive (as set forth
under the heading "Executive Compensation") individually, and of all directors
and executive officers of the Company as a group.
Common Stock
-----------------------------
Number
of Shares
Beneficially Percentage
Name of Beneficial Owner Owned of Class(1)
------------------------ ------------ -----------
Edward N. Patrone - 0 - *
Norman A. Gardner(2) 2,100,998 14.7%
William F. Drake, Jr. 89,998 *
Dr. Arshavir Gundjian(3) 155,750 1.1%
Ray B. Mundt(4) 2,100,998 14.7%
Joel A. Pinsky 6,000 *
Dr. Frank Cistone(5) 31,500 *
William H. Watson(6) 57,000 *
All Executive Officers and Directors as a Group 2,511,696 17.3%
(9 individuals)(7)
- -----------------------------
* Less than 1.0%.
(1) Where the Number of Shares Beneficially Owned (reported in the preceding
column) includes shares which may be purchased upon the exercise of
outstanding stock options which are or within 60 days will become
exercisable ("presently exercisable options") the percentage of class
reported in this column has been calculated assuming the exercise of such
presently exercisable options.
(2) Mr. Gardner directly holds 10,000 shares and indirectly holds beneficially
720,000 shares of Common Stock by virtue of his ownership of 100% of the
issued and outstanding common stock of A.Z.O.I. International, Inc. For
purposes of beneficial ownership, all shares of the Company's Common Stock
held A.Z.O.I. International, Inc. have been attributed to Mr. Gardner. In
addition, 1,165,198 shares owned by Mr. Mundt are subject to a pooling
agreement between Messrs. Mundt and Gardner. For purposes of beneficial
ownership, these shares have been attributed to Mr. Gardner. Includes
presently exercisable options to purchase 205,800
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shares of the Company. Does not include options to purchase 37,200 shares
of the Company which options are not presently exercisable.
(3) Includes presently exercisable stock options to purchase 73,250 shares.
(4) Mr. Mundt is the record and beneficial owner of 1,165,198 shares of the
Company's Common Stock. In addition, 935,800 shares of Common Stock
beneficially owned by Mr. Gardner (including shares which may be acquired
upon the exercise of presently exercisable stock options) are subject to a
pooling agreement entered into by Messrs. Mundt and Gardner and are deemed
to be beneficially owned by each of them. Does not include 86,000 shares of
Common Stock owned by relatives of Mr. Mundt.
(5) Represents presently exercisable stock options to purchase 31,500 shares of
Common Stock.
(6) Represents presently exercisable stock options to purchase 57,000 shares.
Mr. Watson resigned as an executive officer of the Company on September 30,
1996.
(7) Includes shares of Common Stock which may be acquired upon the exercise of
options by Messrs. Cistone, Gardner, Gundjian and Watson in the amounts set
forth above for such individuals, and 21,200 shares and 59,250 shares which
may be acquired upon the exercise of options held by Mr. Klumpp and Mr.
Lutterschmidt, respectively.
Except as stated herein, there are no arrangements known to the Company which
may result in a change in control of the Company and each shareholder has sole
voting and investment power with respect to the Company's common shares included
in the above table.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
A total of six directors will be elected at the Meeting by the holders
of the Company's Common Stock. The proxies will not be voted for a greater
number of persons than the number of nominees named herein. The persons named as
"Proxies" in the enclosed form of proxy will vote the shares represented by all
valid returned proxies in accordance with the specifications of the shareholders
returning such proxies. If no choice has been specified by a shareholder, the
shares will be voted "FOR" the nominees. If at the time of the Meeting any of
the nominees named below should be unable or unwilling to serve, which event is
not expected to occur, the discretionary authority provided in the proxy will be
exercised to vote for such substitute nominee or nominees, if any, as shall be
designated by the Board of Directors.
Nominees
Management of the Company recommends the election of the six director
nominees set forth below, to hold office until the next annual meeting of
shareholders and until their successors are elected and qualified or until their
earlier death, resignation, or removal. Management has nominated the following
persons for election as directors: Edward N. Patrone; Norman A. Gardner; William
F. Drake, Jr.; Dr. Arshavir Gundjian; Ray B. Mundt; and Joel A. Pinsky.
DIRECTORS, NOMINEES FOR DIRECTORS AND OFFICERS
Directors of the Company hold office until the next annual meeting of
the shareholders and until their successors have been elected and qualified. The
officers of the Company are appointed by and serve at the pleasure of the Board
of Directors.
The directors, nominees for directors and officers of the Company,
their ages, present positions with the Company, and a summary of their business
experience are set forth below.
Edward N. Patrone, 62, has served as a director since 1996 and as
Chairman of the Board since February 1997. Mr. Patrone acted as the president of
Paper Corporation of America, a division of Alco Standard Corporation, until his
retirement in May 1991. Since retiring, Mr. Patrone has been active as a private
consultant to business. Mr. Patrone also serves as a director of CompuCom
Systems Corp. and PrimeSource Corp.
Norman A. Gardner, 54, Founder, President, Chief Executive Officer and
a director of the Company. He has been the President and a director of the
Company since 1985, and served as Treasurer from 1991 to 1993.
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William F. Drake, Jr., 65, a director of the Company since 1992. Mr.
Drake has served as a director and Vice Chairman of Ikon Office Solutions, Inc.
(formerly Alco Standard Corporation) for more than five years and, since October
1996, as its General Counsel. From 1988 until September 1996, Mr. Drake served
as a partner in the law firm of Montgomery, McCracken, Walker & Rhoads, LLP, and
he continues of counsel to that firm.
Dr. Arshavir Gundjian, 61, Senior Vice President, Technology &
Technical Sales Worldwide (since 1985) and a director (since 1991) of the
Company. Dr. Gundjian has held a teaching and research position in the
specialized areas of electronic semi-conductors and laser optics at McGill
University in Montreal, Quebec since 1965, and has published more that 25 papers
in these areas. He was Chairman of Graduate Studies of the McGill University
Department of Electrical Engineering until 1989. Dr. Gundjian is also Chairman
of the International Electro-Technical Commission Canadian Subcommittee on laser
equipment. He is a member of the Optical Society of America and the New York
Academy of Sciences.
Ray B. Mundt, 68, has served as a director of the Company since 1989,
and as Chairman of the Board of Directors from 1990 until February 1997. Mr.
Mundt served as Chairman of the Board of Directors (from 1986 to 1995) and as
Chief Executive Officer (from 1986 to 1993) of Alco Standard Corporation. Since
July 1996, Mr. Mundt has served as Chairman and Chief Executive Officer of
Unisource Worldwide, Inc., formerly a unit of Alco Standard Corporation. Mr.
Mundt is also currently a director of Liberty Mutual Insurance Company, Liberty
Mutual Fire Company and Liberty Mutual Finance Company.
Joel A. Pinsky, 61, Secretary and General Counsel of the Company, has
served as a director since 1992. Mr. Pinsky has engaged in the practice of law
as a partner with the law firm of Gross, Pinsky (barristers and solicitors) for
more than thirty years.
Rudolph A. Lutterschmidt, 50, Vice President and Chief Financial
Officer (since 1994) of the Company. Mr. Lutterschmidt became Vice President and
Controller of the Company in April 1992 after having served as the Company's
Controller on a consulting basis from July 1991 to March 1992. He is a member of
the Financial Executives Institute and the Institute of Management Accountants
and is a Certified Management Accountant.
Dr. Frank Cistone, 43, Vice President, Technology & Operations. Dr.
Cistone joined the Company in September 1995 and was appointed Vice President,
Technology and Operations in March 1996. From 1991 through September 1995, he
was president of Pantek, USA, responsible for technological, engineering and
strategic consulting services to the fluoropolymers industry. He is a longtime
member of the American Chemical Society.
Jack J. Klumpp, 43, Vice President, Security Paper Group. Mr. Klumpp
joined the Company in March 1993 and became Vice President, Security Paper Group
in March 1996. From September 1988 until he joined the Company, he served the
James River Paper Company
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as product manager for its tag and label product line and director of human
resources for that division's production facility.
Mr. Klumpp is the son-in-law of Mr. Mundt. Except for this
relationship, there are no family relationships among any of the directors or
executive officers of the Company; nor are there any arrangements or
understandings between any director or director nominee and any other person
pursuant to which such director or director nominee was or is to be selected as
a director or nominee.
The Board of Directors has the following standing committees:
1. An Executive Committee composed of Messrs. Mundt, Drake, Gardner and
Pinsky, which has the authority to act for the Board in all matters arising
between regular or special meetings of the Board. The Executive Committee met
three times during the year ended December 31, 1996.
2. An Audit Committee composed of Messrs. Patrone and Drake, which
selects, subject to Board approval (and, if the Board so determines, subject to
shareholder approval), the independent accountants to audit the Company's books
and records, and considers and acts upon accounting matters as they arise. The
Audit Committee met once during the year ended December 31, 1996.
3. A Compensation Committee, composed of Messrs. Pinsky and Drake. The
Compensation Committee administers the Company's stock option plans and
recommends compensation policies to the Board of Directors. The Compensation
Committee met two times during the year ended December 31, 1996.
4. A Nominating Committee, composed of Messrs. Mundt, Gardner, Drake
and Pinsky. The Nominating Committee recommends nominees for election as
director to the Board of Directors. The Nominating Committee met once during the
year ended December 31, 1996.
The Board of Directors met four times during the year ended December
31, 1996. During 1996, no director attended fewer than 75% of the aggregate of
all meetings of the Board of Directors and all meetings of each committee on
which such director serves.
-8-
PROPOSAL NO. 2
RATIFICATION OF AUDITORS
The firm of Coopers & Lybrand L.L.P., Certified Public Accountants, has
audited the Financial Statements of the Company as at December 31, 1996 and for
the year then ended. The Board of Directors has appointed such firm to audit the
accounts and records of the Company for the fiscal year ended December 31, 1997.
It is proposed that the appointment of Coopers & Lybrand L.L.P. be submitted to
the shareholders for ratification. Neither such firm nor any of its members or
any of their associates has or has had any financial interest in the Company,
direct or indirect, or any relationship with the Company other than in
connection with their duties as auditors and accountants.
Shareholder ratification of this appointment is not required.
Management has submitted this matter to the Shareholders because it believes the
shareholders' views on the matter should be considered and if the proposal is
not approved, management may reconsider the appointment for the fiscal year
ending December 31, 1997. The Board of Directors recommends that the
shareholders vote "FOR" this proposal.
It is anticipated that a representative of Coopers & Lybrand L.L.P.
will be present at the Meeting. Such representative will be given the
opportunity to make a statement should he so desire and will be available to
answer appropriate questions.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
1996, 1995 and 1994 earned by or paid to Norman Gardner the Company's Chief
Executive Officer, and the only other executive officers whose total annual
salary and bonus for 1996 exceeded $100,000 (the "Named Executives").
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
-------------------------------------- -------------------------------------
Awards Payouts
------ -------
Name Other Annual Restricted LTIP All Other
and Compensa- Stock Options/ Payouts Compensa-
Position Year Salary($) Bonus($) tion($) Awards ($) SARs(#) ($) tion($)
-------- ---- --------- -------- ------- ---------- -------- ----- -------
Norman A. 1996 $195,000 - 13,458(1) - - - -
Gardner, 1995 152,625 26,666 14,019(1) - 23,000 - -
President & 1994 160,875 - 14,775(1) - 180,000 - -
Chief Executive
Officer
Dr. Arshavir 1996 165,000 - 21,500(3) - 20,000 - -
Gundjian, Senior 1995 138,750 26,666 9,504(1) - 33,250 - -
Vice President, 1994 146,166 15,000 11,096(1) - 20,000 - -
Technology &
Technical Sales
Worldwide
William H. 1996 133,872(2) - - - - -
Watson, III, 1995 129,500 26,666 6,000(1) - 21,500 - -
Vice President, 1994 85,346 - 3,500(1) - 60,000 - -
Sales &
Marketing
Dr. Frank 1996 100,000 - 4,800(1) - - - -
Cistone, Vice 1995 30,769 - 1,600(1) - 31,500 - -
President, 1994 - - - - - - -
Technology &
Operations
- -----------------------------
(1) Reimbursement of automobile expense.
(2) Includes $28,333 in consulting fees paid to a firm controlled by Mr. Watson
for consulting services rendered following his resignation on September 30,
1996.
(3) Reimbursement of automobile expenses and expense allowances related to
extended foreign travel.
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The following table furnishes information concerning stock options
granted during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
- --------------------------------------------------------------------------------------------------- -----------------------------
% of Total
Securities Options/SARs
Underlying Granted to
Options/ All Employees Exercise of Base
Name SARs Granted (#) in Fiscal Year Price ($/Sh.) Expiration Date 5% ($)(1) 10% ($)(1)
---- ---------------- -------------- --------------- --------------- --------- ----------
====================================================================================================================================
Dr. Arshavir Gundjian 20,000 48.5 3.10 5/2001 17,100 37,900
- -----------------------------
(1) As required by the rules of the Securities and Exchange Commission, the
dollar amounts reflected in these columns represent the hypothetical gain that
would exist for the options based on assumed 5% and 10% annual compounded rates
of stock price appreciation over the full option term. These assumed rates would
result in a Common Stock price on May 8, 2001, the date the options first listed
above expire, of $3.96 and $4.99 respectively. If these price appreciation
assumptions are applied to all of the Company's outstanding Common Stock on the
grant date, such Common Stock would appreciate in the aggregate by approximately
$12 million and $27 million, respectively, over the same term. These prescribed
rates are not intended to forecast possible future appreciation, if any, of the
Common Stock.
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The following table sets forth the aggregate number of shares of Common
Stock subject to options held by the Named Executives at December 31, 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Value of
Number of Securities Unexercised
Underlying Unexer- In-the-Money
cized Options at Options at
Fiscal Year End Fiscal Year End
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized Unexercisable Unexercisable
---- -------------- -------- -------------------- -------------
Norman Gardner - - 170,100/72,900 - / -
Arshavir Gundjian - - 73,250/ - - / -
William H. Watson, III - - 47,000/20,000 - / -
Frank Cistone - - 31,500/ - - / -
Employment Contracts
The Company has an employment agreement with Dr. Arshavir Gundjian
pursuant to which the Company has employed Dr. Gundjian through December 31,
1998, with two one-year renewal terms at the option of the Company. Should the
Company choose not to exercise its option to reemploy Dr. Gundjian at the end of
the initial term or the initial renewal term, the Company has agreed to engage
Dr. Gundjian as a consultant on an annual basis at $82,500 per year. The
agreement provides for a base salary of $165,000 per annum during Dr. Gundjian's
employment, a cash bonus of up to $50,000 payable in respect of each year of his
employment (or $25,000 in respect of each year of his consultancy, should the
Company not exercise its option to reemploy Dr. Gundjian) if certain financial
goals of the Company are met, and additional bonuses if additional financial
goals are achieved. In addition, the Company has agreed to pay Dr. Gundjian's
lodging and automobile expenses, as well as the cost of weekly travel from the
Company's headquarters in Wayne, Pennsylvania to Dr. Gundjian's home in
Montreal, Quebec.
The agreement may be terminated by the Company for legal cause, or upon
Dr. Gundjian's death or disability. In the event that Dr. Gundjian's employment
is terminated without cause as a result of his disability or death, Dr. Gundjian
(or his estate) is entitled to receive the balance of the base salary payable to
him through the remaining term of the agreement.
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The agreement confirms the Company's ownership of all intellectual
property developed during Dr. Gundjian's employment, and contains his
undertaking not to compete with the Company for a period of three years from the
termination of his employment.
Director Compensation
The outside directors are each entitled to receive fees of $500 per
meeting for their attendance at Board of Directors meetings. Effective January
1, 1991, the Company's Board of Directors informally agreed to suspend the
payment of directors' fees pending improvement in the Company's cash flow. All
directors have been and will be reimbursed for reasonable expenses incurred in
connection with attendance at Board of Directors meetings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In formulating compensation policy, the Compensation Committee
continues to consider both the size and nature of the Company's current
activities and the Company's future prospects. In light of the Company's
relatively modest but growing revenues and its technologies and products which
are believed to have significant future potential, the policies of the
Compensation Committee are:
To provide cash compensation for executive officers, principally in the
form of salary, which is considered adequate but not excessive in light of the
Company's limited resources. In addition, cash bonuses are paid upon attainment
of specific goals.
To provide incentive compensation, principally in the form of stock
options, the value of which to the executive officers will reflect the degree to
which future success is realized by the Company. In the case of Mr. Gardner, the
Company has utilized and may in the future utilize stock option-based
compensation as a partial substitute for cash compensation.
The compensation of Mr. Gardner in his capacity as chief executive
officer is determined from time to time by the Compensation Committee. In the
view of the Compensation Committee, the chief executive officer is primarily
responsible for the development and implementation of corporate strategy. During
1995, the Company, under Mr. Gardner's guidance, continued successfully to
implement a business strategy emphasizing the development of revenues from the
licensing of its technologies, augmented, in certain cases, by revenues from the
sale of products. Mr. Gardner had the primary responsibility for implementing
this strategy in 1995, and his success in this regard was reflected in Mr.
Gardner's salary for 1996. The Committee believes that Mr. Gardner has continued
to provide the Company with commendable leadership in this regard. During 1996,
the Company's revenues grew more slowly than in the prior year, and operating
results fell below expectations. Recognizing this, the Company and Mr. Gardner
have agreed that his salary shall be temporarily
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reduced pending improvement in the Company's financial performance. While the
Committee believes that this temporary reduction is appropriate in view of the
Company's current financial circumstances, it does not see such reduction as
mandated by Mr. Gardner's individual performance.
As described in the text and tables set forth earlier in this Proxy
Statement, Mr. Gardner has received options under the Company's stock option
plans, reflecting the Committee's belief that this form of compensation is
consistent with Mr. Gardner's responsibility for long term corporate strategy.
The Compensation Committee of the Board of Directors:
William F. Drake
Joel A. Pinsky
Performance Graph
The following graph compares the cumulative shareholder return on the
Common Stock of the Company, for the period from August 21, 1992 (when the
Company first registered its Common Stock under the Securities Exchange Act of
1934, as amended) through December 31, 1996, with the cumulative total return of
the NASDAQ Broad Market Index, and a Similar Market Capitalization Index. The
NASDAQ Broad Market Index includes all domestic common shares traded on the
NASDAQ National Market and the NASDAQ Small-Cap Market, while the Similar
Capitalization Index includes only issuers which are included in the NASDAQ
Broad Market Index and had a market capitalization at August 21, 1992 of between
$40 million and $50 million.
In the printed version of the document a line graph
appears depicting the following plot points:
NASDAQ
DATE PEER NOCOPI NASDAQ
- ---- ------ ------ ------
8/21/92 $ 100.00 $ 100.00 $ 100.00
9/30/92 $ 99.09 $ 74.67 $ 103.62
12/31/92 $ 117.43 $ 124.44 $ 120.55
3/31/93 $ 122.54 $ 122.67 $ 122.81
6/30/93 $ 123.98 $ 106.67 $ 125.17
9/30/93 $ 135.98 $ 92.44 $ 135.72
12/31/93 $ 139.37 $ 119.11 $ 138.38
3/31/94 $ 131.65 $ 88.89 $ 132.56
6/30/94 $ 121.40 $ 85.33 $ 126.37
9/30/94 $ 132.47 $ 94.22 $ 136.83
12/31/94 $ 123.78 $ 92.44 $ 135.27
3/31/95 $ 129.17 $ 126.22 $ 147.47
6/30/95 $ 141.38 $ 119.11 $ 168.68
9/30/95 $ 157.07 $ 124.44 $ 189.00
12/31/95 $ 155.79 $ 119.11 $ 191.34
3/31/96 $ 162.32 $ 104.93 $ 200.28
6/30/96 $ 173.19 $ 138.96 $ 216.62
9/30/96 $ 172.92 $ 99.83 $ 224.33
12/31/96 $ 184.50 $ 45.94 $ 235.34
-14-
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during or with respect to the Company's fiscal year
ended December 31, 1996 (and the written representations of certain persons that
such persons were not required to file an annual report on Form 5 in respect of
such year), except as described below, no person who, at any time during such
fiscal year was a director or officer of the Company or beneficially owned ten
percent or more of the outstanding common stock of the Company, failed to timely
file reports required by Section 16(a) of the Exchange Act. Dr. Gundjian failed
to timely file reports with respect to two sales of Common Stock by him and with
respect to the acquisition by him of Common Stock purchase options, and Mr.
Gardner failed to timely file one report with respect to the sale of Common
Stock by him. All reports required to be filed by Dr. Gundjian and Mr. Gardner
have subsequently been filed.
CERTAIN TRANSACTIONS
Pledge of Collateral
The Company has a $1 million line of credit with a commercial bank. In
connection with this line of credit, Messrs. Mundt and Gardner have pledged
collateral, consisting of a certificate of deposit and marketable securities,
having an aggregate value of not less than $1.3 million. The Company has agreed
to reimburse Messrs. Mundt and Gardner in the event that the lender should
liquidate the collateral pledged by them. The Company has not borrowed against
this line of credit.
Other Transactions
Joel A. Pinsky, Secretary, General Counsel and a director of the
Company, is a partner in the Montreal law firm of Gross, Pinsky which rendered
legal services to the Company during the fiscal year ended December 31, 1996.
Gross, Pinsky has performed, and is expected to continue performing, legal
services for the Company during the 1997 fiscal year.
William F. Drake, a director of the Company, is of counsel to the law
firm of Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pennsylvania. Such
law firm furnished legal services to the Company during the fiscal year ended
December 31, 1996, and is expected to continue furnishing legal services to the
Company during the 1997 fiscal year.
For additional information regarding related party transactions,
shareholders are directed to footnote 5, "Related Party Transactions," contained
in the Notes to the Financial Statements of the Company appearing in the Annual
Report on form 10-K for the year ended December 31, 1996 which is enclosed with
this Proxy Statement.
-15-
Except as otherwise described herein, no officer or director of the
Company has, or proposes to have, any direct or indirect material interest by
securities holdings, contract, or otherwise, in the Company, or in any assets of
the Company, or in any purchase, the value of which will be affected by the
operations of the Company.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any matter to be presented at the Meeting other than as set forth
herein. If any other matters are properly brought before the Meeting, however,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them. A majority
of the shares present which are entitled to vote thereon would be necessary to
approve any such matters.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR ANNUAL MEETING TO BE HELD IN 1998
Any proposal by a Shareholder to be presented at the Company's next
Annual Meeting of Shareholders, currently expected to be held in June 1998, must
be received at the offices of the Company, 230 Sugartown Road, Wayne,
Pennsylvania 19087 not later than December 31, 1997.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31, 1996, is
enclosed herewith for your information. Portions of the Annual Report are
incorporated by reference into this Proxy Statement and are considered part of
the soliciting materials.
BY ORDER OF THE BOARD OF DIRECTORS
Joel A. Pinsky,
Secretary
April 30, 1997
-16-
PROXY
NOCOPI TECHNOLOGIES, INC.
Annual Meeting of Shareholders - June 9, 1997
The undersigned hereby constitutes and appoints Rudolph Lutterschmidt
and Donna Ciavarelli, and either of them, with full power of substitution, as
proxies, to vote for the undersigned all shares of the common stock, par value
$.01 of Nocopi Technologies, Inc., a Maryland corporation (the "Company") that
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held on June 9, 1997 at 9:30 a.m., Eastern
Daylight Savings Time, or at any adjournments thereof, upon the matters
described in the accompanying proxy statement and upon such other matters as may
properly come before the meeting. Said proxies are directed to vote or refrain
from voting on the matters set forth in the accompanying proxy statement in the
manner set forth on the reverse side of this proxy:
(Continued and to be signed on reverse side)
A /X/ Please mark your votes as in this example.
FOR WITHHELD
1. ELECTION OF / / / /
DIRECTORS:
For all listed nominees (except Withhold Authority
for the following persons, as to for all listed
whom authority to vote FOR is nominees.
withheld)
---------------------------------------------------------------------
Nominees as directors:
Messrs. Drake, Gardner, Mundt, Patrone, Pinsky and Dr. Gundjian
FOR AGAINST ABSTAIN
2. Ratification of the appointment of Coopers & / / / / / /
Lybrand L.L.P. as the Company's Independent
Accountants.
In the event that any of the above nominees for director are unable or
unwilling to serve at the time of the meeting, the proxies are authorized to
vote in their discretion for any substitute nominee(s) selected by the Board of
Directors. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting or any adjournments
thereof.
This proxy is solicited on behalf of the Board of Directors
This proxy, when properly executed, will be voted in the manner
directed on the face hereof. If no direction is made, this proxy will be vote
FOR the above named nominees for election as directors and FOR Proposal 2.
The undersigned represents that he has received the Company's Annual
Report for the year ended December 31, 1996 and the Company's Proxy Statement
furnished in connection with the Annual Meeting of Shareholders.
Please date, sign and return this proxy card promptly in the
accompanying envelope. No postage is required. If you furnish a proxy and
subsequently attend the annual meeting in person, you may vote in person.
SIGNATURE__________________________________ DATE:________________
SIGNATURE__________________________________ DATE:________________
Joint Signature (if necessary)
Note: Please sign exactly as the name appears hereon. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please furnish full title as such.
If a corporation, please sign in full corporate name by the President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.