Exchange Act of 1934
Proxy Statement Pursuant to Section 14(a) of the Securities
(Amendment No.--)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] 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)
Lawrence M. Gordon
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or,
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:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0.11:1
(4) Proposed maximum aggregate value of transaction:
1Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 20, 1995
To The Stockholders:
The Annual Meeting of Stockholders of National Patent Development
Corporation (the "Company") will be held at the Columbia Inn, 10207
Wincopin Circle, Columbia, Maryland on the 20th day of September, 1995,
at 2:30 P.M., Eastern Standard Daylight Savings Time, for the following
purposes:
1. To elect seven Directors to serve until the next Annual
Meeting and until their respective successors are elected
and qualify.
2. To consider and act upon a proposal to amend the Company's
Restated Certificate of Incorporation to effect a reverse
stock split (the "Reverse Stock Split") in which each four
shares of issued Common Stock of the Company, par value $.01
per share, whether issued and outstanding or held in
treasury, will be reclassified and changed into one share of
new Common Stock of the Company, par value $.01 per share.
3. 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 July
28, 1995 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
August 18, 1995
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
August 18, 1995
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 Columbia Inn, 10207 Wincopin Circle,
Columbia, Maryland on the 20th day of September, 1995 at 2:30 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 August 18,1995.
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 seven nominees for election as directors
named herein and FOR the approval of the Reverse Stock Split. 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. The election of
directors will be determined by a plurality of the votes of the shares
of common stock, par value $.01 per share (the "Common Stock") and Class
B Capital Stock, par value $.01 per shares (the "Class B Stock") present
in person or represented by proxy at the Annual Meeting and entitled to
vote on the election of directors. A majority of the votes represented
by the outstanding shares of Common Stock and a majority of the votes
represented by the outstanding shares of Class B Stock, each voting
separately as a class, is required to approve the Reverse Stock Split.
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 the
approval of the Reverse Stock Split, an abstention will operate to
prevent approval of the Reverse Stock Split 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 with respect to the
approval of the Reverse Stock Split.
VOTING SECURITIES
The Board of Directors has fixed the close of business on July 28,
1995 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 July 28, 1995 consisted of
26,951,311 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 July 28, 1995, 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 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 983,333 shares(1) 50(2)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Martin M. Pollak 983,333 shares(1) 50(2)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
(1)Includes 858,333 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 89% 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 July 12, 1995, Mr. Feldman and Mr. Pollak controlled in
the aggregate approximately 10.2% of the voting power of all voting
securities of the Company. This percentage for Mr. Feldman and Mr.
Pollak would increase to approximately 45.8% 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., Princeton Services, Inc.
and Merrill Lynch Phoenix Fund, Inc. filed a 13-G which disclosed the
ownership of 1,426,100 shares of the Common Stock representing
approximately 5.9% of the outstanding Common Stock as of December 31,
1994.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
<R >
The following table sets forth, as of July 12, 1995, 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.
Total Number of Shares
Beneficially
Name Owned
Jerome I. Feldman(1)(2)(3)(4) 2,328,302
Martin M. Pollak(1)(2)(3)(4) 2,328,039
Scott N. Greenberg(3) 201,300
Roald Hoffmann, Ph.D.(5) 31,466
Ogden R. Reid(5) 19,000
Paul A. Gould(1)(5) 316,500
Herbert R. Silverman 5,000
Lawrence M. Gordon(1) 146,612
Directors and Executive Officers as a Group
(9 persons) (1)(3) 5,376,244
Percent of
Common Stock
Owned
Jerome I. Feldman (1)(2)(3)(4) 8.03
Martin M. Pollak (1)(2)(3)(4) 8.03
Scott N. Greenberg(3) *
Ogden R. Reid(5) *
Roald Hoffmann, Ph.D.(5) *
Paul A. Gould(1)(5) 1.18
Herbert R. Silverman *
Lawrence M. Gordon (1) *
Directors and Executive Officers as a Group
(9 persons)(1)(3) 17.10
Of Total Number of
Shares Beneficially
Owned,
Shares Which May Be
Acquired Within 60 Days
Jerome I. Feldman(1)(2)(3)(4) 1,945,333
Martin M. Pollak(1)(2)(3)(4) 1,955,333
Scott N. Greenberg(3) 184,700
Roald Hoffmann, Ph.D.(5) 29,666
Ogden R. Reid(5) ` 18,000
Paul A. Gould(1)(5) 6,000
Herbert A. Silverman -0-
Lawrence M. Gordon(1) 144,100
Directors and Executive Officers as a Group
(9 persons)(1)(3) 4,283,132
* 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 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 is 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 4,691, 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 858,333 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
General Physics Corporation ("GPC") indicated: Jerome I. Feldman-2,100
(.02%); Martin M. Pollak-5,900 (.06%) and Scott N. Greenberg-1,000
(.01%). In addition, all directors and executive officers as a group
beneficially own 9,000 shares. Mr. Feldman and Mr. Pollak through their
ownership of the Company's Common Stock, may be deemed to beneficially
own an aggregate of 5,215,165 shares of GPC beneficially owned by the
Company, Five Star and MXL, wholly-owned subsidiaries of the Company.
However, Mr. Feldman and Mr. Pollak disclaim beneficial ownership of
such 5,215,165 shares (5,217,265 and 5,221,065 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 .01% of the
outstanding shares of GPC's common stock. All such persons have sole
voting and investment power as to all shares except as indicated.
(4) Member of the Executive Committee.
(5) Member of the Audit Committee.
As of July 12, 1995 the Company owned 3,515,165 shares of GPC
common stock, constituting approximately 34% of the outstanding shares,
Five Star owned approximately 1,062,500 shares constituting
approximately 10% and MXL owned approximately 637,500 shares
constituting approximately 6% of the outstanding shares of GPC common
stock. Accordingly, the Company's voting control of GPC is
approximately 50.89%.
As of July 12, 1995 the Company owned 2,842,300 shares of SGLG,
Inc. ("SGLG") common stock, constituting approximately 92% of the
outstanding shares. In addition, Mr. Pollak owns 1,000 shares of SGLG
common stock.
ELECTION OF DIRECTORS
Seven 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 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 seven 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 and a Director 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 from 1985 to January 1995 of GTS Duratek
Inc., ("Duratek") a company which provides environmental technology and
consulting services to various utilities, industrial and commercial
clients; a Director since 1987, Chairman of the Executive Committee
since 1988 and Chief Executive Officer since September 1994 of GPC, 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; President since October 1994 and Chief
Executive Officer, Chairman of the Executive Committee and a Director of
SGLG since 1991, a holding company; and a director and consultant to
American Drug Company ("ADC"), a generic drug distribution company since
January 1994. 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
67
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 from 1985 to January
1995; a Director of GPC since 1987 and Chairman of the Board since 1988;
Chairman of the Board of SGLG since 1991; and President, Chief Executive
Officer and a director of ADC since January 1994. 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 68
Scott N. Greenberg has been a Director of the Company since 1987,
Vice President and Chief Financial Officer since 1989 and Vice
President, Finance from 1985. He has been a Director of GPC since 1987;
a Director of SGLG since 1991; Chief Financial Officer and a Director of
ADC since January 1994 and from 1991 to January 1995, a Director of
Duratek. Age 38
Ogden R. Reid has been a Director of the Company since 1979. He
has been a Director of Interferon since 1982; a Director of GPC since
1988 and Vice Chairman and Director of SGLG since 1992; from 1991 to
January 1995 he was Vice Chairman of the Board of Duratek. 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 70
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 57
Paul A. Gould has been a Director of the Company since 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 April 1994
of Resource Recycling Technologies, Inc., which is engaged in solid
waste material management alternatives. Age 49
Herbert R. Silverman has been a Director of the Company since
November 1994. Since 1975 he has been a Senior Advisor to Bank Julius
Baer (New York), Zurich, Switzerland, Chairman of the Executive
Committee of Baer American Banking Corporation since 1976 and is a
member of the Board of Directors of Partners Funds, Inc. and Focus Fund,
both of which are mutual stock funds managed by Neuberger & Berman since
1965. He is also a life trustee of New York University and New York
University Medical Center. Age 77
Section 16 Reporting
Section 16(a) of the Securities Exchange Act 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") and the American Stock Exchange, Inc. Officers,
directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of copies of such forms received by it
and written representations from certain reporting persons that no Forms
5 were required for those persons, the Company believes that during its
most recent fiscal year, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were
complied with, except for Paul A. Gould, a Director of the Company, who
filed a late report on Form 4.
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
1994, at which all of the directors attended the meetings of the Board
and Committees on which they served, except for Roald Hoffmann, who
attended fewer than 75% of the meetings.
Directors Compensation
Directors who are not employees of the Company receive a fee of
$1,500 for each meeting of the Board of Directors attended, but do not
receive any additional compensation for service on committees of the
Board of Directors. Officers of the Company do not receive additional
compensation for serving as directors.
Executive Committee
The Executive Committee, consisting of Jerome I. Feldman and
Martin M. Pollak, meets on call and has authority to act on most matters
during the intervals between Board meetings. The committee formally
acted 26 times in 1994 through unanimous written consents.
Audit Committee
The Audit Committee reviews the internal controls of the Company
and the objectivity of its financial reporting. It meets with
appropriate Company financial personnel and the Company's independent
certified public accountants in connection with these reviews. This
committee recommends to the Board the appointment of the independent
certified public accountants, subject to the ratification by the
stockholders at the Annual Meeting, to serve as auditors for the
following year in examining the books and records of the Company. This
Committee met twice in 1994. The Audit Committee currently consists of
Ogden R. Reid, Roald Hoffmann and Paul A. Gould.
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the
Company and subsidiaries to its Chief Executive Officer and the
Company's most highly compensated executive officers for 1994.
SUMMARY COMPENSATION TABLE
Annual Compensation
Salary Bonus
Name and Principal Position Year ($) ($)
Jerome I. Feldman 1994 322,304 40,000(1)
President and Chief 1993 316,526 120,000
Executive Officer 1992 326,243 -0-
Martin M. Pollak 1994 322,259(2) 40,000(1)
Executive Vice President 1993 315,110 -0-
and Treasurer 1992 325,110 151,250
Scott N. Greenberg 1994 216,375 20,000(1)
Vice President and 1993 156,625 -0-
Chief Financial Officer 1992 151,000 -0-
Lawrence M. Gordon 1994 233,205 50,000(1)
Vice President and 1993 183,205 50,000
General Counsel 1992 183,507 -0-
(1) For 1994, Messrs. Feldman, Pollak, Greenberg and Gordon received
their respective cash bonuses for services rendered to Interferon.
(2) For 1994, $150,000, of Mr. Pollak's compensation was paid by ADC, as
a consequence of his services to both companies.
Long Term
Compensation
Awards All Other
Options Compensation
Name and Principal Position ($) ($)
Jerome I. Feldman -0- 3,696(1)
President and Chief -0- 3,598(l)
Executive Officer -0- 253,491(1)
Martin M. Pollak -0- 3,696(1)(2)
Executive Vice President -0- 3,598(1)
and Treasurer -0- 253,491(1)
Scott N. Greenberg -0- 3,696(3)
Vice President and -0- 3,598(3)
Chief Financial Officer 22,500 2,932(3)
Lawrence M. Gordon -0- 3,696(3)
Vice President and -0- 2,937(3)
General Counsel -0- 3,392(3)
(1) Includes $3,696, $3,598 and $3,491 as a matching contribution by
the Company to the 401(k) Savings Plan, and $250,000 in 1992 pursuant to
a Non-Compete Agreement between Messrs. Feldman and Pollak and
SmithKline Beecham Corporation. See "Employment Contracts and
Termination of Employment and Change in Control Arrangements."
(2) Constitutes matching contributions made by ADC and the Company
equally on behalf of Mr. Pollak pursuant to the Company's 401(k) Savings
Plan.
(3) Matching contribution by the Company to the 401(k) Savings Plan.
For the year ended 1994, none of the named executive officers were
granted non-qualified stock options.
The following table and notes set forth information for the named
executive officers regarding the exercise of stock options during 1994
and unexercised options held at the end of 1994.
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1994
AND YEAR-END OPTION VALUES
Shares Acquired
on Exercise
(#) (1) Value Realized
($)
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,
1994 (#)
Exercisable/Unexercisable
Name
Jerome I. Feldman 1,778,667(2) -0-
Martin M. Pollak 1,788,667(2) -0-
Scott N. Greenberg 184,700 -0-
Lawrence M. Gordon 144,100 -0-
Value of Unexercised
In-the-Money Options at
December 31, 1994 ($)
Name Exercisable/Unexercisable
Jerome I. Feldman -0- -0-
Martin M. Pollak -0- -0-
Scott N. Greenberg -0- -0-
Lawrence M. Gordon -0- -0-
(1) None of the named executive officers exercised any stock options
during 1994.
(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 (1.8125)
as reported by the American Stock Exchange on December 30, 1994.
Board Compensation Committee Report on Executive Compensation
During the year ended December 31, 1994, the Company did not have
a Compensation Committee. Accordingly, the full Board of Directors was
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 assist 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 management's 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 has 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 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
1994, the Company also made matching contributions to the 401(k) Savings
Plan for those participants.
Mr. Feldman's 1994 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
provided that Mr. Feldman serve as President and Chief Executive Officer
of the Company for the period through December 31, 1994. 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 $40,000 in 1994 from Interferon for his
substantial efforts in seeking to obtain additional financing for
Interferon. In addition, Mr. Feldman played a significant role in
attempting to secure marketing and distribution opportunities for
Interferon with a number of independent national distributors and multi-
national pharmaceutical companies. In 1994 Mr. Feldman received
compensation of $8,000 for serving as a Director and Chairman of the
Executive Committee of GPC. (See "Employment Contracts and Termination
of Employment and Change in Control Arrangements").
The Board of Directors
Jerome I. Feldman
Martin M. Pollak
Scott N. Greenberg
Ogden R. Reid
Roald Hoffmann, Ph.D.
Paul A. Gould
Herbert R. Silverman
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1994 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
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Agreements with Messrs. Feldman and Pollak. As of May 19, 1995,
the Company entered into a three year agreement (the "Agreement") 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 May 18, 1998. The Agreements provide for each Employee to
receive annual compensation (a minimum base salary) of $325,000 for the
first year of the Agreements, $350,000 for the second year of the
Agreements and $ 375,000 for the third year of the Agreements (subject
to increase by the Board of Directors). Under the terms of the
Agreements, each of the Employees received options to purchase 250,000
shares of Common Stock and 250,000 shares of Class B Stock. The
Agreements provide for the termination of employment upon the Employee's
death, physical 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 $325,000 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.
Certain Transactions
GTS Duratek, Inc.
On January 24, 1995, the Company sold 1,666,667 shares of its
Duratek common stock at a price of $3.00 per share to the Carlyle Group
("Carlyle") in connection with a $16 million financing by Duratek with
Carlyle, a Washington, D.C. based private merchant bank. In addition,
the Company granted Carlyle an option to purchase up to an additional
500,000 shares of Duratek common stock over the next year at $3.75 per
share (the "Carlyle Transaction").
Duratek received $16 million from Carlyle in exchange for 160,000
shares of new issued 8% cumulative convertible preferred stock
(convertible into 5,333,333 shares of Duratek common stock at $3.00 per
share). Duratek granted Carlyle an option to purchase up to 1,250,000
shares of newly issued Duratek common stock from Duratek over the next
four years.
As of July 12, 1995, the Company owns 3,523,972 shares of Duratek
common stock (approximately 39.8% of the currently outstanding shares of
common stock). Assuming, (i) Carlyle converted all of its cumulative
convertible preferred stock into Duratek common stock and exercised its
option to purchase additional shares of Duratek common stock from each
of Duratek and the Company and (ii) the Company's employees exercised
their options to purchase an aggregate of 497,750 shares of Duratek
common stock, the Company would own 2,526,222 shares of Duratek common
stock (approximately 16.4% of the then outstanding shares of common
stock).
In connection with the Carlyle Transaction, Carlyle will have the
right, through its preferred stock, to elect a majority of Duratek's
Board of Directors. Upon conversation of the preferred stock, Carlyle
would own approximately 56.7% of Duratek's common stock if all of its
options are exercised.
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, 1989 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.
Comparison of 5-Year Cumulative Total Return
Index 1989 1990 1991 1992 1993 1994
NPDC 114 41 71 42 64 25
AMEX Market 127 103 126 135 159 127
Dow Jones
Biotech 131.28 159.48 335.74 310.57 292.04 247
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT THE ONE-FOR-FOUR REVERSE COMMON STOCK SPLIT
The Board of Directors believes that the recent per share price of
the Common Stock has affected the marketability of the existing shares,
increased the amount and percentage of transaction costs paid by
individual stockholders and affected the potential ability of the
Company to raise capital by issuing additional shares. The Company
believes there are several reasons for these effects, as summarized
below.
As a means of improving marketability of the Common Stock,
reducing stockholders' transaction costs, and other considerations, on
July 21, 1995, the Board of Directors of the Company approved, subject
to the stockholder approval solicited hereby, a proposal to amend the
Restated Certificate of Incorporation to effect a one-for-four reverse
Common Stock split (the "Reverse Stock Split").
Although the Company's Board of Directors believes as of the date
of this Proxy Statement that a one-for-four Reverse Stock Split is
advisable, the Reverse Stock Split may be abandoned by the Board of
Directors at any time before, during or after the Annual Meeting. In
addition, depending upon prevailing market conditions, the Board of
Directors may deem it advisable to implement the Reverse Stock Split and
concurrently declare a stock-for-stock dividend in a ratio to be
determined, the latter of which does not require stockholder approval.
Depending upon the amount of any such stock-for-stock dividend, this
would partially offset the decrease in the number of issued shares of
new Common Stock resulting from the one-for-four Reverse Stock Split,
potentially to the extent that the result will be the same as if a one-
for-three, one-for-two or other reverse stock split ratio had been
approved by the Company's stockholders. The net effect of
implementation of the Reverse Stock Split and any subsequent dividend
declarations described herein will not result in more than four shares
being surrendered for each share of new Common Stock.
Reasons for the Reverse Stock Split Proposal
The Board of Directors of the Company believes that the relatively
low per share market price of the Common Stock may impair the
acceptability of the Common Stock to certain institutional investors and
other members of the investing public. Theoretically, the number of
shares outstanding should not, by itself, affect the marketability of
the stock, the type of investor who acquires it, or the Company's
reputation in the financial community. In practice this is not
necessarily the case, as certain investors view low-priced stock as
unattractive or, as a matter of policy, will not extend margin credit on
stock trading at low prices, although certain other investors may be
attracted to low-priced stock because of the greater trading volatility
sometimes associated with such securities. Many brokerage houses are
reluctant to recommend lower-priced stock to their clients or to hold it
in their own portfolios. Further, a variety of brokerage house policies
and practices discourage individual brokers within those firms from
dealing in low-priced stock because of the time-consuming procedures
that make the handling of low-priced stock unattractive to brokerage
houses from an economic standpoint.
In addition, since the broker's commissions on low-priced stock
generally represent a higher percentage of the stock price than
commissions on higher priced stock, the current share price of the
Common Stock can result in individual stockholders paying transaction
costs (commissions, markups or markdowns) which are a higher percentage
of their total share value than would be the case if the share price
were substantially higher. This factor is also believed to limit the
willingness of institutions to purchase the Common Stock at its current
relatively low per share market price. If approved, the Reverse Stock
Split may result in some stockholders owning "odd-lots" of less than 100
shares of Common Stock. Brokerage commissions and other costs of
transactions in odd-lots may be higher, particularly on a per-share
basis, than the cost of transactions in even multiples of 100 shares.
The Board of Directors believes that the decrease in the number of
shares of Common Stock outstanding as a consequence of the proposed
Reverse Stock Split and the resulting anticipated increased price level
will encourage greater interest in the Common Stock by the financial
community and the investment public and possibly promote greater
liquidity for the Company's stockholders, although it is possible that
such liquidity could be affected adversely by the reduced number of
shares outstanding after the Reverse Stock Split. Also, although any
increase in the market price of the new Common Stock resulting from the
Reverse Stock Split may be proportionately less than the decrease in the
number of shares outstanding, the proposed Reverse Stock Split could
result in a market price for the shares that would be high enough to
overcome the reluctance, policies and practices of brokerage houses and
investors referred to above and to diminish the adverse impact of
correspondingly higher trading commissions on the market for the shares.
There can be no assurance, however, that the foregoing effects
will occur or that the market price of the new Common Stock immediately
after implementation the proposed Reverse Stock Split will be maintained
for any period of time, that such market price will approximate four
times (or some other multiple of) the market price before the proposed
Reverse Stock Split, or that such market price will exceed or remain in
excess of the current market price.
If the Reverse Stock Split is approved, the total number of shares
of Common Stock held by each stockholder would be converted
automatically into a right to receive an amount of whole shares of new
Common Stock equal to the number of shares owned immediately prior to
the Reverse Stock Split divided by four. No fractional shares would be
issued and, in lieu of any fractional shares, fractional shares
otherwise issuable to a given stockholder would be rounded up to the
next whole share.
Approval of the Reverse Stock Split would not affect any
stockholder's percentage ownership interest in the Company or
proportional voting power, except for minor differences resulting from
the rounding of fractional shares. The Reverse Stock Split should not
reduce the number of stockholders of the Company since fractional shares
will be rounded up to a whole share of new Common Stock. The shares of
Common Stock which will be issued upon approval of the Reverse Stock
Split will be fully paid and nonassessable. The voting rights and other
privileges of the holders of Common Stock would not be affected
substantially by adoption of the Reverse Stock Split or subsequent
implementation thereof. If for any reason the Board of Directors deems
it advisable to do so, the Reverse Stock Split may be abandoned by the
Board of Directors at any time before, during or after the Annual
Meeting and prior to filing and effectiveness of the amendment to the
Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware, pursuant to Section 242(c) of the Delaware General
Corporation Law, without further action by the stockholders of the
Company. In addition, the effect of the Reverse Stock Split may be
partially offset if the Board of Directors elects to declare a stock-
for-stock dividend as described above.
Effective Date
If the Reverse Stock Split is approved by the stockholders at the
Annual Meeting, and upon a determination by the Board of Directors that
a Reverse Stock Split is in the best interest of the Company and its
stockholders, an amendment to Article Fourth of the Restated Certificate
of Incorporation, would be filed with the Secretary of State of the
State of Delaware on any date (the "Effective Date") selected by the
Board of Directors on or prior to the Company's next Annual Meeting of
Stockholders, and the Reverse Stock Split would become effective as of
5:00 p.m. E.S.T. on the date of such filing. Without any further action
on the part of the Company or the stockholders, the shares of Common
Stock held by stockholders of record as of the Effective Date will be
converted by 5:00 p.m. E.S.T. on the Effective Date into the right to
receive an amount of whole shares of new Common Stock equal to the
number of their shares divided by four, with any fractional share
rounded up to the next whole share.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company will
send a letter of transmittal to each stockholder of record on the
Effective Date for use in transmitting certificates representing share
of Common Stock ("old certificates") to the Company's transfer agent,
Harris Trust Company(the "Exchange Agent"). The letter of transmittal
will contain instruction for the surrender of old certificates to the
Exchange Agent in exchange for certificates representing the number of
whole shares of new Common Stock. No new certificates will be issued to
a stockholder until such stockholder has surrendered all old
certificates together with a properly completed and executed letter of
transmittal to the Exchange Agent.
Upon proper completion and execution of the letter of transmittal
and return thereof to the Exchange Agent, together with all old
certificates, stockholders will receive a new certificate or
certificates representing the number of whole shares of new Common Stock
into which their shares of Common Stock represented by the old
certificates have been converted as a result of the Reverse Stock Split.
Until surrendered, outstanding old certificates held by stockholders
will be deemed for all purposes to represent the number of whole share
of Common Stock to which such stockholders are entitled as a result of
the Reverse Stock Split. Stockholders should not send their old
certificates to the Exchange Agent until they have received the letter
of transmittal. Shares not presented for surrender as soon as is
practicable after the letter of transmittal is sent shall be exchanged
at the first time they are presented for transfer.
No service charges will be payable by stockholders in connection
with the exchange of certificates, all expenses of which will be borne
by the Company.
Effect of the Reverse Stock Split
If the Reverse Stock Split is approved at the Annual Meeting and
the Company's Board of Directors subsequently determines that it is
advisable to proceed with the Reverse Stock Split, the result (without
giving effect to the stock dividend, if any, referred to above) would be
that each Company stockholder who owns four or more shares of Common
Stock will receive one share of new Common Stock for each four shares of
Common Stock held at the time of the Reverse Stock Split, and one
additional share in lieu of the issuance of a fractional share of new
Common Stock. Each Company stockholder who owns fewer than four shares
of Common Stock on the date the Reverse Stock Split is effected will be
entitled to receive one share of new Common Stock in lieu of receiving a
fractional share resulting from the Reverse Stock Split. The rounding up
of fractional shares to the next whole share is being done to avoid the
expense and inconvenience of issuing fractional shares, and is not
separately bargained-for consideration.
As of July 28, 1995, the number of issued shares of Common Stock
was 26,953,957, which includes 2,646 shares held in treasury. Based upon
the Company's best estimates, the aggregate number of shares of new
Common Stock will be issued as a result of the Reverse Stock Split will
be approximately 6,738,490 shares, including 662 shares held as treasury
stock.
)
Dissenting stockholders have no appraisal rights under Delaware
law or under the Company's Amended and Restated Certificate of
Incorporation or Bylaws in connection with the Reverse Stock Split.
Federal Income Tax Consequences
The following is a summary of the material anticipated Federal
income tax consequences of the Reverse Stock Split to stockholders of
the Company. This summary is based on the Federal income tax laws now in
effect and as currently interpreted; it does not take into account
possible changes in such laws or interpretations, including amendments
to applicable statutes, regulations and proposed regulations or changes
in judicial or administrative rulings, some of which may have
retroactive effect. This summary is provided for general information
only and does not purport to address all aspects of the possible Federal
income tax consequences of the Reverse Stock Split and IS NOT INTENDED
AS TAX ADVICE TO ANY PERSON. In particular, and without limiting the
foregoing, this summary does not consider the Federal income tax
consequences to stockholders of the Company in light of their individual
investment circumstances or to holders subject to special treatment
under the Federal income tax laws (for example, life insurance
companies, regulated investment companies and foreign taxpayers). The
summary does not address any consequence of the Reverse Stock Split
under any state, local or foreign tax laws.
No ruling from the Internal Revenue Service ("Service") or opinion
of counsel will be obtained regarding the Federal income tax
consequences to the stockholders of the Company as a result of the
Reverse Stock Split. ACCORDINGLY, EACH STOCKHOLDER IS ENCOURAGED TO
CONSULT HIS OR HER TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES
OF THE PROPOSED TRANSACTION TO SUCH STOCKHOLDER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
LAWS.
The Company believes that the Reverse Stock Split would be a tax-
free recapitalization to the Company and its stockholders. If the
Reverse Stock Split qualifies as a recapitalization under Section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended, a
stockholder of the Company who exchanges his or her Common Stock solely
for new Common Stock should recognize no gain or loss for Federal income
tax purposes. A stockholder's aggregate tax basis in his or her shares
of new Common Stock received from the Company should be the same as his
or her aggregate tax basis in the Common Stock exchanged therefor. The
holding period of the new Common Stock received by such stockholder
should include the period during which the Common Stock surrendered in
exchange therefor was held, provided all such Common Stock was held as a
capital asset on the date of the exchange.
Vote Required
In order to effect the Reverse Stock Split, the Restated
Certificate of Incorporation must be amended, which requires, under
Delaware law, the affirmative vote of holders of a majority of the (i)
votes represented by the outstanding shares of Common Stock and (ii)
votes represented by the outstanding Class B Stock, each voting
separately as a class.
The Board of Directors recommends that you vote FOR the proposal
to amend the Restated Certificate of Incorporation to effect the one-
for-four reverse split of the Common Stock.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's
1996 proxy statement provided they are received by the Company no later
than January 13, 1996, 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
NATIONAL PATENT DEVELOPMENT CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held September 20, 1995
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 Columbia Inn,
10207 Wincopin Circle, Columbia, Maryland on September 20, 1995, at 2:30
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. Election of Directors: Jerome I. Feldman, Martin M. Pollak, Scott
N. Greenberg, Roald Hoffmann, Odgen R. Reid, Paul A. Gould and
Herbert R. Silverman.
For All
(Except
Nominees
Written
(INSTRUCTION: To withhold For Withhold Below)
authority to vote for any
individual nominee, write
that nominee's name in the
space provided below)
2. Proposal to amend the Company's Restated Certificate of
Incorporation to effect a reverse stock split in which each four
shares of issued and outstanding shares of common stock will be
reclassified and changed into one share of new Common Stock of the
Company.
FOR AGAINST ABSTAIN
3. Upon any other matters which may properly come before the meeting
or any adjournments thereof.
Please sign exactly as name appear below.
Dated , 1995
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
an, please give full title as such.
corporation, please sign in full
corporate name by President
or other authorized officer. If a
partnership please sign in
partnership name by authorized
person.
