Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.--)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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):
[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 June 14, 1995
To The Stockholders:
The Annual Meeting of Stockholders of National Patent
Development Corporation (the "Company") will be held at the
offices of General Physics Corporation, 6700 Alexander Bell
Drive, Columbia, Maryland on the 14th day of June, 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 increase the
total number of authorized shares of common stock which the
Company shall have authority to issue from 40,000,000 shares to
45,000,000 shares.
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 17, 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
April 28, 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
April 28, 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 offices of General
Physics Corporation, 6700 Alexander Bell Drive on the 14th day of
June, 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 April 28, 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, 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, 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.
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 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, 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 present in person or
represented by proxy. 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
Amendment to the Company's Restated Certificate of Incorporation,
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 with respect to the approval
of the Amendment to the Company's Restated Certificate of
Incorporation.
VOTING SECURITIES
The Board of Directors has fixed the close of business on
April 17, 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 April 17, 1995 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 ClassB 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 21, 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.
3
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 900,000 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 900,000 shares(1) 50(2)
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 21, 1995, Mr. Feldman and Mr. Pollak
controlled in the aggregate approximately 10.6% of the voting
power of all voting securities of the Company. This percentage
for Mr. Feldman and Mr. Pollak would increase to approximately
45% 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
4
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
The following table sets forth, as of March 21, 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.
5
Total Number of
Shares Beneficially
Name Owned
Jerome I. Feldman(1)(2)(3)(4)(5) 2,161,636
Martin M. Pollak(1)(2)(3)(4)(5) 2,161,373
Scott N. Greenberg(3)(4) 201,300
Roald Hoffmann, Ph.D.(3)(4)(6) 22,800
Ogden R. Reid(3)(4)(5)(6) 17,000
Paul A. Gould(1)(4)(6) 212,600
Herbert R. Silverman 5,000
Lawrence M. Gordon(1)(3)(4) 146,612
Directors and Executive Officers as a Group
(9 persons) (1)(3)(4) 4,928,346
Percent of
Common Stock
Owned
Jerome I. Feldman (1)(2)(3)(4)(5) 7.82
Martin M. Pollak (1)(2)(3)(4)(5) 7.82
Scott N. Greenberg(3)(4) *
Ogden R. Reid(3)(4)(6) *
Roald Hoffmann, Ph.D.(3)(6) *
Paul A. Gould(1)(4)(6) *
Herbert R. Silverman *
Lawrence M. Gordon (1)(3)(4) *
Directors and Executive Officers as a Group
(9 persons)(1)(3)(4) 16.46
Of Total Number of
Shares Beneficially
Owned,
Shares Which May Be
Acquired Within 60 Days
Jerome I. Feldman(1)(2)(3)(4)(5) 1,778,667
Martin M. Pollak(1)(2)(3)(4)(5) 1,788,667
Scott N. Greenberg(3)(4) 184,700
Roald Hoffmann, Ph.D.(3)(6) 21,000
Ogden R. Reid(3)(6) 16,000
Paul A. Gould(1)(6) 6,000
Herbert A. Silverman -0-
Lawrence M. Gordon(1)(3)(4) 144,100
Directors and Executive Officers as a Group
(9 persons)(1)(3)(4) 3,939,134
* The number of shares owned is less than one percent of the
outstanding shares of Common Stock.
6
(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 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 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 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 496,450 (2.16%); Martin M. Pollak 482,500 (2.10%); Scott
N. Greenberg 165,000 (.73%); Roald Hoffmann 3,000(.013%) Ogden R.
Reid 7,100 (.032%) and Lawrence M. Gordon 182,500 (.80%). These
shares include 480,000, 480,000, 165,000, 3,000, 7,000 and
182,500 shares for Messrs. Feldman, Pollak, Greenberg, Hoffmann,
Reid and Gordon, respectively, which are subject to currently
exercisable stock options. In addition, all directors and
executive officers as a group beneficially own 1,336,500 shares,
of which 1,317,500 shares are subject to currently exercisable
stock options. Certain members of the families of Messrs. Feldman
and Pollak hold 2,950 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 an aggregate of
6,975,148 shares of Common Stock of Interferon beneficially owned
by the Company, Five Star Group, Inc. ("Five Star") and MXL
Industries, Inc. ("MXL"), wholly owned subsidiaries of the
Company. However, Mr. Feldman and Mr. Pollak disclaim beneficial
ownership of such 6,975,148 shares (7,471,598 and 7,457,648
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.
7
(4) 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
5,120,495 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
5,120,495 shares (5,122,595 and 5,126,395 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.
(5) Member of the Executive Committee.
(6) Member of the Audit Committee.
As of March 21, 1995 the Company owned 4,800,148 shares of
Interferon common stock, constituting approximately 21% of the
outstanding shares, Five Star owned approximately 1,359,375
shares constituting approximately 6% and MXL owned approximately
815,625 shares constituting approximately 4% of the outstanding
shares of Interferon Common Stock. Accordingly, the Company's
voting control of Interferon is approximately 31%.
As of March 21, 1995 the Company owned 3,420,495 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 50.43%.
As of March 1, 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,
8
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 66
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 67
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
9
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 68
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 Compan'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
10
believes that during the period January 1, 1994 to March 30,
1995, 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 $1,500 for each meeting of the Board of Directors attended,
but do not receive any additional compensation for service on
committees of the Board of Directors. Officers of the Company do
not receive additional compensation for serving as directors.
Executive Committee
The Executive Committee, consisting of Jerome I. Feldman and
Martin M. Pollak, meets on call and has authority to act on most
matters during the intervals between Board meetings. The
committee formally acted 26 times in 1994 through unanimous
written consents.
Audit Committee
The Audit Committee reviews the internal controls of the
Company and the objectivity of its financial reporting. It meets
with appropriate Company financial personnel and the Company's
independent certified public accountants in connection with these
reviews. This committee recommends to the Board the appointment
of the independent certified public accountants, subject to the
ratification by the stockholders at the Annual Meeting, to serve
as auditors for the following year in examining the books and
records of the Company. This Committee met twice in 1994. The
Audit Committee currently consists of Ogden R. Reid, Roald
Hoffmann and Paul A. Gould.
11
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid
by the Company and subsidiaries to its Chief Executive Officer
and the Company's most highly compensated executive officers for
1994.
SUMMARY COMPENSATION TABLE
Annual Compensation
Salary Bonus
Name and Principal Position Year ($) ($)
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, 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, $150,000, of Mr. Pollak's compensation was paid by
ADC, as a consequence of his services to both companies.
12
Long Term
Compensation
Awards All Other
Options Compensation
Name and Principal Position ($) ($)
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)
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
Chief Financial Officer 22,500 2,932
Lawrence M. Gordon -0- 3,696(3)
Vice President and -0- 2,937
General Counsel -0- 3,392
(1) Includes $3,696, $3,598 and $3,491 as a matching
contribution by the Company to the 401(k) Savings Plan, and
$250,000 in 1992 pursuant to a Non-Compete Agreement between
Messrs. Feldman and Pollak and SmithKline Beecham Corporation.
See "Employment Contracts and Termination of Employment and
Change in Control Arrangements."
(2) Constitutes matching contributions made by ADC and the
Company equally on behalf of Mr. Pollak pursuant to the Company's
401(k) Savings Plan.
(3) Matching contribution by the Company to the 401(k) Savings
Plan.
For the year ended 1994, none of the named executive
officers were granted non-qualified stock options.
The following table and notes set forth information for the
named executive officers regarding the exercise of stock options
during 1994 and unexercised options held at the end of 1994.
13
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1994
AND YEAR-END OPTION VALUES
Shares Acquired
on Exercise
(#) (1) Value Realized
($)
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(3)
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.
14
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 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 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. This Agreement was exended as
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of January 1, 1995 for an additional year on the same tems and
conditions as the prior Agreement. The January 1, 1995 Agreement
and the January 1, 1989 Agreement shall be collecively referred
to as the Agreement. 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 $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.
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
Agreements with Messrs. Feldman and Pollak. The Company
entered into an Agreement with its President and Chief Executive
Officer, Jerome I. Feldman, and with its Executive Vice President
and Treasurer, Martin M. Pollak (the "Employees"), which was
extended for an additional year as of January 1, 1995.
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, 1995. The
Agreements provide for each Employee to receive annual
compensation (a minimum base salary) of $300,000 (subject to
16
increase by the Board of Directors). 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
$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.
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").
17
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 March 1, 1995, the Company owns 3,534,972 shares of
Duratek common stock (approximately 40.4% 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 2,537,222 shares of Duratek
common stock (approximately 16.5% 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 50% 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
AMEX Market 127 103 126 135 159
Dow Jones
Biotech 131.28 159.48 335.74 310.57 292.04
18
PROPOSED AMENDMENTS TO THE RESTATED CERTIFICATE OF INCORPORATION
Increase in Authorized Shares
The Board of Directors unanimously recommends that the
stockholders adopt an amendment to the Company's Restated
Certificate of Incorporation which will increase the authorized
shares of Common Stock, par value $.01 per share, from 40,000,000
shares to 45,000,000 shares. On March 21, 1995, 25,737,237 of
the 40,000,000 shares of Common Stock presently authorized were
outstanding and an aggregate of [ ] shares were reserved
for issuance.
The Company's Board of Directors has unanimously recommended
for approval by stockholders the proposal to amend the first
sentence of Article Fourth of the Restated Certificate of
Incorporation as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
fifty-seven million eight hundred thousand (57,800,000)
shares of which forty-five million (45,000,000) are to be
Common Stock of the par value of one cent ($.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
Company's flexibility in connection with possible future actions,
such as acquisitions, financings, investment opportunities,
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 from 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
19
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. For example, the
Company has in the past issued Common Stock as consideration for
the retirement of its outstanding Swiss indebtedness and accrued
and unpaid interest thereon, in order to strengthen the financial
position of the Company. The Company may make similar offers in
the future, on terms and conditions approved by the Board of
Directors. If the amendment is approved by the stockholders, the
Company expects that such transactions will in most cases not be
subject to further approval of stockholders. 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
issuance of additional shares of Common Stock might include
dilution of the current equity interests of stockholders.
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
31, 1995. 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
20
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 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
21
NATIONAL PATENT DEVELOPMENT CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held June 14, 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 offices of General Physics
Corporation, 6700 Alexander Bell Drive, Columbia, Maryland on
June 14, 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 Restated Certificate of Incorporation
to increase the total number of authorized shares of common
stock.
FOR AGAINST ABSTAIN
3. Proposal to approve the selection of KPMG Peat Marwick to
audit the accounts of the Company for the current year.
22
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 , 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
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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