As filed with the Securities and Exchange Commission
on July 1, 1994
Registration Statement No.
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NATIONAL PATENT DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1926739
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
9 West 57th Street
Suite 4170
New York, New York 10019
(212) 826-8500
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Lawrence M. Gordon, Esquire
9 West 57th Street
Suite 4170
New York, New York 10019
(212) 230-9513
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
Registration Statement.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box.
If any of the securities being registered on this Form
are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box.X
Subject to Completion, dated July 1, 1994
PROSPECTUS
NATIONAL PATENT DEVELOPMENT CORPORATION
2,486,000 SHARES OF COMMON STOCK
PAR VALUE $.01 PER SHARE
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTORS SHOULD CONSIDER THE INFORMATION UNDER "RISK
FACTORS" IN CONNECTION WITH THEIR INVESTMENT DECISION.
This Prospectus relates to an aggregate of 2,486,000
shares of common stock, par value $.01 per share (the "Common
Stock"), of National Patent Development Corporation, a Delaware
corporation (the "Company"). Of the 2,486,000 shares offered
hereby, 1,646,000 are being issued in connection with the
Company's Exchange Offer (the "Offer") which commenced on June
10, 1994, 40,000 are being issued by the Company in payment of
interest on its 5% U.S. Dollar Denominated Convertible Bonds due
August 31, 1999 and 800,000 are being issued in connection with
the Distribution (the "Distribution") by the Company to its
stockholders of shares of American Drug Company ("ADC"). See
"Recent Developments - "Exchange Offer" and "American Drug
Company" for a more complete description of the Offer and the
Distribution and also see "Selling Securities Holders." On June
27, 1994 the closing price of the Common Stock on the American
Stock Exchange, Inc. ("AMEX")was $3.00.
It is presently anticipated that all of the above
referred to shares of Common Stock will be offered from time to
time by the Selling Shareholders in one or more transactions on
the American Stock Exchange, Inc. or the Pacific Stock Exchange,
Inc., in privately negotiated transactions or otherwise, at fixed
prices that may be changed, at market prices prevailing at the
time of the sale, at prices related to such prevailing market
prices, or at negotiated prices. It is anticipated that broker-
dealers participating in sales of the Common Stock will receive
ordinary and customary brokerage commissions. See "Plan of
Distribution".
The Company will receive none of the proceeds from the
sale of the shares of Common Stock by the Selling Securities
Holders.
2
All expenses incurred by the Company in connection with
the preparation of this Prospectus, estimated to be $5,600, are
being borne by the Company.
Proceeds
Underwriting to Selling
Price to Discounts and Proceeds Securities
Public Commissions to Company Holders
Per Share $ - $ $
Total
The date of this Prospectus is July , 1994.
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of each class Amount offering aggregate Amount of
of securities to be to be price per offering registra-
registered registered unit(1) price tion fee
Common Stock, 1,646,000(2) $3.00 $4,938,000 $1,702.76
$.01 par value
per share
Common Stock, 40,000(3) $3.00 $ 120,000 $ 41.38
$.01 par value
per share
Common Stock, 800,000(4) $3.00 $2,400,000 $ 827.59
$.01 par value
per share
Total 2,486,000 $7,458,000 $2,571.73
(1) The proposed maximum offering price per share for
the 2,486,000 is $3.00 and is based on the last sales price of
the Common Stock on the American Stock Exchange, Inc. ("AMEX") on
June 27, 1994.
(2) Assumes the issuance of 1,646,000 shares of Common
Stock to the exchanging holders in the Company's Exchange Offer
based on (i) an exchange rate of SFr. 1.327 per US $1.00, (ii)
20% of the Old Bonds accepted for exchange, and (iii) a price per
share of $3.00.
(3) Assumes the issuance of 40,000 shares of Common
Stock as payment of interest on the 5% U.S. Dollar Denominated
Convertible Bonds due August 31, 1999.
(4) The Company agreed to issue 800,000 shares to be
sold to NPD Trading (USA), Inc. ("Trading") in connection with
the Distribution of American Drug Company.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1993, or until the
Registration Statement shall become effective on such date as the
Commission acting pursuant to said Section 8(a), may determine.
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AVAILABLE INFORMATION
This Prospectus omits certain of the information
contained in the Registration Statement relating to the Common
Stock which is on file with the Commission. The Company is
subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other
information with the Commission. Such Registration Statement,
reports, proxy statements, and other information can be inspected
and copied at the public reference facilities of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and
at its regional offices located at 75 Park Place, New York, New
York; and 5757 Wilshire Boulevard, Los Angeles, California.
Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. Such material
can also be inspected at the American Stock Exchange, Inc., 86
Trinity Place, New York, New York, and at the Pacific Stock
Exchange, Inc., 301 Pine Street, San Francisco, California, on
which Exchanges the Company's Common Stock is listed.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission are
incorporated by reference into this Prospectus:
1. Annual Report on Form l0-K for the year ended December
31, 1993.
2. Annual Report on Form 10-K/A for the year ended December
31, 1993.
3. The Company's Proxy Statement for the Annual Meeting of
the Stockholders on June 8, 1994.
4. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994.
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All documents subsequently filed with the Commission by
the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the
termination of the offering, shall be deemed to be incorporated
by reference into this Prospectus from the date of filing of such
documents.
Any person receiving a copy of this Prospectus may obtain
without charge, upon written or oral request, a copy of any of
the documents incorporated by reference herein, except for
exhibits to such documents (unless such exhibits are specifically
incorporated by reference into the documents which this
Prospectus incorporates). Requests should be directed to:
Corporate Secretary, National Patent Development Corporation, 9
West 57th Street, New York, New York 10019, (212) 826-8500.
RISK FACTORS
Investors should consider, among other items, the
following factors in connection with a decision to purchase the
Common Stock offered hereby.
1. Liquidity: Financial Condition. The Company believes
that it has sufficient cash and cash equivalents and borrowing
availability under existing and potential lines of credit to
satisfy its cash requirements until the first scheduled maturity
of its Swiss Franc denominated indebtedness on March 1, 1995.
However, in order for the Company to meet its long-term cash
needs, which include the repayment of $13,518,000 of Swiss Franc
denominated indebtedness scheduled to mature in 1995 and
$7,279,000 of Swiss Franc denominated indebtedness which is
scheduled to mature in 1996, the Company must obtain additional
funds. The Company has reduced and is continuing to reduce its
long-term debt through the issuance of equity securities in
exchange for long-term debt (including the shares of Common Stock
issued in the Offer), and is also exploring new credit
arrangements on an ongoing basis. However, there is no assurance
that the Company will be able to obtain any new credit
arrangements.
At March 31, 1994, the Company and its majority-owned
subsidiaries held cash and cash equivalents totaling $9,848,000.
Of these amounts, approximately $7,748,000 is held by the
Company and is available for the general corporate purposes of
the Company.
2. Recent Historical Operating Losses, Retained Earnings
Deficit. Since 1987, the Company has experienced losses before
income taxes, discontinued operations and extraordinary items.
These losses were the result of operating losses at certain of
its subsidiaries, which were not wholly offset by operating
profits from certain of its other subsidiaries. The Company's
6
current strategy is to consolidate certain related operating
businesses and to improve their operating results, while
continuing to make investments in new ventures or make selected
divestitures based on market conditions.
For the quarter ended March 31, 1994, the Company's loss
from operations before income taxes and extraordinary items was
$2,394,000, as compared to a loss of $2,939,000 for the quarter
ended March 31, 1993. For the year ended December 31, 1993, the
Company's loss from operations before income taxes and
extraordinary items was $8,371,000, as compared to a loss of
$13,178,000 for the year ended December 31, 1992. As of March
31, 1994, the Company had stockholders' equity of $66,158,000 and
a deficit of $41,488,000. Losses in future years may adversely
affect the Company's ability to service its debt.
3. Ratio of Earnings to Fixed Charges. The ratio of
earnings to fixed charges represents the number of times that
fixed charges were covered by income before income taxes,
discontinued operations and extraordinary items, as adjusted by
such fixed charges. For the three months ended March 31, 1994
and the year ended December 31, 1993, the Company had a
deficiency in the coverage of fixed charges to earnings before
fixed charges of $2,326,000 and $10,747,000 respectively.
4. Holding Company; Dependence on Subsidiaries. The
Company is primarily a holding company, which is a legal entity
separate and distinct from its various operating subsidiaries.
As a holding company, the Company is dependent upon management
fees, dividends and other payments or advances from operating
subsidiaries as its principal source of cash to service
outstanding debt. The ability of the Company to obtain cash from
an operating subsidiary depends upon, among other factors, the
operating results of the subsidiary, restrictions on payments to
the Company imposed by creditors of the subsidiary, restrictions
on payments to the Company imposed by other agreements governing
the subsidiary and the degree of dilution of dividend payments
resulting from public ownership of equity securities of the
subsidiary.
As of March 31, 1994, there is currently at the holding
company level approximately $7,748,000 of cash and cash
equivalents. GTS Duratek, Inc. ("Duratek") under its Revolving
Line of Credit, is prohibited from making any payments to the
Company. GPS Technologies, Inc. ("GPS"), under the terms of its
Amended and Restated Revolving Credit and Term Loan and Security
Agreement, may only pay the Company an amount equal to 80% of the
amount GPS would have paid in federal income taxes if it filed
its federal income tax return on a stand-alone basis. However,
GPS may be prohibited from distributing approximately $1,200,000
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of management fees and tax sharing payments to the Company in
1994 if GPS were to be in violation of certain covenants in its
bank agreements.
The rights of the Company and its creditors to
participate in the assets of any of the Company's subsidiaries
upon bankruptcy or liquidation of a subsidiary are subject to the
prior claims of the subsidiary's creditors except to the extent
the Company may itself be a creditor with recognized claims
against the subsidiary; however, the Company's claims may be
subordinate to the claims of any secured creditors of the
subsidiary. See "The Company."
5. Currency Fluctuations. On March 31, 1994, the value
of the Swiss Franc to the U.S. dollar was approximately 1.412 to
1. At March 31, 1994, the Company had an aggregate of SFr.
26,318,000 of Swiss Franc denominated indebtedness outstanding,
of which SFR. 23,823,000 represents principal amount outstanding
and SFr. 2,495,000 represents interest accrued thereon. Foreign
currency valuation fluctuations may adversely affect the results
of operations and financial condition of the Company. In order
to protect itself against foreign currency valuation
fluctuations, the Company has at times swapped or hedged a
portion of its obligations denominated in Swiss Francs; however,
at March 31, 1994, the Company had not swapped or hedged any of
its Swiss Franc obligations. If the value of the Swiss Franc to
the U.S. dollar increases, the Company will recognize transaction
losses on its Swiss Franc obligations. There can be no assurance
that the Company will be able in the future to swap or hedge
obligations denominated in foreign currencies at prices
acceptable to the Company, or at all. The Company will review
its policy as to hedging on a continuing basis.
THE COMPANY
The Company is primarily a holding company, which is
a legal entity separate and distinct from its various operating
subsidiaries. The Company's operations consist of four operating
business segments: Physical Science, Distribution, Optical
Plastics and Electronics.
Physical Science
The Company's Physical Science Group consists of (i)
GPS Technologies, Inc. ("GPS"), an approximately 92% owned
subsidiary, and (ii) GTS Duratek, Inc. ("Duratek"), an
approximately 66% owned subsidiary. For a description of a
transaction between GPS and General Physics Corporation, see
"Recent Developments".
8
GPS provides a wide range of management and
technical training as well as specialized engineering services to
various commercial industries and the United States government.
Principal clients of GPS include electric utilities, process
industries, manufacturing plants, Federal agencies and the
aerospace industries. In addition, the Company currently owns
approximately a 28% investment in General Physics Corporation
("General Physics"), which provides a wide range of personnel
training and technical support services to the domestic
commercial nuclear power industry and the United States
Department of Energy and Defense, as well as environmental
engineering, training and support services to governmental and
commercial clients.
Duratek's operations consist of two operating
groups: (1) "Environmental Services" engaged in cleanup of water
and other liquids containing radioactive and/or hazardous (mixed
waste) contaminants and minimum additive vitrification for long-
term stabilization of such waste and (2) "Consulting and Staff
Augmentation" services. Duratek provides services for various
utility, industry, government and commercial clients.
Distribution
The Company's Distribution Group, incorporated under
the name Five Star Group, Inc. ("Five Star"), is engaged in the
wholesale distribution of home decorating, hardware and
finishing products.
Healthcare
The Company's investment in the Health Care industry
consists of the Company's ownership of approximately 36% of the
outstanding shares of common stock of Interferon Sciences, Inc.
("ISI"). ISI is a bipharmaceutical company engaged in the
manufacture and sale of ALFERON N Injection, the only product
approved by the Food and Drug Administration that is based upon a
natural source, multi-species alpha interferon. ISI also is
developing its existing injectable, topical and/or oral
formulations of its natural alpha interferon for the potential
treatment of HIV, hepatitis C, hepatitis B, multiple sclerosis,
cancers and other indications.
Additionally, the Company owns approximately 4.9% of
the outstanding shares of common stock of American White Cross,
Inc. (formerly, NPM Healthcare Products, Inc.) ("White Cross").
White Cross is a leading manufacturer and marketer of private
label adhesive and cotton-based health and personal care
products.
9
Optical Plastics
The Company's Optical Plastics Group, through its
wholly owned subsidiary MXL Industries, Inc., manufactures molded
and coated optical products, such as shields and face masks and
non-optical plastic products.
Electronics
The Company's Electronics Group, through its
subsidiary Eastern Electronics Mfg. Corporation, is engaged in
contract manufacturing, such as printed circuit board assembly
for the electronics industry.
The Company, a Delaware corporation, was
incorporated in 1959, and its headquarters are located at 9 West
57th Street, New York, New York 10019. Its telephone number is
(212) 826-8500.
RECENT DEVELOPMENTS
Exchange Offer
On June 10, 1994, the Company commenced an Exchange
Offer (the "Offer") for an aggregate of up to 60% of the
outstanding principal amount of its Swiss denominated 8% Bonds
due March 1, 1995, 6% Convertible Bonds due March 7, 1995, 5 3/4%
Convertible Bonds due May 9, 1995, 5 5/8% Convertible Bonds due
March 18, 1996 (collectively, the "Old Swiss Franc Bonds") and 7%
Dual Currency Bonds due March 18, 1996 (the "Old U.S. Dollar
Bonds") and (collectively with the Old Swiss Franc Bonds, the
"Old Bonds"). The Offer will be co-managed by Banque Scandinave
en Suisse and Banque Leu AG.
The purpose of the Offer is to reduce the Company's
long-term debt (including current maturities) and related
interest expense, increase book value and provide the Company
with additional financial flexibility. If an aggregate of 60% of
the outstanding principal amount of the Old Bonds are exchanged,
the Company will reduce its total long-term debt (including
current maturities) by approximately $12,500,000 to approximately
$30,500,000, increase shareholders' equity to approximately
$79,000,000 and reduce interest expense by approximately
$1,200,000 per year.
For each SFr. 1,000 principal amount of Old Swiss
Franc Bonds exchanged, the holder will receive Common Stock with
a value equal to the sum of SFr. 1,000 and the respective amount
of Swiss Bond Accrued Interest for the tendered Old Swiss Franc
Bond (the "Swiss Bond Common Stock Value"). For each US $1,000
principal amount of Old U.S. Dollar Bond exchanged, the holder
will receive Common Stock with a value equal to the sum of US
10
$1,000 and the U.S. Bond Accrued Interest (the "U.S. Bond Common
Stock Value"). The number of shares of Common Stock issued for
each SFr. 1,000 principal amount of Old Swiss Franc Bonds
exchanged will be equal to the number obtained by dividing (i)
the Swiss Bond Common Stock Value by (ii) the Swiss Franc/U.S.
Dollar spot rate reported in The Wall Street Journal-Europe
Edition on the fifth trading day prior to July 11, 1994 (as
determined by the Company), and then dividing the resulting
quotient by the average of the last sale prices on the American
Stock Exchange, Inc. ("AMEX") of the Common stock for the ten
trading days ending five trading days prior to July 11, 1994.
The number of shares of Common stock issued for each US $1,000
principal amount of Old U.S. Dollar Bonds exchanged will be equal
to the number obtained by dividing (i) the U.S. Bond Common Stock
Value by (ii) the average of the last sale prices on the AMEX of
the Common Stock for the ten trading days ending five trading
days prior to July 11, 1994. Fractional shares of Common Stock
resulting from such exchange will be rounded up to the nearest
integral multiple.
As of June 10, 1994, there were outstanding SFr.
7,401,000 of the 8% Bonds, SFr. 8,635.000 of the 6% Convertible
Bonds, SFr. 3,520,000 of the 5 3/4% Convertible Bonds, SFr.
4,735,000 of the 5 5/8% Convertible Bonds and $3,926,000 of the
7% Dual Currency Bonds.
The Offer will expire at 5:00 P.M., New York time on
Monday July 11, 1994.
American Drug Company
On February 2, 1994, the Board of Directors of the
Company approved a dividend of approximately 46.1% of the common
stock of American Drug Company ("ADC") to holders of record of
the Company's Common Stock and Class B Capital Stock. ADC is
currently a wholly-owned subsidiary of the Company. The dividend
will be at the rate of one share, plus one warrant to purchase
one share of ADC common stock at an exercise price per share of
$1.00, for every four outstanding shares of Common Stock and
Class B Capital Stock of the Company. The distribution of ADC
common stock to the Company's stockholders will result in direct
ownership in a company focused on developing markets for
American-made generic pharmaceutical and personal care products
in Russia and the other states of the Commonwealth of Independent
States and on developing other business opportunities. Following
the distribution, the Company will own 6,000,000 shares of the
common stock of American Drug Company, representing approximately
53.9% of the outstanding common stock of ADC, without accounting
for outstanding options and warrants. See "Relationship with
Selling Securities Holders" for a description of the Company's
funding commitments with respect to ADC.
11
Interferon Sciences, Inc.
On May 13, 1994, ISI filed a registration statement with
the Commission relating to a proposed public offering of
3,000,000 shares of its common stock (with an additional 450,000
shares of its common stock subject to an over-allotment option).
D. Blech & Company, Incorporated is the underwriter of the
offering. On July 1, 1994, ISI filed an amendment with the
Commission which increased the shares in the public offering to
4,000,000 shares of its common stock (with an additional 600,000
shares of its common stock subject to an over-allotment option).
General Physics Corporation
On April 7, 1994, General Physics entered into an
agreement with GPS and the Company to acquire substantially all
of the operating assets of GPS and certain of its subsidiaries.
General Physics agreed to pay GPS a purchase price with a current
present value of approximately $36 million. The purchase price
will be payable to GPS as follows: $10 million in cash; 3.5
million shares of General Physics common stock valued at
approximately $13,500,000 (based upon the price per share of
General Physics common stock prior to the announcement of the
transaction which was $3.875); warrants to acquire 1,000,000
shares of General Physics common stock at $6.00 per share valued
at approximately $1,300,000; warrants to acquire up to 475,644
additional shares of General Physics common stock at $7.00 per
share valued at approximately $500,000; and 6% Senior
Subordinated Debentures due 2004 (the "Debentures"), in the
aggregate principal amount of $15,000,000, valued at
approximately $10,700,000. The values assigned to each component
of consideration were based upon (i) discussions with the
independent investment banker to the Independent Committee of
General Physics and the investment banker to GPS and (ii)
negotiations between the Independent Committee of General Physics
and the Board of Directors of GPS. Portions of the cash and
stock consideration of the purchase price will be (a) used to
repay outstanding bank debt of GPS which at March 31, 1994 was
$6,350,000 and long-term debt of GPS which at March 31, 1994 was
$8,975,000 to be repaid to the Company and (b) held in escrow.
The transaction is contingent upon the occurrence of
certain events, including, without limitation, the approval of
the transaction by the stockholders of General Physics and GPS.
The transaction is anticipated to close as soon as practicable in
the second half of 1994, if all necessary approvals are obtained
and conditions satisfied. The Company anticipates that, if the
aforementioned transaction is consummated, it will own
approximately 52% of the outstanding common stock of General
Physics, and if the Company were to exercise all of its warrants,
it would own approximately 58% of the outstanding common stock of
General Physics.
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CAPITALIZATION
The following table sets forth the unaudited
capitalization of the Company at March 31, 1994 and as adjusted
to give effect to the exchange of the Common Stock for 60% of the
Bonds, as if such exchange had occurred on March 31, 1994. The
Company's Swiss Franc denominated indebtedness has been
translated at an exchange rate of approximately SFr. 1.412 per US
$1.00.
March 31, 1994
Outstanding Pro Forma
(unaudited, in thousands)
SHORT-TERM DEBT
Current maturities of long-term debt $17,281 $10,666
Line of credit and other agreements 26,537 26,537
Total short-term debt $43,818 $37,203
LONG-TERM DEBT LESS CURRENT MATURITIES
Bonds
5.75% Convertible Swiss Bonds
due 1995 $2,493 $ 997
5.625% Convertible Swiss Bonds
due 1996 3,353 1,341
7% Dual Currency Convertible Bonds
due 1996 3,926 1,570
12% Subordinated Debentures due 1997 6,790 6,790
5% Convertible Bonds due 1999 2,079 2,079
Mortgage notes payable, equipment lease
obligations and other 7,137 7,137
25,778 19,914
Common stock issued subject to
repurchase obligation 3,876 3,876
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per
share, 10,000,000 shares authorized,
no shares issued and outstanding
Common Stock 192 233 (a)(b)
Class B capital stock 2 2
Capital in excess of par value 107,452 120,635 (a)(b)
Deficit (41,488) (41,578)(b)(c)
Total stockholders' equity 66,158 79,292
Total capitalization $ 95,812 $103,082
(a) Assumes the Company issues 3,925,028 shares of its Common
Stock at a price of $3.50 per share in exchange for debt
and accrued interest with a value of $12,639,000, which
represents an 8% discount to market value.
13
(b) Assumes the Company issues 167,243 shares of its Common
stock at a price of $3.50 per share with a guaranteed
value of approximately $585,000 in payment of commissions
and fees to the Exchange Agents.
(c) Assumes a loss in the Offer (net of taxes) of $90,000.
MARKET PRICES OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock, $.01 par value, is traded on
the American Stock Exchange, Inc. and the Pacific Stock Exchange,
Inc. The following tables present its high and low market prices
during the periods indicated as reported by the American Stock
Exchange, Inc.
Quarter High Low
1994 First 4 7/8 3 7/8
Second 3 15/16 2 3/4
(through
June 27,1994)
1993 First 3 5/8 2 1/2
Second 4 1/4 2 1/2
Third 3 3/4 2 7/8
Fourth 5 3/4 3 7/16
1992 First 5 5/8 4 1/8
Second 4 5/8 3 3/8
Third 3 3/4 2 13/16
Fourth 3 1/4 2 1/16
On June 27, 1994, the closing price of the Common
Stock on the American Stock Exchange was $3.00.
In March 1989, the Company decided to discontinue
payment of its quarterly dividend because the Board of Directors
believed that the resources available for the quarterly dividend
would be better invested in operations and the reduction of long-
term debt.
USE OF PROCEEDS
The Company will receive none of the proceeds from
the sale of the Common Stock offered by the Selling Securities
Holders.
PLAN OF DISTRIBUTION
The distribution of the Common Stock by the Selling
Securities Holders may be effected from time to time in one or
more transactions on AMEX or the Pacific Stock Exchange, Inc., in
14
privately-negotiated transactions or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, or at
negotiated prices.
The Selling Shareholders and any underwriters,
broker-dealers or agents that act in connection with the sale of
the shares of Common Stock hereunder may be deemed to be
"underwriters" as that term is defined in the Securities Act of
1933, as amended (the "Securities Act"), and any commissions
received by them and profit on any resale of the shares as
principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
It is anticipated that broker-dealers participating
in sales of the Common Stock will receive ordinary and customary
brokerage commissions.
The Company will pay all of the expenses of this
offering.
The shares of Common Stock are listed on AMEX and
the Pacific Stock Exchange, Inc. The Common Stock offered hereby
by the Company and the Selling Securities Holders when issued,
will be listed, subject to notice of issuance, on said Exchanges.
SELLING SECURITIES HOLDERS
The Registration Statement, of which this Prospectus
is a part, relates to an aggregate of 2,486,000 shares of Common
Stock to be sold by the exchanging holders who participated in
the Offer and certain other Selling Securities Holders set forth
below from time to time. See "Recent Developments - Exchange
Offer, and American Drug Company."
As of the date of this filing, the identity of the
Selling Securities Holders in the Offer is unknown and the
identity of all such Selling Securities Holder will not be known
until the expiration of the Exchange Offer at 5:00 P.M., New York
City time on Monday, July 11, 1994 (the "Expiration Date") unless
the Exchange Offer is extended. Promptly after the Expiration
Date, the Company intends to file an amendment to this
registration statement to include the name of each Selling
Securities Holder, the nature of any position, office or other
material relationship that any Selling Securities Holders may
have had within the past three years with the Company or any of
its affiliates, the amount of Shares owned by each Selling
Securities Holder prior to the offering, the amount to be offered
by each Selling Securities Holder and the amount and percentage
of Shares to be owned by each Selling Securities Holder after
completion of the offering.
15
The following table sets forth the name of the other
Selling Securities Holders, their relationship with the Company
and certain information supplied by them regarding their
beneficial ownership of the Common Stock as of June 1, 1994. The
securities to be offered and the securities to be beneficially
owned by such Selling Securities Holders after completion of the
offering are also set forth below.
SHARES OF
PERCENTAGE COMMON COMMON
OF COMMON STOCK STOCK
STOCK OWNED OWNED
SELLING OWNED PRIOR PRIOR AFTER
SECURITIES TO THE TO THE THE
HOLDER OFFERING OFFERING OFFERING
NPD Trading (USA), Inc. 3.9%(1) 800,000 (1)
Banque Scandinave
en Suisse * (2) 40,000 (2)
* Less than one percent.
(1) Pursuant to the terms of the Distribution the Company
agreed to issue 800,000 shares of Common Stock to be sold to NPD
Trading. See "Relationship with American Drug Company."
(2) Pursuant to the terms of the 5% U.S. Dollar Denominated
Convertible Bonds Due August 31, 1999 (the "New Bonds") interest
on the New Bonds is payable at the sole discretion of the Company
in either United States Dollars or shares of Common Stock.
Banque Scandinave en Suisse acted as Paying Agent for the New
Bonds. In addition Banque Scandinave en Suisse is one of the
Exchange Agents for the Offer. See "Recent Developments -
Exchange Offer."
Relationship with American Drug Company
In April 1994, the Company agreed to sell to NPD
Trading (USA), Inc., a wholly-owned subsidiary of American Drug
Company, an aggregate of $2.5 million of common stock, to be
registered, of the Company, GTS Duratek, Inc. ("Duratek") or
Interferon Sciences, Inc. ("ISI") (or a combination thereof, to
be determined in the Company's discretion), which common stock
the Company agreed to deliver to American Drug Company within a
24 month period commencing three months from the Effective Date
of the Distribution, as requested by American Drug Company. NPD
Trading will purchase these equity securities from time to time
in the aggregate amount of $2.5 million, which will constitute a
loan from the Company, which bears interest at the prime rate,
(the "National Patent Loan"). Obligations under the National
16
Patent Loan will arise as NPD Trading purchases the securities,
and principal and accrued interest thereon will become due on the
date which is five years from the date of the last advance. The
Company will contribute to American Drug's capital sufficient
funds necessary to support American Drug's working capital
requirements until the equity securities described above are
registered.
In addition, the Company has agreed to advance up to
$250,000 in cash to NPD Trading, if needed, for a six month
period from the Effective Date, for working capital purposes (the
"Short-Term Loan"). The amount of any such advances outstanding
pursuant to the Short-Term Loan, which bears interest at the
prime rate, will be payable by American Drug Company on or before
the date which is 12 months from the Effective Date.
Following the Distribution, the Company will have a
continuing relationship with American Drug Company as a result of
(i) the Management Services Agreement between the Company and the
American Drug Company relating to professional services and
employee benefit administration, (ii) the Installment Sale
Agreement between the Company and NPD Trading (USA), Inc., a
wholly-owned subsidiary of American Drug Company, relating to the
purchase by the subsidiary of certain shares of common stock of
the Company, GTS Duratek, Inc., a 66%-owned subsidiary of the
Company ("Duratek"), and/or Interferon Sciences, Inc., a company
in which the Company has a 36% investment ("ISI"), and the loan
by the Company to American Drug Company's subsidiary in
connection therewith and (iii) the Company's continuing majority
ownership of Common Stock. In addition, Martin M. Pollak,
Executive Vice President, Treasurer and a director of the
Company, is President, Chief Executive Officer and a director of
American Drug Company; Jerome I. Feldman, President, Chief
Executive Officer and a director of the Company, is Chairman of
the Board of, and a consultant to, American Drug Company; and
Scott N. Greenberg, Chief Financial Officer and a director of the
Company, is Chief Financial Officer and a director of American
Drug Company.
DESCRIPTION OF CAPITAL STOCK
Common and Class B Stock
As of June 21, 1994 the Company had outstanding two
classes of common stock: 20,358,259 shares of Common Stock, par
value $.01 per share, entitled to one vote per share on all
matters, and 250,000 shares of Class B Capital Stock, par value
$.01 per share ("Class B Stock"), entitled to ten votes per share
on all matters, without distinction between classes except when
approval of a majority of each class is required by statute. The
Class B Stock is convertible at any time into shares of Common
Stock on a share for share basis.
17
Since the Common Stock and Class B Stock do not have
cumulative voting rights, the holders of shares having more than
50% of the voting power, if they choose to do so, may elect all
the directors of the Company and the holders of the remaining
shares would not be able to elect any directors.
The holders of Common Stock and Class B Stock are
entitled to share equally in any dividends (other than stock
dividends) that may be declared, and if any stock dividends are
declared, they are to be declared and paid at the same rate on
each class of stock in the shares of such class. In the event of
liquidation, dissolution or winding up of the Company, the
holders of the Common Stock and the Class B Stock are entitled to
share equally in the corporate assets available for distribution
to stockholders. None of the shares of either class has any
preemptive or redemption rights or sinking fund provisions
applicable to it, and all the presently outstanding shares are
fully paid and non-assessable.
Certain of the Company's borrowing agreements and
indentures contain restrictions on dividends and on the
repurchase by the Company of its Common Stock or Class B Stock.
On March 22, 1989 the Board of Directors of the Company
determined that the Company would omit its regular dividend
commencing with the first quarter ended March 31, 1989.
Preferred Stock
The Company is authorized to issue l0,000,000 shares,
par value $.l per share, of preferred stock. There are presently
no shares of Preferred Stock issued. To the extent that any
shares of Preferred Stock may be issued, such Preferred Stock may
(i) have priority over Common Stock with respect to dividends and
the assets of the Company upon liquidation; (ii) have significant
voting power; (iii) provide for representation of the holders of
the Preferred Stock on the Company's Board of Directors upon the
occurrence of certain events; and (iv) require the approval of
the holders of the Preferred Stock for the taking of certain
corporate actions, such as mergers.
Transfer Agent and Registrar
Harris Trust Company of New York is the transfer agent
and registrar for the Common Stock.
LEGAL OPINION
Andrea D. Kantor, Esq., Associate General Counsel of
the Company, has passed upon the legality of the Common Stock of
the Company being offered hereby. Ms. Kantor has options to
purchase 17,500 shares of Common Stock under the Company's Non-
Qualified Stock Option Plan, all of which are currently exercisable.
18
EXPERTS
The audited consolidated financial statements and
schedules of the Company as of December 31, 1993 and 1992 and for
each of the years in the three-year period ended December 31,
1993, incorporated by reference herein and elsewhere in the
Registration Statement, have been incorporated by reference
herein and in the Registration Statement in reliance upon the
reports of KPMG Peat Marwick, independent certified public
accountants, incorporated by reference herein, and upon the
authority of said firm as experts in auditing and accounting.
MISCELLANEOUS
No person has been authorized to give any information
or to make any representations, other than as set forth in this
Prospectus, in connection with the offer contained in this
Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company.
Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the
Company since the date hereof. This Prospectus does not
constitute an offer to sell or solicitation of an offer to buy
any of these securities to any person in any jurisdiction in
which such offer or solicitation may not lawfully be made and
does not constitute an offer of any securities other than those
to which it relates.
REGISTRATION STATEMENT
The Company has filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of
which this Prospectus is a part. This Prospectus does not contain
all of the information set forth in the Registration Statement
and its exhibits, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission, and
to all of which reference is made. For further information
pertaining to the securities hereby offered and to the Company,
reference is made to the Registration Statement, including
exhibits incorporated therein by reference or filed as part
thereof, copies of which may be obtained from the Commission's
principal office in Washington, D.C. at prescribed rates, or,
under certain circumstances, from the Company.
19
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses payable by the Registrant in connection
with the issuance and distribution of the securities being
registered (other than underwriting discounts and commissions, of
which there are none) are as follows:
SEC Registration Fee $ 2,600
Accounting Fees and Expenses $ 2,500
Miscellaneous Expenses $ 500
TOTAL: $ 5,600
Item 15. Indemnification of Directors and Officers.
Section l45 of the Delaware General Corporation Law, as
amended, grants each corporation organized thereunder certain
powers to indemnify its officers and directors against liability
for certain of their acts. Article ELEVEN of the Company's
Restated Certificate of Incorporation and Article III, Section l5
of the by-laws of the Company, provide that the Company shall, to
the full extent permitted by law or to the extent that a court of
competent jurisdiction shall deem proper or permissible under the
circumstances, whichever is greater, indemnify all directors,
officers, incorporators, employees, or agents of the Company.
In addition, Section l02 of the Delaware General
Corporation Law permits corporations, through provisions in their
certificates of incorporation, to limit the monetary liability of
directors. Article TWELVE of the Company's Restated Certificate
of Incorporation provides that no director of the Company shall
be liable to the Company or any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section l74 of the Delaware
General Corporation Law (relating to the liability of directors
for unlawful payment of dividends or unlawful stock purchase or
redemption), or (iv) for any transaction from which the director
derived an improper benefit.
The Company has purchased Director's and Officers'
Liability Insurance, including a Company Reimbursement Policy.
Subject to the policy conditions, the insurance provides coverage
for amounts payable by the Company to its directors and officers
pursuant to the Company's by-laws.
20
Item l6. Exhibits
4.1 Specimen Common Stock Certificate (filed as Exhibit 4.5
to the Company's Registration Statement (Registration
No. 33-15700), and incorporated by reference herein.
4.2 Amendment to Restated Certificate of Incorporation.
4.3 Amended By-Laws of the Company (filed as Exhibit 3.3 to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1986) and incorporated by reference
herein.
4.4 Schedule 13E-4 filed on June 10, 1994, incorporated by
reference herein (File No. 005-38329).
5.1 Opinion of Andrea D. Kantor, Esq.**
10.1 Form of Installment Sale Agreement, dated as of April
1994 between National Patent Development Corporation
and American Drug Company (filed as Exhibit 10.11 to
American Drug Company's Form S-1 Registration Statement
No. 33-78252, incorporated by reference herein.)
23.1 Consent of KPMG Peat Marwick.*
*Filed herewith.
**To be filed by amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934, that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned registrant hereby undertakes to file,
during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (i) to
include any prospectus required by section 10(a)(3) of the
Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement; and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change in such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
21
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of
1934.
The undersigned registrant hereby undertakes that, for
the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to remove
from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the registrant pursuant to the
foregoing provisions, the registrant has been informed that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
22
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, and the State of New York, on this 1st day
of July 1994.
NATIONAL PATENT DEVELOPMENT
CORPORATION
(Registrant)
BY: Jerome I. Feldman
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of l933,
this Amendment No. 4 to the Registration Statement has been
signed by the following persons in their capacities on July 1st,
1994.
SIGNATURES TITLE
Jerome I. Feldman President and Chief Executive
Officer and Director
(Principal Executive Officer)
Scott N. Greenberg Vice President, Chief Financial
Officer and Director (Principal
Financial and Accounting Officer)
Martin M. Pollak Executive Vice President and
Treasurer and Director
Ogden R. Reid Director
23
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
National Patent Development Corporation
We consent to the use of our reports incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the Prospectus.
KPMG PEAT MARWICK
New York, New York
July 1, 1994
