Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14-11(c) or 240.14a-12
National Patent Development Corporation
(Name of Registrant as Specified In Its Charter)
Andrea D. Kantor
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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14a-6(j)(2).
[ ] $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: COMMON STOCK
(2) Aggregate number of securities to which transaction
applies:
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computed pursuant to Exchange Act Rule 0.11:1
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state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
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the offsetting fee was paid previously. Identify the previous
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NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 8, 1994
To The Stockholders:
The Annual Meeting of Stockholders of National Patent
Development Corporation (the "Company") will be held at The
Brunswick Hilton, Three Tower Center Boulevard, East Brunswick,
New Jersey on the 8th day of June, 1994, at 1:30 P.M., Eastern
Standard Daylight Savings Time, for the following purposes:
1. To consider and act upon a proposal to amend the
Company's Restated Certificate of Incorporation to increase the
total number of authorized shares of common stock which the
Company shall have authority to issue from 30,000,000 shares to
40,000,000 shares.
2. To elect six Directors to serve until the next Annual
Meeting and until their respective successors are elected and
qualify.
3. To consider and act upon a proposal to approve the
selection by the Board of Directors of KPMG Peat Marwick,
independent certified public accountants, as auditors for the
Company for the current year.
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record as of the close of business on
April 15, 1994 are entitled to receive notice of and to vote at
the meeting. A list of such stockholders shall be open to the
examination of any stockholder during ordinary business hours,
for a period of ten days prior to the meeting, at the principal
executive offices of the Company, 9 West 57th Street, Suite 4170,
New York, New York.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
New York, New York
April 29, 1994
If you do not expect to be present at the meeting, please
fill in, date and sign the enclosed Proxy and return it promptly
in the enclosed return envelope.
NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
April 29, 1994
New York, New York
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the
Board of Directors of National Patent Development Corporation, a
Delaware corporation (the "Company"), for use only at the Annual
Meeting of Stockholders to be held at The Brunswick Hilton, Three
Tower Center Boulevard, East Brunswick, New Jersey on the 8th day
of June, 1994 at 1:30 P.M., Eastern Standard Daylight Savings
Time, and at any adjournments thereof. The approximate date on
which this Proxy Statement and the accompanying Proxy were first
given or sent to security holders was April 29, 1994.
Each Proxy executed and returned by a stockholder may be
revoked at any time thereafter, by written notice to that effect
to the Company, attention of the Secretary, prior to the Annual
Meeting, or to the Chairman of, or the Inspectors of Election, in
person, at the Annual Meeting, or by the execution and return of
a later-dated Proxy, except as to any matter voted upon prior to
such revocation.
The Proxies in the accompanying form will be voted in
accordance with the specifications made and where no
specifications are given, such Proxies will be voted FOR the
amendment to the Company's Restated Certificate of Incorporation
to increase the total number of shares of common stock which the
Company shall have authority to issue, FOR the six nominees for
election as directors named herein, and FOR the approval of the
selection of KPMG Peat Marwick as auditors. In the discretion of
the proxy holders, the Proxies will also be voted FOR or AGAINST
such other matters as may properly come before the meeting. The
management of the Company is not aware that any other matters are
to be presented for action at the meeting. Although it is
intended that the Proxies will be voted for the nominees named
herein, the holders of the Proxies reserve discretion to cast
votes for individuals other than such nominees in the event of
the unavailability of any such nominee. The Company has no
reason to believe that any of the nominees will become
unavailable for election. The Proxies may not be voted for a
greater number of persons than the number of nominees named. A
majority of the votes represented by the outstanding shares of
common stock, par value $.01 per share (the "Common Stock") and a
majority of the votes represented by the outstanding shares of
Class B Capital Stock, par value $.01 per share (the "Class B
Stock"), each voting separately as a class, is required to
approve the proposal to amend the Restated Certificate of
Incorporation to increase the total number of shares of Common
Stock which the Company shall have authority to issue. The
election of directors will be determined by a plurality of the
votes of the shares of Common Stock and Class B Capital Stock,
present in person or represented by proxy at the Annual Meeting
and entitled to vote on the election of directors, while approval
of the selection of auditors for the current year will require
the affirmative vote of holders of Common Stock and Class B Stock
representing a majority of the outstanding shares. Accordingly,
in the case of shares that are present or represented at the
Annual Meeting for quorum purposes, not voting such shares for a
particular nominee for director, including by withholding
authority on the Proxy, will not operate to prevent the election
of such nominee if he or she otherwise receives affirmative
votes; with respect to any other item, an abstention will operate
to prevent approval of the item to the same extent as a vote
against approval, and a broker "non-vote" (which results when a
broker holding shares for a beneficial owner has not received
timely voting instructions on certain matters from such
beneficial owner) will effect the outcome of the vote the same as
a negative vote on such item.
VOTING SECURITIES
The Board of Directors has fixed the close of business on
April 15, 1994 as the record date for the determination of
stockholders entitled to receive notice of and to vote at the
Annual Meeting. The issued and outstanding stock of the Company
on April 15, 1994 consisted of _________ shares of Common Stock,
each entitled to one vote, and 250,000 shares of Class B Stock,
each entitled to ten votes. A quorum of the stockholders is
constituted by the presence, in person or by proxy, of holders of
record of Common Stock and Class B Stock representing a majority
of the number of votes entitled to be cast. The only difference
in the rights of the holders of Common Stock and the rights of
holders of Class B Stock is that the former class has one vote
per share and the latter class has ten votes per share. The
Class B Stock is convertible at any time into shares of Common
Stock on a share for share basis at the option of the holders
thereof.
PRINCIPAL HOLDERS OF SECURITIES
As of March 1, 1994, no person was known to the Company to
own beneficially more than 5% of the Common Stock or Class B
Stock of the Company except as set forth below.
The following table shows as of such date the Class B Stock
beneficially owned directly by Mr. Jerome I. Feldman, President
and Chief Executive Officer and a director of the Company, and
2
Mr. Martin M. Pollak, Executive Vice President and Treasurer and
a director of the Company (for information with respect to the
shares of Common Stock beneficially owned by Messrs. Feldman and
Pollak, see "Security Ownership of Directors and Named Executive
Officers"):
Amount of
Title of Name and Address Beneficial Percent
Class of Beneficial Owners Ownership of Class
Class B Jerome I. Feldman 900,000 shares<F1> 50<F2>
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Martin M. Pollak 900,000 shares<F1> 50<F2>
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
(1)Includes 775,000 shares each for Messrs. Feldman and Pollak
which they currently have the right to purchase pursuant to the
exercise of stock options.
(2)Percentage could increase up to approximately 88% if either
individual exercised all of his stock options and the other
individual did not exercise any.
Based upon the Common Stock and Class B Stock of the Company
outstanding at March 1, 1994, Mr. Feldman and Mr. Pollak
controlled approximately 13% of the voting power of all voting
securities of the Company. This percentage for Mr. Feldman and
Mr. Pollak would increase to approximately 51% if they exercised
all the presently outstanding options to purchase shares of the
Common Stock and Class B Stock of the Company held by them.
On March 26, 1986, Mr. Feldman and Mr. Pollak entered into
an agreement (i) granting each other the right of first refusal
over the sale or hypothecation of the Class B Stock and options
to purchase Class B Stock now owned or subsequently acquired by
each of them and (ii) in the event of the death of either of them
granting the survivor a right of first refusal over the sale or
hypothecation of the Class B Stock or options to acquire shares
of Class B Stock held by the estate of the decedent. The
aforesaid right of first refusal is for the duration of the life
of the survivor of Mr. Feldman or Mr. Pollak.
Merrill Lynch & Co., Inc., Merrill Lynch Group, Inc.,
Princeton Services, Inc., Fund Asset Management, L.P., and
3
Merrill Lynch Phoenix Fund, Inc. filed a 13-G which disclosed the
ownership of 1,278,200 shares of the Common Stock representing
7.7% of the outstanding Common Stock as of December 31, 1993.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1994,
beneficial ownership of shares of Common Stock of the Company and
subsidiaries by each director, each of the named executive
officers and all directors and executive officers as a group.
4
Total Number of
Shares Beneficially
Name Owned
Jerome I. Feldman <F1><F2><F3><F4><F6> 2,165,892
Martin M. Pollak <F1><F2><F3><F4><F5><F6> 2,161,373
Ogden R. Reid <F3><F4><F7> 14,000
Scott N. Greenberg <F3><F4> 197,300
Roald Hoffmann, Ph.D. <F3><F7> 17,800
Paul A. Gould <F1><F7> 71,400
Lawrence M. Gordon <F1><3><f4> 142,612
Directors and Executive Officers as a Group
(7 persons) <F1><f3<>f4> 4,770,377
Percent of
Common Stock
Owned
Jerome I. Feldman <F1><F2><F3><F4><F6> 9.75
Martin M. Pollak <F1><F2><F3><F4><F5><F6> 9.73
Ogden R. Reid <F3><F4><F7> *
Scott N. Greenberg <F3><F4> *
Roald Hoffmann, Ph.D. <F3><F7> *
Paul A. Gould <F1><F7> *
Lawrence M. Gordon <F1><3><f4> *
Directors and Executive Officers as a Group
(7 persons) <F1><f3<>f4> 19.49
Of Total Number of
Shares Beneficially
Owned,
Shares Which May Be
Acquired Within 60 Days
Jerome I. Feldman <F1><F2><F3><F4><F6> 1,778,667
Martin M. Pollak <F1><F2><F3><F4><F5><F6> 1,788,667
Ogden R. Reid <F3><F4><F7> 12,000
Scott N. Greenberg <F3><F4> 180,700
Roald Hoffmann, Ph.D. <F3><F7> 16,000
Paul A. Gould <F1><F7> 4,000
Lawrence M. Gordon <F1><3><f4> 140,100
Directors and Executive Officers as a Group
(7 persons) <F1><f3<>f4> 3,920,134
* The number of shares owned is less than one percent of the
outstanding shares of Common Stock.
(1) Included in the table are 125,000 shares for each of
Messrs. Feldman and Pollak which they currently have the right to
5
acquire through the conversion of shares of Class B Stock into
shares of Common Stock which they currently own, (see "Principal
Holders of Securities"). Also included in the table are 2,904
shares for a foundation of which Mr. Feldman is a trustee and
6,469 shares for a foundation of which Mr. Pollak is a trustee.
Also included in the table are 4,426 shares for Mr. Feldman,
2,414 shares for Mr. Pollak and 2,012 shares for Mr. Gordon and
8,852 shares for all directors and executive officers as a group,
issuable upon the conversion of bonds issued with the Company's
12% Subordinated Debentures Due 1997. Mr. Feldman disclaims
beneficial ownership of the 2,414 shares issuable upon conversion
of bonds held by his wife pursuant to the Debentures. Messrs.
Feldman, Pollak and Gould disclaim beneficial ownership of 8,447,
23,006 and 100 shares, respectively, held by members of their
families which are included in the table.
(2) Included in the table are options to purchase 775,000 shares
of Class B Options for each of Messrs. Feldman and Pollak which
they currently have the right to acquire through the exercise of
stock options, which shares are convertible into shares of Common
Stock.
(3) Of the directors and executive officers of the Company, the
following beneficially own the number of shares of common stock
of Interferon Sciences, Inc. ("Interferon") indicated: Jerome I.
Feldman 458,300 (2.31%); Martin M. Pollak 442,500 (2.23%); Ogden
R. Reid 5,100 (.026%); Scott N. Greenberg 145,000 (.74%); Roald
Hoffmann 2,000 (.010%) and Lawrence M. Gordon 162,500 (.83%).
These shares include 440,000, 440,000, 5,000, 145,000, 2,000 and
162,500 shares for Messrs. Feldman, Pollak, Reid, Greenberg,
Hoffmann and Gordon, respectively, which are subject to currently
exercisable stock options. In addition, all directors and
executive officers as a group beneficially own 1,215,400 shares,
of which 1,194,500 shares are subject to currently exercisable
stock options. Certain members of the families of Messrs. Feldman
and Pollak hold 5,800 and 1,000 shares, respectively, as to which
Messrs. Feldman and Pollak disclaim beneficial ownership. Mr.
Feldman and Mr. Pollak through their ownership of the Company's
Common Stock, may be deemed to beneficially own the 6,975,148
shares of Common Stock of Interferon beneficially owned by the
Company. However, Mr. Feldman and Mr. Pollak disclaim benefical
ownership of such 6,975,148 shares (7,433,448 and 7,417,648
shares in the aggregate for Mr. Feldman and Mr. Pollak,
respectively). The total number of shares owned by all directors
and executive officers of the Company as a group (other than
Messrs. Feldman and Pollak) is 1.6% of the outstanding shares of
Interferon's common stock. All such persons have sole voting and
investment power as to all shares except as indicated.
(4) Of the directors and executive officers of the Company, the
following beneficially own the number of shares of common stock
of GTS Duratek, Inc. ("Duratek") indicated: Jerome I.
6
Feldman 176,000 (2.05%) (of which 165,000 shares are subject to
currently exercisable stock options); Martin M. Pollak 167,500
(1.95%) (of which 165,000 shares are subject to currently
exercisable stock options); Scott N. Greenberg 35,250 (.41%) (of
which 35,000 shares are subject to currently exercisable stock
options); Lawrence M. Gordon 25,000 (.29%) (of which all shares
are subject to currently exercisable stock options). In addition,
all directors and executive officers as a group beneficially own
414,750 shares, of which 407,000 shares are subject to currently
exercisable stock options. Members of Mr. Feldman's family hold
6,000 shares, as to which Mr. Feldman disclaims beneficial
ownership. Mr. Feldman and Mr. Pollak through their ownership of
the Company's Common Stock, may be deemed to beneficially own an
aggregate of 5,652,101 shares of Duratek beneficially owned by
the Company and GPS. However, Mr. Feldman and Mr. Pollak
disclaim beneficial ownership of such 5,652,101 shares (5,828,101
and 5,819,601 shares in the aggregate for Mr. Feldman and Mr.
Pollak, respectively). The total number of shares owned by all
directors and executive officers of the Company as a group (other
than Messrs. Feldman and Pollak) is .90% of the outstanding
shares of Duratek's common stock. All such persons have sole
voting and investment power as to all shares except as indicated.
(5) Of the directors of the Company, Mr. Pollak is the beneficial
owner of 1,000 shares of common stock of GPS Technologies, Inc.
("GPS").
(6) Member of the Executive Committee.
(7) Member of the Audit Committee.
As of March 1, 1994 the Company owned 6,975,148 shares of
Interferon common stock, constituting approximately 36% of the
outstanding shares.
As of March 1, 1994 the Company owned 1,702,101 shares of
Duratek common stock, constituting approximately 19.9% of the
outstanding shares and GPS owned 3,950,000 shares of Duratek
common stock, constituting approximately 46.2% of the outstanding
shares. Since the Company owns approximately 92% of the
outstanding shares of GPS, its voting control of Duratek is
approximately 66%.
As of March 1, 1994 the Company owned 2,842,300 shares of GPS
common stock, constituting approximately 92% of the outstanding
shares.
ELECTION OF DIRECTORS
Six directors will be elected at the meeting to hold office
until the next Annual Meeting of Stockholders and until their
respective successors are elected and qualify. The By-Laws of the
7
Company permit the Board of Directors to fix the number of
directors at no less than three nor more than fifteen persons,
and the Board of Directors has fixed the number of directors at
six persons. The Proxies solicited by this proxy statement may
not be voted for a greater number of persons than the number of
nominees named. It is intended that these Proxies will be voted
for the following nominees, but the holders of these Proxies
reserve discretion to cast votes for individuals other than the
nominees for director named below in the event of the
unavailability of any such nominee. The Company has no reason to
believe that any of the nominees will become unavailable for
election. Set forth below are the names of the nominees, the
principal occupation of each, the year in which first elected a
director of the Company and certain other information concerning
each of the nominees.
Jerome I. Feldman is founder of, and since 1959, has been
President and Chief Executive Officer of the Company. He has been
Chairman of the Executive Committee and a director of Interferon,
which is a biopharmaceutical company engaged in the manufacture
and sale of ALFERON N Injection since 1981; a director since 1981
and Chairman of the Board since 1985 of Duratek, a company which
provides environmental technology and consulting services to
various utilities, industrial and commercial clients; a director
since 1987 and Chairman of the Executive Committee since 1988 of
General Physics Corporation ("Physics"), a company which provides
personnel training and technical support services to the domestic
commercial nuclear power industry and to the United States
Department of Energy; and Chief Executive Officer, Chairman of
the Executive Committee and a director of GPS, which provides
training, engineering, technical services, computer simulation
services and analytical laboratory services to commercial
industries and the United States Government, since May 1991. He
has been a Director of Hamilton Financial Services, Inc., a
financial service holding company since 1983. Mr. Feldman is also
a Trustee of the New England Colleges Fund and of Bard College.
Age 65
Martin M. Pollak is founder of, and since 1959, has been
Executive Vice President, Treasurer and a Director of the
Company. He has been Chairman of the Board of Interferon since
1981; a director of Duratek since 1983 and Chairman of the
Executive Committee since 1985; a director of Physics since 1987
and Chairman of the Board since 1988; and Chairman of the Board
of GPS since May 1991. Mr. Pollak is Chairman of the Czech and
Slovak United States Economic Counsel and a member of the Board
of Trustees of the Worcester Foundation for Experimental Biology
and a director of Brandon Systems Corporation, a personnel
recruiting company, since 1986. Age 66
Scott N. Greenberg has been a Director of the Company since
1987, Vice President and Chief Financial Officer since 1989 and
8
Vice President, Finance from 1985. He has been a director of
Duratek since 1991; a director of Physics since 1987 and a
director of GPS since May 1991. Age 37
Ogden R. Reid has been a Director of the Company since 1979.
He has been a director of Interferon since 1982; Vice Chairman of
the Board of Duratek since 1991; a director of Physics since 1988
and Vice Chairman and director of GPS since 1992. Mr. Reid had
been Editor and Publisher of the New York Herald Tribune and of
its International Edition; United States Ambassador to Israel; a
six-term member of the United States Congress and a New York
State Environmental Commissioner. Age 67
Roald Hoffmann, Ph.D. has been a Director of the Company
since 1988 and a Director of Interferon since 1991. He has been a
John Newman Professor of Physical Science at Cornell University
since 1974. Dr. Hoffmann is a member of the National Academy of
Sciences and the American Academy of Arts and Sciences. In 1981,
he shared the Nobel Prize in Chemistry with Dr. Kenichi Fukui.
Age 56
Paul A. Gould has been a Director of the Company since March
1993. He has been Managing Director since 1979 of Allen & Company
Incorporated, an investment banking firm. He has been a Director
since 1992 of Liberty Media Corp., a cable programming company
and a Director since 1987 of Allegheny & Western Energy
Corporation, an oil and gas exploration company. Age 48
Board of Directors
The Board of Directors has the responsibility for
establishing broad corporate policies and for the overall
performance of the Company, although it is not involved in
day-to-day operating details. Members of the Board are kept
informed of the Company's business by various reports and
documents sent to them as well as by operating and financial
reports made at Board and Committee meetings. The Board held
three meetings in 1993, at which all of the directors attended
the meetings of the Board and Committees on which they served,
except for Paul A. Gould, who attended fewer than 75% of the
meetings.
Directors Compensation
Directors who are not employees of the Company receive a fee
of $1,500 for each meeting of the Board of Directors attended,
but do not receive any additional compensation for service on
committees of the Board of Directors. Officers of the Company do
not receive additional compensation for serving as directors.
9
Executive Committee
The Executive Committee, consisting of Jerome I. Feldman and
Martin M. Pollak, meets on call and has authority to act on most
matters during the intervals between Board meetings. The
committee formally acted 24 times in 1993 through unanimous
written consents.
Audit Committee
The Audit Committee reviews the internal controls of the
Company and the objectivity of its financial reporting. It meets
with appropriate Company financial personnel and the Company's
independent certified public accountants in connection with these
reviews. This committee recommends to the Board the appointment
of the independent certified public accountants, subject to the
ratification by the stockholders at the Annual Meeting, to serve
as auditors for the following year in examining the books and
records of the Company. This Committee met two times in 1993. The
Audit Committee currently consists of Ogden R. Reid, Roald
Hoffmann and Paul A. Gould.
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid
by the Company and subsidiaries to its Chief Executive Officer
and the Company's most highly compensated executive officers for
1993.
SUMMARY COMPENSATION TABLE
Annual Compensation
Salary
Bonus
Name and Principal Position Year ($) ($)
Jerome I. Feldman 1993 16,526
120,000
President and Chief 1992 326,243 -0-
Executive Officer 1991 367,781
75,000
Martin M. Pollak 1993 315,110 -0-
Executive Vice President 1992 325,110
151,250
and Treasurer 1991 352,223
200,000
Scott N. Greenberg 1993 156,625 -0-
Vice President and 1992 151,000 -0-
Chief Financial Officer 1991 156,311
235,000
Lawrence M. Gordon 1993 183,205
50,000
Vice President and 1992 183,507 -0-
General Counsel 1991 187,354
235,000
10
Long Term
Compensation
Awards
All Other
Options
Compensation
Name and Principal Position ($) ($)
Jerome I. Feldman -0-
3,598(f1)
President and Chief -0-
253,491(f1)
Executive Officer -0-
250,000(f1)
Martin M. Pollak -0-
3,598(f1)
Executive Vice President -0-
253,491(f1)
and Treasurer -0-
250,000(f1)
Scott N. Greenberg -0-
3,598(f2)
Vice President and 22,500 2,932
Chief Financial Officer -0- -0-
Lawrence M. Gordon -0-
2,937(f2)
Vice President and -0- 3,392
General Counsel -0- -0-
(1) Includes $3,598 and $3,491 as a matching contribution by the
Company to the 401(k) Savings Plan, which became effective
on March 1, 1992 and $250,000 in 1991 and 1992 pursuant to a
Non-Compete Agreement between Messrs. Feldman and Pollak and
SmithKline Beckman Corporation. See "Employment Contracts
and Termination of Employment and Change in Control
Arrangements."
(2) Matching contribution by the Company to the 401(k) Savings
Plan.
For the year ended 1993, none of the named executive
officers were granted non-qualified stock options.
The following table and notes set forth information for the
named executive officers regarding the exercise of stock options
during 1993 and unexercised options held at the end of 1993.
11
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1993
AND YEAR-END OPTION VALUES
Shares Acquired
on Exercise
(#) (f1) Value Realized
($)
Name
Jerome I. Feldman -0- -0-
Martin M. Pollak -0- -0-
Scott N. Greenberg -0- -0-
Lawrence M. Gordon -0- -0-
Number of Unexercised
Options at December 31,
1993 ($)
Exercisable/Unexercisable
Name
Jerome I. Feldman 1,778,667(f2) -0-
Martin M. Pollak 1,788,667(f2) -0-
Scott N. Greenberg 180,700 4,000
Lawrence M. Gordon 140,100 4,000
Value of Unexercised
In-the-Money Options at
December 31, 1993 ($)
Name
Exercisable/Unexercisable (f3)
Jerome I. Feldman 3,335,001 -0-
Martin M. Pollak 3,353,751 -0-
Scott N. Greenberg 338,813 7,500
Lawrence M. Gordon 262,688 7,500
(1) None of the named executive officers exercised any stock
options during 1993.
(2) Includes 775,000 Class B Options, which options are
convertible into shares of Common Stock on a share for share
basis.
(3) Calculated based on the closing price of the Common Stock
($4.125) as reported by the American Stock Exchange on
December 31, 1993.
12
Board Compensation Committee Report on Executive Compensation
During the year ended December 31, 1993, the Company did not
have a Compensation Committee. Accordingly, the full Board of
Directors is responsible for determining and implementing the
compensation policies of the Company.
The executive compensation policies are designed to offer
competitive compensation opportunities for all executives which
are based on personal performance, individual initiative and
achievement, and assists the Company in attracting and retaining
qualified executives.
The Board also endorses the position that stock ownership by
management and stock-based compensation arrangements are
beneficial in aligning managements' and shareholders' interests
in the enhancement of shareholder value and recommends to the
Stock Option Committee the grant of stock options to executive
officers whose performance had a significant effect on the
success of the Company.
Compensation paid to the Company's executive officers
generally consists of the following elements: base salary, annual
bonus and grant of stock options. The compensation for Mr. Pollak
is determined on the same basis as that of Mr. Feldman, the Chief
Executive Officer. The compensation for the other executive
officers of the Company is determined by a consideration of each
officer's initiative and contribution to overall corporate
performance, the officer's managerial abilities and the
performance in any special projects that the officer may have
undertaken. Competitive base salaries that reflect the
individual's level of responsibility are important elements of
the Company's executive compensation philosophy. Subjective
considerations of individual performance are considered by the
Board in establishing annual bonuses and other incentive
compensation.
The Company has certain broad-based employee benefit plans
in which all employees, including the named executives are
permitted to participate on the same terms and conditions
relating to eligibility and subject to the same limitations on
amounts that may be contributed. In 1993, the Company also made a
matching contribution to the 401(k) Savings Plan for those
participants.
Mr. Feldman's 1993 Compensation
Mr. Feldman's compensation is determined principally by the
terms of his employment agreement. As of January 1, 1989, the
Company entered into an Employment Agreement (the "Agreement")
with Mr. Feldman which provides that Mr. Feldman will serve as
President and Chief Executive Officer of the Company for the
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period through December 31, 1994. See "Employment Contracts and
Termination of Employment and Change in Control Arrangements."
The Agreement was approved by a vote of the entire Board. The
Agreement provides Mr. Feldman with annual compensation (a
minimum base salary) of $300,000 (subject to review by the Board
of Directors). Mr. Feldman also received a cash bonus of
$120,000 in 1993. Among the factors the Board considered in
awarding Mr. Feldman a cash bonus, were Mr. Feldman's significant
contribution to the Company's reduction of its long-term debt and
improvement of the financial performance of certain operating
units of the Company. In addition, in 1993 Mr. Feldman received
compensation of $16,250 for serving as a Director and Chairman of
the Executive Committee of General Physics Corporation, a public
company, in which National Patent has a 28% investment.
The Board of Directors
Jerome I. Feldman
Martin M. Pollak
Scott N. Greenberg
Ogden R. Reid
Roald Hoffmann, Ph.D.
Paul A. Gould
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1993 the Company did not
have a Compensation Committee and the entire Board of Directors
made decisions on compensation of the Company's executives.
Mr. Feldman, the Company's Chief Executive Officer and a
director, Mr. Pollak, the Company's Executive Vice President and
Treasurer and a director and Mr. Greenberg, the Company's Vice
President and Chief Financial Officer and a director participated
in Board executive compensation deliberations.
Employment Contracts and Termination of Employment and Change in
Control Arrangements
Agreements with Messrs. Feldman and Pollak. As of January 1,
1989, the Company entered into the Agreements with its President
and Chief Executive Officer, Jerome I. Feldman, and with its
Executive Vice President and Treasurer, Martin M. Pollak (the
"Employees").
Pursuant to the Agreements, Mr. Feldman will serve as
President and Chief Executive Officer of the Company and Mr.
Pollak will serve as Executive Vice President and Treasurer of
the Company for the period through December 31, 1994. The
Agreements provide for each Employee to receive annual
compensation (a minimum base salary) of $300,000 (subject to
increase by the Board of Directors). The Agreements provide for
the termination of employment upon the Employee's death, physical
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or mental disability or retirement. In addition, the Company may
terminate the Employee's employment "for cause" (including a
failure to perform required duties or the engaging in of gross
misconduct) and each Employee may voluntarily terminate his
employment for "Good Reason", which occurs if the Employee
determines in good faith that due to a change in control of the
Company he is not able to effectively discharge his duties.
"Change in control" is defined to include (1) any "person" (other
than the Employees or certain persons who may acquire securities
of the Company from an Employee) acquiring the beneficial
ownership of more than 30% of the Company's outstanding
securities or (2) certain changes in the composition of the Board
of Directors of the Company.
Upon termination by the Company "for cause", all obligations
of the Company under the Employee's Agreement terminates. Upon
termination by the Company other than "for cause", disability, or
retirement, or by the Employee for "Good Reason", such Employee
is entitled to receive as severance pay an amount equal to his
full base salary (which at the present time is a minimum of
$300,000 for each of the Employees) at the rate then in effect,
multiplied by the greater of (1) the number of years (including
fractions thereof) remaining in the term of the employment, or
(2) the number three. In addition, the Employee would receive an
amount in cash equal to the aggregate spread between the exercise
prices of all options held by the Employee under the Company's
1973 Non-Qualified Stock Option Plan and the higher of (x) the
market value of the Common Stock, and (y) the highest price paid
in connection with any change in control of the Company. Subject
to certain conditions, the Company would also maintain for two
years (or until the Employee's commencement of full-time
employment with a new employer) certain insurance, health and
disability plans in effect, or arrange for substantially similar
benefits. The Agreements also contain non-competition and
confidentiality provisions.
PERFORMANCE GRAPH
The following table compares the performance of the Company
for the periods indicated with the performance of the AMEX Market
Value Index and the Dow Jones Industry Group BTC Biotechnology.
Total Return Indices reflect reinvested dividends and are
weighted on a market capitalization basis at the time of each
reported data point. Assumes $100 invested on December 31, 1988
in National Patent Common Stock, AMEX Market Value Index and Dow
Jones Industry Group BTC - Biotechnology. Values are as of
December 31 of specified year assuming that dividends are
reinvested.
15
Comparison of 5-Year Cumulative Total Return
Index 1988 1989 1990 1991 1992 1993
NPDC 100 114 41 71 42 64
AMEX Market 100 127 103 126 135 159
Dow Jones
Biotech 100 131.28 159.48 335.74 310.57 292.04
PROPOSED AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
Increase in Authorized Shares
The Board of Directors unanimously recommends that the
stockholders adopt an amendment to the Company's Certificate of
Incorporation which will increase the authorized shares of Common
Stock, par value $.01 per share, from 30,000,000 shares to
40,000,000 shares. On March 1, 1994, 20,295,388 of the
30,000,000 shares of Common Stock presently authorized were
outstanding and an aggregate of 9,710,257 shares were reserved
for issuance.
The Company's Board of Directors has unanimously recommended
for approval by stockholders the proposal to amend the first
sentence of Article Fourth of the Certificate of Incorporation as
follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
fifty-two million eight hundred thousand (52,800,000) shares
of which forty million (40,000,000) are to be Common Stock
of the par value of one cent ($.01) per share (hereinafter
called the "Common Stock"); of which two million eight
hundred thousand (2,800,000) shares are to be Class B
Capital Stock with a par value of one cent ($.01) per share
(hereinafter called the "Class B Capital Stock"); and of
which ten million (10,000,000) shares are to be Preferred
Stock with a par value of one cent ($.01) per share
(hereinafter called the "Preferred Stock"), to be issued in
such series and with such terms and conditions as the Board
of Directors may determine.
The Board of Directors believes that it would be in the best
interests of the Company to have additional shares of Common
Stock available for issuance at its discretion and without the
necessity for a special stockholders' meeting to enhance the
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Company's flexibility in connection with possible future actions,
such as acquisitions, financings, investment opportunites,
internal development, retirement of outstanding indebtedness, and
other corporate purposes.
If the amendment is approved by the stockholders as
described below, the additional shares may be issued form time to
time upon authorization of the Board of Directors without further
authorization of the stockholders for such consideration as the
Board of Directors may determine and as may be permitted by the
laws of Delaware. The amendment is not being proposed as a means
of preventing a change in control or takeover of the Company.
However, the use of these shares for such a purpose is possible.
For instance, shares of authorized but unissued or unreserved
Common Stock could be issued in an effort to dilute the stock
ownership and voting power of persons seeking to obtain control
of the Company or could be issued to purchasers who would support
the Board of Directors in opposing a takeover proposal. Such
possibilities may have the effect of discouraging a challenge for
control or making it less likely that such a challenge would take
place. The unissued and unreserved shares of Common stock, Class
B Capital Stock and Preferred Stock will still be available for
issuance for any proper corporate purpose, as authorized from
time to time by the Board of Directors without further approval
by the stockholders of the Company. The additional shares of
Common Stock will be identical to the currently authorized shares
of Common Stock in all respects. Holders of such shares will not
have preemptive rights to purchase any capital stock of the
Company.
Reasons for and Effect of Authorization
The Board of Directors believes that the complexity of
modern business financing requires greater flexibility in the
Company's capital structure than now exists. The additional
shares of Stock to be authorized by the proposed amendment would
be available for issuance from time to time for any proper
corporate purpose, including, as appropriate, acquisitions and
public or private sales for cash as a means of obtaining capital
for use in the Company's business, retirement of outstanding
indebtedness, and other corporate purposes.
It is not possible to state the actual effect of the
authorization of the additional shares of stock upon the rights
of holders of the Common Stock, however the effect of the
additional shares of Common Stock might include dilution of the
equity interest of the Common Stock.
APPROVAL OF SELECTION OF KPMG PEAT MARWICK AS AUDITORS
The Board of Directors has selected KPMG Peat Marwick to
audit the accounts of the Company for the year ending December
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31, 1994. KPMG Peat Marwick has no financial interest in the
Company and neither it nor any member or employee of the firm has
had any connection with the Company in the capacity of promoter,
underwriter, voting trustee, director, officer or employee. KPMG
Peat Marwick has audited the accounts of the Company since 1970.
The Delaware General Corporation Law does not require the
approval of the selection of auditors by the Company's
stockholders, but in view of the importance of the financial
statements to the stockholders, the Board of Directors deems it
desirable that they pass upon its selection of auditors. In the
event the stockholders disapprove the selection, the Board of
Directors will consider the selection of other auditors. The
Board of Directors recommends that you vote in favor of the above
proposal in view of the familiarity of KPMG Peat Marwick with the
Company's financial and other affairs acquired during its
previous service as auditors for the Company.
A representative of KPMG Peat Marwick is expected to be
present at the Annual Meeting, with the opportunity to make a
statement if he desires to do so, and is expected to be available
to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the
Company's 1995 proxy statement provided they are received by the
Company no later than January 13, 1995, and are otherwise in
compliance with applicable Securities and Exchange Commission
regulations.
GENERAL
So far as is now known, there is no business other than that
described above to be presented for action by the stockholders at
the meeting, but it is intended that the proxies will be voted
upon any other matters and proposals that may legally come before
the meeting and any adjournments thereof in accordance with the
discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the
Company. It is expected that the solicitations will be made
primarily by mail, but regular employees or representatives of
the Company may also solicit proxies by telephone or telegraph
and in person, and arrange for brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to
their principals at the expense of the Company.
Lydia M. DeSantis
Secretary
18
NATIONAL PATENT DEVELOPMENT CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held June 8, 1994
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a
stockholder of National Patent Development Corporation hereby
appoints Jerome I. Feldman and Martin M. Pollak, and each of
them, attorneys and agents of the undersigned, with full power of
substitution, to vote all shares of the Common Stock of the
undersigned in said Company at the Annual Meeting of Stockholders
of said Company to be held at The Brunswick Hilton, Three Tower
Center Boulevard, East Brunswick, New Jersey on June 8, 1994, at
1:30 P.M. Eastern Standard Daylight Savings Time and at any
adjournments thereof, as fully and effectually as the undersigned
could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or
their substitutes may lawfully do in place of the undersigned as
indicated below.
This proxy when properly executed will be voted as directed. If
no direction is indicated, this proxy will be voted for proposals
(1) (2) and (3).
1. Proposal to amend the Restated Certificate of Incorporation
to increase the total number of authorized shares of common
stock.
FOR AGAINST
ABSTAIN
2. Election of Directors: Jerome I. Feldman, Martin M. Pollak,
Scott N. Greenberg, Roald Hoffmann, Odgen R. Reid, and Paul
A. Gould.
FOR all nominees WITHHOLD AUTHORITY (INSTRUCTION: To
withhold
(Except as marked to vote for all authority to vote for
any
to the contrary nominees individual
nominee, write
below) that nominee's
name in
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the space
provided below)
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3. Proposal to approve the selection of KPMG Peat Marwick to
audit the accounts of the Company for the current year.
FOR AGAINST
ABSTAIN
4. Upon any other matters which may properly come before the
meeting or any adjournments thereof.
Please sign exactly as name appear below.
Dated , 1994
Signature
Signature if held jointly
Please mark, sign, date and
return the proxy card promptly
using the enclosed envelope.
When shares are held by joint
tenants both should sign.
When signing as attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership
please sign in partnership
name by authorized person.
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