THIS DOCUMENT IS A COPY OF THE FORM 10-Q FOR THE THIRD
QUARTER ENDED SEPTEMBER 30, 1995 FILED ON NOVEMBER 15, 1995
PURSUANT TO RULE 201 TEMPORARY HARDSHIP EXEMPTION.
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended September 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-7234
NATIONAL PATENT DEVELOPMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-1926739
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
9 West 57th Street, New York, NY 10019
(Address of principal executive offices) (Zip code)
(212) 826-8500
(Registrant's telephone number, including area code) 212-230-9500
Indicate by check mark whether the registrant (1) has filedall reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period)
that the registrant was required to file such reports and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of issuer's classes of common stock
as of November 10, 1995:
Common Stock 5,571,780 shares
Class B Capital 62,500 shares
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets -
September 30, 1995 and December 31, 1994 1
Consolidated Condensed Statements of OperationsThree
Months and Nine Months Ended September 30,
1995 and 1994 3
Consolidated Condensed Statements of Cash Flows Nine
Months Ended September 30, 1995 and 1994 4
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Qualification Relating to Financial Information 13
Part II. Other Information 14
Signatures 15
PART I. FINANCIAL INFORMATION
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
September 30, December 31,
1995 1994
ASSETS (unaudited) (a)
Current assets
Cash and cash equivalents $ 6,838 $ 10,075
Accounts and other receivables,
of which $8,881 and $15,152 is from
government contracts 39,596 52,487
Inventories 18,734 20,642
Costs and estimated earnings in
excess of billings on uncompleted
contracts, of which $1,734 and $2,092
relates to government
contracts 10,871 15,237
Prepaid expenses and other
current assets 3,790 6,770
Total current assets 79,829 105,211
Investments 26,549 11,600
Property, plant and equipment,
at cost 32,658 37,423
Less accumulated depreciation (23,635) (22,843)
9,023 14,580
Intangible assets, net of
amortization 29,794 37,025
Investment in financed assets
684
Other assets 3,886 6,446
$149,081 $175,546
(a) The Consolidated Condensed Balance Sheet as of December 31, 1994 has
been summarized from the Company's audited Balance Sheet as of that date.
See accompanying notes to the consolidated condensed financial statements.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
(in thousands)
September 30, December 31,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) (a)
Current liabilities
Current maturities of long-term debt $ 3,872 $ 14,279
Short-term borrowings 19,569 31,060
Accounts payable and accrued expenses 18,896 27,958
Billings in excess of costs and
estimated earnings on uncompleted
contracts 6,849 6,091
Total current liabilities 49,186 79,388
Long-term debt less current maturities 19,725 17,513
Minority interests and other 9,432 11,970
Common stock issued subject to
repurchase obligation 1,646 1,510
Stockholders' equity *
Common stock 67 60
Class B capital stock 2 2
Capital in excess of par value 123,211 120,037
Deficit (52,267) (53,151)
Net unrealized loss on
available-for-sale securities (1,921) (1,783)
Total stockholders' equity 69,092 65,165
$149,081 $175,546
(a) The Consolidated Condensed Balance Sheet as of December 31, 1994 has
been summarized from the Company's audited Balance Sheet as of that date.
* Stockholders' equity has been restated to reflect the effect of the one
for four reverse stock split (See Note 5(a) to the Consolidated Condensed
Financial Statements).
See accompanying notes to the consolidated condensed financial statements.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three months Nine months
ended September 30, ended September 30,
1995 1994 1995 1994
Revenues
Sales $ 47,551 $ 51,653 $142,519 $147,613
Investment and other
income (expense), net 246 (139) 924 (2,149)
47,797 51,514 143,443 145,464
Costs and expenses
Costs of goods sold 39,444 43,742 119,310 122,176
Selling, general &
administrative 9,419 8,432 23,968 25,331
Interest 1,203 1,417 3,636 4,317
50,066 53,591 146,914 151,824
Minority interests (314) 86 (818) (18)
Gain on sale of stock by
affiliates 5,912 5,912 229
Gain on disposition of stock of
a subsidiary 2,567
Income (loss) before income taxes,
discontinued operation and
extraordinary item 3,329 (1,991) 4,190 (6,149)
Income tax expense (248) (183) (1,073) (301)
Income (loss) before discontinued
operation and extraordinary item 3,081 (2,174) 3,117 (6,450)
Discontinued operation (1,015) (285) (2,154) (812)
Income (loss) before
extraordinary item 2,066 (2,459) 963 (7,262)
Extraordinary item
Extinguishment of debt,
net of income tax (87) 35 (79) 35
Net income (loss) $ 1,979 $ (2,424) $ 884 $ (7,227)
Income (loss) per share *
Income (loss) before discontinued
operation and extraordinary
item $ .45 $ (.38) $ .47 $ (1.24)
Discontinued operation (.15) (.05) (.33) (.16)
Extraordinary item (.01) .01 (.01) .01
Income (loss) per share $ .29 $ (.42) $ .13 $ (1.39)
Dividends per share none none none none
* All periods have been restated to reflect the effect of the one for four
reverse stock split (See Note 5(a) to the Consolidated Condensed Financial
Statements).
See accompanying notes to the consolidated condensed financial statements.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine months
ended September 30,
1995 1994
Cash flows from operations:
Net income (loss) $ 884 $ (7,227)
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Provision for discontinued operation 2,075
Depreciation and amortization 3,640 3,232
Loss (gain) from extinguishment of debt 79 (35)
Gain from disposition of stock in
subsidiaries (2,567)
Gain on sale of stock by affiliates (5,912)
Change in other operating assets and
liabilities 3,792 (6,989)
Net cash provided by (used for) operations 1,991 (11,019)
Cash flows from investing activities:
Proceeds from sale of stock of a subsidiary 5,000
Sales of certain net assets and
businesses of a subsidiary
4,470
Additions to property, plant & equipment (1,701) (2,266)
Additions to intangible assets (988) (3,626)
Reduction of investments and other assets, net 139 2,331
Net cash provided by
investing activitie $ 2,450 $ 909
See accompanying notes to the consolidated condensed financial statements.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(in thousands)
Nine months
ended September 30,
1995 1994
Cash flows from financing activities:
Proceeds from short-term borrowings $ 7,160 $ 17,810
Repayments of short-term borrowings (11,020) (5,655)
Proceeds from issuance of long-term debt 4,910 3,871
Reduction of long-term debt (8,728) (3,491)
Exercise of common stock options and
warrants
100
Proceeds from issuance of common stock 188
Net cash provided by (used for)
financing activities (7,678) 12,823
Net increase (decrease) in cash
and cash equivalents (3,237) 2,713
Cash and cash equivalents at the
beginning of the periods 10,075 10,976
Cash and cash equivalents at the
end of the periods $ 6,838 $ 13,689
Supplemental disclosures of cash
flow information:
Cash paid during the periods for:
Interest $ 3,939 $ 3,198
Income taxes $ 421 $ 480
See accompanying notes to the consolidated condensed financial statements.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Inventories
Inventories are valued at the lower of cost or market,principally using
the first-in, first-out (FIFO) method. Inventories consisting of material,
labor, and overhead are classified as follows (in thousands):
September 30, December 31,
1995 1994
Raw materials $ 663 $ 1,973
Work in process 505 462
Finished goods 17,566 15,557
Land held for resale 2,650
$ 18,734 $ 20,642
2. Long-term debt
Long-term debt consists of the following (in thousands):
September 30, December 31,
1995 1994
8% Swiss bonds $ 127 $ 2,999
8% Swiss bonds due 2000 2,365
Swiss convertible bonds 2,007 10,157
New 5% Swiss bonds 2,129 2,129
12% Subordinated debentures 6,759 6,783
Other 10,210 9,145
23,598 31,213
Less current maturities 3,872 13,700
$ 19,725 $ 17,513
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
2. Long-term debt (Continued)
On June 28, 1995, the Compan's Exchange Offer for certain issues of
its outstanding indebtedness expired. The Company accepted for exchange
Swiss Francs ("SFr.") 1,299,000 of its 8% Swiss Bonds due March 1, 1995,
SFr. 1,120,000 of its Convertible Swiss Bonds due March 7, 1995, SFr.
945,000 of its 5.75% Convertible Bonds due May 9, 1995, SFr. 795,000 of its
5.625% Convertible Bonds due March 18, 1996, and $1,212,000 of its 7% Dual
Currency Bonds due March 18, 1996. In exchange for the forgoing bonds,
the Company issued an aggregate of SFr. 3,604,000 of new 8% Swiss Bonds,
due June 28, 2000 (the "New 8% Bonds") and paid $2,873,000 in cash.
The New 8% Bonds were valued at $ 2,340,000(after an original issue discount
of 25%). The principal and interest on the New 8% Bonds are payable either in
cash or in shares of common stock of the Company, at the option of the Company.
The Company reduced its long-term debt due in 1995 and 1996 by $4,824,000 and
realized a loss of $220,000 on the Exchange Offer.
3. Term loan
On April 7, 1995, the Company entered into a $5,000,000
Term Loan Agreement, of which the Company received
approximately $4,900,000 after closing fees. The Term Loan
is payable in sixteen consecutive quarterly installments,
commencing on June 30, 1996. The first fifteen installments
will be $250,000 and the last installment shall be
$1,250,000. The Company has used a portion of the proceeds in
July 1995 to repay and refinance certain of its Swiss
denominated long-term debt due in 1995 and 1996. The Term
Loan is secured by certain assets of the Company and requires
the Company to meet certain financial covenants.
4. Revolving credit agreement
On April 7, 1995, General Physics Corporation (GP), the
Company's 51% owned subsidiary, entered into a new
$20,000,000 secured revolving credit agreement with a
commercial bank, and terminated its previous credit
agreement. Borrowings under the new credit agreement bear
interest at the prime rate or at a rate which is 1.75% over
LIBOR, whichever rate is elected by GP. The new credit
agreement is secured by the accounts receivable of GP and
certain of its subsidiaries, and contains certain covenants
which, among other things, limit the amount and nature of
certain expenditures by GP, and requires GP to maintain
certain financial ratios.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
5. Subsequent events
(a) On September 20, 1995, the Company's stockholders and
Board of Directors approved the proposal to amend the
Company's Restated Certificate of Incorporation to effect a
one-for-four reverse stock split of its Common Stock. The
reverse stock split was effective on October 6, 1995 (the
"Effective Date"). As of September 20, 1995, there were
27,115,240 shares of common stock outstanding and after the
Effective Date there were approximately 6,778,810 shares of
Common Stock outstanding.
On the Effective Date, the shares of common stock held by
stockholders of record were converted into the amount of
whole shares of new common stock equal to the number of their
shares divided by four, with any fractional shares rounded up
to the next whole share.
The balance sheets at September 30, 1995 and December
31, 1994 as well as the earnings (loss) per share for the
quarter and nine months ended September 30, 1995 and 1994
have been restated to reflect the reverse split as if it had
occurred on January 1, 1994.
(b) On October 23, 1995, Five Star, MXL and the Company
entered into various amendments to the Five Star Loan
Agreement and the MXL Loan Agreement. Under the terms of the
amendments, (i) Five Star is allowed to borrow 80% of
Eligible Receivables (as defined), (ii) MXL is allowed to
lend Five Star and the Company up to an additional $750,000
and $500,000, respectively and (iii) the Five Star and MXL
Term Loans were restructured and as of November 1, 1995,
MXL owed $3,960,000 under the MXL Term Loan and Five Star's
Term Loan was repaid in its entirety. In addition, both Five
Star and MXL are permitted to loan or dividend to the Company
50% of their Excess Cash Flow (as defined).
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company realized income before income taxes,
discontinued operation and extraordinary item of $3,329,000
and $4,190,000 for the quarter and nine months ended
September 30, 1995, as compared with a loss of $(1,991,000)
and ($6,149,000) for the corresponding periods of 1994. The
improvement in the Company's results before discontinued
operation and extraordinary item is due to several factors.
The improved results were primarily the result of a
$5,912,000 gain recognized during the third quarter of 1995
as a result of the issuance of common stock by Interferon
Sciences, Inc. (ISI) and the initial public offering by GSE
Systems, Inc. (GSES). At September 30, 1995, the Company
owns approximately 22% of ISI and controls 26% of GSES. In
addition, in January 1995, the Company recognized a
$2,567,000 gain on the sale of 1,666,667 shares of the
Company's GTS Duratek, Inc. (Duratek) common stock. As a
result of the above transaction, the Company's ownership in
Duratek fell below 50% and commencing in January 1995, the
Company has accounted for this investment on the equity
basis. Included in investment and other income(expense), net
for the quarter and nine months ended September 30, 1995, is
$70,000 and $1,061,000, respectively, of foreign currency
transaction losses, compared to losses of $351,000 and
$2,363,000 for the corresponding periods of 1994. The
Physical Science and Optical Plastics Groups achieved
increased operating profits in 1995, partially offset by
reduced operating profits achieved by the Distribution Group.
In addition, for the quarter and nine months ended September
30, 1995, the Company also achieved reduced interest expense
at the corporate level, as a result of reduced long-term
debt.
Foreign currency valuation fluctuations may adversely affect
the results of operations and financial condition of the
Company. At September 30, 1995, the Company had not hedged
its Swiss franc obligations. If the value of the Swiss franc
to the U.S. dollar increases, the Company will recognize
transaction losses on its Swiss franc obligations. On
September 30, 1995, the value of the Swiss franc to the U.S.
dollar was approximately 1.1553 to 1. There can be no
assurance that the Company will be able to swap or hedge
obligations denominated in foreign currencies at prices
acceptable to the Company or at all. The Company will
continue to review this policy on a continuing basis. At
September 30, 1995, the Company had approximately SFr.
4,738,000 of Swiss denominated debt outstanding, of which
approximately SFr. 4,338,000 represents principal amount
outstanding and approximately SFr. 400,000 represents
interest accrued thereon.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS (Continued)
Sales
For the quarter ended September 30, 1995, consolidated sales
decreased by $4,102,000 to $47,551,000 from the $51,653,000
recorded in the corresponding quarter of 1994. For the nine
months ended September 30, 1995, consolidated sales decreased
by $5,094,000 to $142,519,000 from $147,613,000 recorded for
the nine months ended September 30, 1994. The decreased
sales during the periods were the result of reduced sales in
the Distribution Group, partially offset by increased sales
within the Physical Science and Optical Plastics Group. The
decreased sales within the Distribution Group was the result
of the loss of a significant customer. The increased sales
within the Physical Science Group were the result of
consolidating the sales of General Physics Corporation (GP)
since September 1994, partially offset by Duratek being
accounted for on the equity basis since January 1995.
Gross margin
Consolidated gross margin of $8,107,000, or 17%, for the
quarter ended September 30, 1995, decreased by $196,000 when
compared to the consolidated gross margin of $7,911,000, or
15%, for the quarter ended September 30, 1994. For the nine
months ended September 30, 1995, consolidated gross margin of
$23,209,000 or 16% of consolidated sales decreased by
$2,228,000 when compared to $25,437,000 or 17% of
consolidated sales earned in the nine months ended September
30, 1994. The decreased gross margin in 1995 was principally
the result of decreased gross margin achieved by the
Distribution and Physical Science Groups. The decreased
gross margin within the Physical Science Group is primarily
due to the Company's ownership in Duratek falling below 50%
in January 1995, and the Company accounting for the results
of Duratek on the equity basis from that time, partially
offset by GP being included in the consolidated results since
September 1994. The reduced gross margin in the Distribution
Group was the result of reduced sales.
Selling, general and administrative expenses
For the quarter and nine months ended September 30, 1995,
selling, general and administrative expenses (SG&A) of
$9,419,000 and $23,968,000 were $987,000 higher and
$1,363,000 lower than the $8,432,000 and $25,331,000 of SG&A
expenses incurred during the quarter and nine months ended September
30, 1994. The increase for the quarter ended September 30,
1995, was primarily the result of the recording of a reserve
of approximately $1,015,000 by General Physics Corporation
during the third quarter of 1995 related to potentially
uncollectable revenue recorded in years prior to December
1993. The decrease in SG&A for the nine months ended
September 30, 1995, was principally the result of Duratek
being accounted for on the equity method since January 1995
partially offset by the above write-off.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS (Continued)
Interest expense
For the quarter and nine months ended September 30, 1995,
interest expense was $1,203,000 and $3,636,000, compared to
$1,417,000 and $4,317,000 for the second quarter and nine
months ended September 30, 1994. The decreased interest
expense for the nine months ended September 30, 1995, was the
result of reduced long-term debt.
Investment and other income (expense), net
Investment and other income (expense), net, of $246,000 and
$924,000 for the quarter and nine months ended September 30,
1995 increased by $385,000 and $3,073,000, respectively, as
compared to $(139,000) and $(2,149,000) for the corresponding
periods of 1994. The change was principally due to two
factors; $70,000 and $1,061,000 of foreign currency
transaction losses recognized during the quarter and nine
months ended September 30, 1995, compared to losses of
$351,000 and $2,363,000 for the corresponding periods of
1994, and reduced losses recognized in 1995 by Interferon
Sciences, Inc. (ISI), the Company's 22% owned affiliate.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had cash and cash
equivalents totaling $6,838,000. GP, SGLG, Inc. and American
Drug Company had cash and, cash equivalents of $645,000 at
September 30, 1995. The minority interests of these three
companies are owned by the general public, and therefore the
assets of these subsidiaries have been dedicated to the
operations of these companies and may not be readily
available for the general corporate purpose of the parent.
In addition, GP under its revolving credit agreement (See
Note 4 to the Consolidated Condensed Financial Statements)
can loan up to $2,000,000 to the Company at the prime rate of
interest.
The Company has sufficient cash, cash equivalents and
marketable securities, and borrowing availability under
existing and potential lines of credit to satisfy its cash
requirements for its Swiss Franc denominated indebtedness due
in 1995 and 1996, which totaled approximately $724,000 and
$1,411,000, respectively at September 30, 1995. In order for
the Company to meet its long-term cash needs, which include
the repayment of approximately $6,759,000 of 12% Subordinated
debentures scheduled to mature in 1997, the Company must
obtain additional funds from various sources. The Company
has historically reduced its longterm debt through the issuance
of equity securities in exchange for long-term debt. In
addition to its ability to issue equity securities, the
Company believes that it has sufficient marketable long-term
investments, as well as the ability to obtain additional
funds from its operating subsidiaries and the potential to
enter into new credit arrangements. The Company reasonably
believes that it will be able to accomplish some or all of
the above transactions in order to fund the scheduled
repayment of the Company's 12% Subordinated debentures in
1997.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
QUALIFICATION RELATING TO FINANCIAL INFORMATION
September 30, 1995
The financial information included herein is unaudited. In
addition, the financial information does not include all
disclosures required under generally accepted accounting
principles because certain note information included in the
Company's Annual Report has been omitted; however, such
information reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement of the results for
the interim periods. The results for the 1995 interim period
are not necessarily indicative of results to be expected for the
entire year.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of shareholders held on
September 20, 1995, the following matters were voted upon:
a. Jerome I. Feldman, Scott N. Greenberg, Paul A.
Gould,Roald Hoffmann, Martin M. Pollak, Herbert A. Silverman and
Ogden R. Reid were elected to serve as directors of the Registrant
for a one year term.
b. The proposal to amend the Company's Restated
Certificate of Incorporation to effect a Reverse Stock Split
in which each four shares of issued Common Stock of the
Registrant, whether issued and outstanding or held in
treasury was changed into one share of new Common Stock of
the Company was adopted with a vote of 17,372,104 votes for
and 1,997,020 votes against from the Common Stock and
2,500,000 votes for and no votes against from Class B Capital
Stock for the adoption of this proposal.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
(3) Amended Restated Certificate of Incorporation
filed with the Secretary of State for the State of Delaware
on October 6, 1995.
(10.1) Amendment dated October 23, 1995 to the
Loan Agreement dated April 29, 1993 between Five Star Group, Inc.
and NatWest Bank N.A., filed herewith.
(10.2) Amendment and Supplement dated October 23, 1995 to
the Loan Agreement dated April 29, 1993 between MXL, Industries,
Inc. and NatWest Bank N.A. filed herewith.
(22) Copy of Notice and Proxy Statement for Annual
Meeting of Shareholders held on September 20, 1995, filed
with the Securities and Exchange Commission pursuant to
Section 14 of the Securities Exchange Act of 1934 and
incorporated herein by reference.
b. Reports on Form 8-K
There were no reports filed on Form 8-K for the period ended
September 30, 1995.
NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
September 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed in its behalf by the undersigned thereunto duly
authorized.
NATIONAL PATENT DEVELOPMENT
CORPORATION
DATE: November 14, 1995 Jerome I. Feldman
President & Chief
Executive Officer
DATE: November 14, 1995 Scott N. Greenberg
Vice President &
Chief Financial Officer
RESTATED CERTIFICATE OF INCORPORATION
NATIONAL PATENT DEVELOPMENT CORPORATION
Incorporated on March 11, 1995
-----------
This Restated Certificate of Incorporation of
National Patent Development Corporation (hereinafter the
"Corporation"), has been adopted by the stockholders and
directors of the Corporation pursuant to Section 245 of
the General Corporation Law of the State of Delaware. It
restates, amends and integrates the provisions of the
Corporation's Restated Certificate of Incorporation filed
with the Secretary of State on June 24, 1982, as
heretofore and hereinafter amended or supplemented.
FIRST: The name of the Corporation (hereinafter
called the "Corporation"), is
NATIONAL PATENT DEVELOPMENT CORPORATION
SECOND: The respective names of the County and of
the City within the County in which the principal office of
the Corporation is to be located in the state of Delaware
are the County of New Castle and the City of Wilmington.
The name of the resident agent of the Corporation is The
Corporation Trust Company. The street and number of said
principal office and the address by street and number of
said resident agent is 1209 Orange Street, Wilmington,
Delaware.
THIRD: The nature of the business of the Corporation
and the objects or purposes to be transacted, promoted or
carried on by it are as follows:
As principal agent, or broker, and on
commission or otherwise, to buy, sell, exchange,
lease, assign, license or take licenses in
respect of domestic and foreign patents, patent
rights, secret processes, formulae or
procedures, copyrights, licenses to manufacture
or sell, or both, patented or copyrighted things
or articles, trademarks or trade names.
To acquire, by purchase or otherwise, and
to own, develop and perfect domestic and foreign
patents, patent rights, copyrights, licenses to
manufacture or sell, or both, patented or
copyrighted things or articles, and to develop,
perfect, improve or to manufacture or to sell,
lease or license the use of the same or
otherwise dispose of the same.
To acquire, by purchase or otherwise, and
to use, develop, finance, operate, sell, lease,
license or sublicense or in any manner dispose of
any and all inventions, improvements and processes
and to carry on any business, manufacturing or
otherwise, which may directly or indirectly
effectuate these objects or any of them.
To apply for, purchase, register, or in any
manner to acquire, and to hold, own, use, operate
and introduce, and to sell, lease assign, pledge,
or in any manner dispose of, and in any manner deal
with licenses, copyrights, trademarks and trade
names, and to acquire, own use or in any manner
dispose of any and all inventions, improvements and
processes, labels, designs, brands, or other
rights, and to work, operate, or develop the same.
To set up, equip, outfit, maintain and conduct
a laboratory or laboratories for research in
connection with the manufacture of any of the
products of this Corporation, to make analyses and
inspections, invent and perfect formulae, carry on
investigations of all kinds, and to buy, sell and
generally deal in such machinery, tools,
appliances, devices, equipment and supplies,
necessary for the manufacture and perfection of any
of the products of this Corporation, and to do
every other act or acts, thing or things,
incidental or pertaining to or growing out of, or
connected with, the preparation, manufacture,
distribution, application and sale of the products
of this Corporation.
To manufacture, buy, sell and generally deal
in any article, product, or commodity produced as
the result of or through the use of any such
inventions, devices, processes, discoveries,
formulae, improvements, or modifications of any
thereof, or any articles, products, commodities,
supplies and materials used or suitable to be used
in connection therewith, or in any manner
applicable or incidental thereto; to grant
licenses, sublicenses, rights, interest and/or
privileges in respect of any the foregoing, and to
supervise or otherwise exercise such control over
its licensees or grantees, and the business
conducted by them as may be agreed upon in its
contracts or agreements with such licensees and
grantees, for the protection of its rights and
interests therein, and to secure to it the payment
of agreed royalties or other considerations.
To acquire, by purchase, lease, gift, device
or otherwise, and to own, use, hold, sell, convey,
exchange, lease, mortgage, work, improve, develop,
divide and otherwise handle, deal in and dispose of
real estate, real property and any interest or
right therein, whether as principal, agent, broker
or otherwise.
To manage, operate, service, equip, furnish,
alter and keep in repair dwellings, apartment
houses, hotels, office buildings and real and
personal property of every kind, nature and
description, whether as principal, agent, broker,
or otherwise, and generally to do anything and
everything necessary and proper and to the extent
permitted by law in connection with the business of
managing and operating real and personal property
of any and all kinds.
To lend money or make advances from time to
time to such extent, to such borrowers, on such
terms, and on such security, if any, as the Board
of Directors of the Corporation may determine, but
only to the extent permitted corporations organized
under the General Corporation Law.
To manufacture, process, purchase, sell and
generally to trade and deal in and with goods,
wares and merchandise of every kind, nature and
description, and to engage and participate in any
mercantile, industrial or trading business of any
kind or character whatsoever.
To purchase or otherwise acquire, and to
hold, mortgage, pledge, sell, exchange or otherwise
dispose of, securities (which term, for the purpose
of this Article THIRD, includes, without limitation
of the generality thereof, any shares of stock,
bonds, debentures, notes, mortgages, or other
obligations, and any certificates, receipts or
other instruments representing rights to receive,
purchase or subscribe for the same, or representing
any other rights or interests therein or in any
property or assets) created or issued by any
persons, firms, associations, corporation, or
governments or subdivisions thereof; to make
payment therefor in any lawful manner; and to
exercise, as owner or holder of any securities, any
and all rights, powers and privileges in respect
thereof.
To make, enter into, perform and carry out
contracts of every kind and description with any
person, firm, association, corporation or
government or subdivision thereof.
To acquire, by purchase, exchange or
otherwise, all or any part of, or any interest in,
the properties, assets, business and good will of
any one or more persons, firms, associations or
corporations heretofore or hereafter engaged in any
business for which a corporation may now or
hereafter be organized under the laws of the State
of Delaware; to pay for the same in cash, property
or its own or other securities; to hold, operate,
reorganize, liquidate, sell or in any manner
dispose of the whole or any part thereof and in
connection therewith, to assume or guarantee
performance of any liabilities, obligations or
contracts of such persons, firms, associations or
corporations, and to conduct the whole or any part
of any business thus acquired.
To endorse or guarantee the payment of
principal, interest or dividends upon, and to
guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in
any way permitted by law the performance of any of
the contracts or other undertakings in which
the Corporation my otherwise be or become
interested, of any person, firm, association,
corporation, government or subdivision thereof, or
of any other combination, organization or entity
whatsoever.
To borrow money for any of the purposes of
the Corporation, from time to time, and without
limit as to the amount; from time to time to issue
and sell its own securities in such amounts, on
such terms and conditions, for such purposes and
for such prices, now or hereafter permitted by the
laws of the State of Delaware and by this
Certificate of Incorporation, as the Board of
Directors of the Corporation may determine and to
secure such securities by mortgage upon, or the
pledge of, or the conveyance or assignment in trust
of, the whole or any part of the properties,
assets, business and good will of the Corporation,
then owned or thereafter acquired.
To draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills
of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments and
evidences of indebtedness whether secured by
mortgage or otherwise, as well as to secure the
same by mortgage or otherwise, so far as may be
permitted by the laws of the State of Delaware.
To purchase, hold, cancel, reissue, sell,
exchange, transfer or otherwise deal in its own
securities from time to time to such an extent and
in such manner and upon such terms as the Board of
Directors of the Corporation shall determine;
provided that the Corporation shall not use its
funds or property for the purchase of its own
shares of capital stock when such use would cause
any impairment of its capital stock, except to the
extent permitted by law; and provided further that
shares of its own capital stock belonging to the
Corporation shall not be voted directly or
indirectly.
To organize or cause to be organized under
the laws of the state of Delaware, or any other
state of the United States of America, or of the
District of Columbia, or of any territory,
dependency, colony or possession of the United
States of America, or of any foreign country, a
corporation or corporations for the purposes of
transacting, promoting or carrying on any or all of
the objects purposes for which the Corporation is
organized, and to dissolve, wind up, liquidate,
merge or consolidate any such corporation or
corporations or to cause the same to be dissolved,
would up, liquidated, merged or consolidated.
To conduct its business in any and all of its
branches and maintain offices both within and
without the State of Delaware, in any and all
States of the United States of America, in the
District of Columbia, in any or all territories,
dependencies, colonies or possessions of the United
States of America, and in foreign countries.
To such extent as a corporation organized
under the General Corporation Law of the State of
Delaware may now or hereafter lawfully do, to do,
either as principal or agent and either alone or in
connection with other corporations, firms or
individuals, all and everything necessary,
suitable, convenient or proper for, or in
connection with, or incident to, the accomplishment
of any of the purposes or attainment of any one or
more of the objects herein enumerated, or designed
directly or indirectly to promote the interests of
the Corporation or to enhance the value of its
properties; and in general to do any and all things
and exercise any and all powers, rights and
privileges which a corporation may now or hereafter
be organized to do or to exercise under the General
Corporation Law of Delaware or under any act
amendatory thereof, supplemental thereto or
substituted therefor.
The foregoing provisions of this Article THIRD shall be
construed both as purposes and powers and each as an
independent purpose and power. The foregoing enumeration of
specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the
Corporation, and the purposes and powers herein specified
shall, except when otherwise provided in this Article THIRD,
be in no way limited or restricted by reference to, or
inference from, the terms of any provision of this or any
other Article of this Certificate of Incorporation; provided
that nothing herein contained shall be construed as
authorizing the Corporation to issue bills, notes or other
evidences of debt for circulation as money, or to carry on
the business of receiving deposits of money or the business
of buying gold or silver bullion or foreign coins or as
authorizing the Corporation to engage in the business of bank
or insurance or to carry on the business of constructing,
maintaining or operating public utilities in the State of
Delaware; and provided, further, that the Corporation shall
not carry on any business or exercise any power in any state,
territory, or country which under the laws thereof the
Corporation may not lawfully carry on or exercise.
FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
fifty two million eight hundred thousand (52,800,000) shares
of which forty million (40,000,000) are to be Common Stock of
the par value of One Cent ($.01) per share (hereinafter
called the "Common Stock"); of which two million eight
hundred thousand (2,800,000) shares are to be Class B Capital
Stock with a par value of One Cent ($.01) per share
(hereinafter called the "Class B Capital Stock"); and of
which ten million (10,000,000) shares are to be Preferred
Stock with a par value of One Cent ($.01 per share
(hereinafter called the "Preferred Stock"), to be issued in
such series and with such terms and conditions as the Board
of Directors may determine. Each four (4) shares of
authorized Common Stock issued and outstanding or standing in
the name of the Corporation at the close of business on the
date of filing and recording (the "Effective Date") of this
Certificate of Amendment (the "Amendment") in the office of
the Secretary of State of the State of Delaware, shall,
upon the filing and recording of this Amendment in the
Office of the Secretary of State of the State of Delaware,
thereupon automatically be reclassified and changed into one
(1) validly issued, fully paid and nonassessable share of
Common Stock. Each holder of record of shares of Common
Stock to be so reclassified and changed shall at the
Effective Date become the record owner of the number of
shares of Common Stock as shall result from such
reclassification and change. Each such record holder shall
be entitled to receive, upon the surrender of the certificate
or certificates representing the shares of Common Stock to be
so reclassified and changed at the office of the transfer
agent of the Corporation in such form and accompanied by such
documents, if any, as may be prescribed by the transfer agent
of the Corporation, a new certificate or certificates
representing the number of shares of Common Stock of which he
or she is the record owner after giving effect to the
provisions of this Article Fourth. The Corporation shall not
issue fractional shares with respect to the reclassification
and change, and instead, shall, in lieu of any fractional
share of Common Stock which would otherwise result, issue to
the holder entitled thereto one (1) whole share of Common
Stock, which shares shall be validly issued, fully paid and
nonassessable.
(a) The designations, preferences, privileges and
voting powers of the shares of the Common Stock and the Class
B Capital Stock, and the restrictions or qualifications
thereof, are as follows:
(1) The holders of the Common Stock and the
holders of the Class B Stock shall be entitled to
the same rights and privileges, except as
hereinafter set forth, and shall share equally,
share and share alike, in the distribution of any
funds which the Board of Directors may declare or
set aside or pay out as dividends and shall share
equally, share and share alike, in the distribution
of all assets of the Corporation after the payment
of its debts or liabilities in the event of any
liquidation, dissolution or winding up of the
Corporation.
(2) In any and all matters requiring the vote
or consent of the stockholders of the Corporation,
each issued and outstanding share of Common Stock
shall be entitled to one (1) vote and each issued
and outstanding share of Class B Stock shall be
entitled to ten (10) votes.
(3) In case the Corporation shall at any time
(i) declare a stock dividend upon its Common Stock
payable in shares of its Common Stock or (ii) make
any distribution upon its Common Stock payable in
shares of its Common Stock or (iii) subdivide its
outstanding shares of Common Stock into a greater
number of shares or (iv) subdivide its outstanding
shares of Common Stock into a smaller number of
shares, then and in any of such events the
Corporation shall make, declare or effect a similar
but ratable stock dividend or distribution or
subdivision of the shares of Class B Stock but
payable in shares of Class B Stock and only on a
share for share basis.
(4) Any holders of Class B Stock may at any
time convert all or any of the shares of such stock
held by him into shares of Common Stock of the
Corporation at the rate of (1) share of Common
Stock for (1) share of Class B Stock, without any
adjustment for dividends or otherwise, by surrender
to the Corporation at any office of the Corporation
or at the office of the Transfer Agent thereof for
cancellation of the certificate or certificates
representing the Class B Stock so to be converted,
and, upon such surrender, shall be entitled to
receive therefor one or more certificates for the
same number of shares of Common Stock the
Corporation shall be required to issue on said
conversion as hereinabove specified.
(b) Shares of Preferred Stock may be issued from time
to time in one or more series as may from time to time be
determined by the Board of Directors of the Corporation. Each
series shall be distinctly designated. All shares of any one
series of the Preferred Stock shall be alike in every
particular, except that there may be different dates from
which dividends (if any) thereon shall be cumulative, if made
cumulative. The powers, preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other
series at any time outstanding. The Board of Directors of
the Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance of
any shares of each particular series of the Preferred Stock,
the designation, powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, if any,
of such series, including, but without limiting the
generality of the foregoing, the following:
(1) the distinctive designation of, and the number
of shares of the Preferred Stock which shall constitute the series,
which number may be increased (except as otherwise fixed by the Board
of Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the Board of Directors;
(2) the rate and times at which, and the
terms and conditions upon which, dividends, if any,
on shares of the series may be paid, the extent of
preferences or relation, if any, of such dividends
to the dividends payable on any other class or
classes of stock of the Corporation, or on any
series of the Preferred Stock or of any other class
or classes of stock of the Corporation, and whether
such dividends shall be cumulative or non-cumulative;
(3) the right, if any, of the holders of
shares of the series to convert the same into, or
exchange the same for, shares of any other class or
classes of stock of the Corporation, or of any
series of the Preferred Stock or of any other class
or classes of stock of the Corporation, and the terms
and conditions of such conversion or exchange;
(4) whether shares of the series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and
and conditions upon which, shares of the series may be
redeemed;
(5) the rights, if any, of the holders of
shares of the series upon voluntary or involuntary
liquidation, merger, consolidation, distribution or
sale of assets, dissolution or winding-up of the
Corporation;
(6) the terms of the sinking fund or
redemption or purchase account, if any, to be
provided for shares of the series; and
(7) the voting powers, if any, of the holders
of shares of the series which may, without limiting
the generality of the foregoing, include the right,
voting as a series by itself or together with other
series by itself or together with other series of
the Preferred Stock or all series of the Preferred
Stock as a class, (i) to vote more or less than one
vote per share on any or all matters voted upon by
the shareholders, (ii) to elect one or more
Directors of the Corporation in the event there
shall have been a default in the payment of
dividends on any one or more series of the
Preferred Stock or under such other circumstances
and upon such conditions as the Board of Directors
may fix.
(c) The relative powers, preferences and rights of
each series of Preferred Stock in relation to the powers,
preferences and rights of each other series of Preferred
Stock shall, in each case, be as fixed from time to time by
the Board of Directors in the resolution or resolutions
adopted pursuant to authority granted in this Article FOURTH
and the consent by class or series vote or otherwise, of the
holders of the Preferred Stock of such of the series of the
Preferred Stock as are from time to time outstanding shall
not be required for the issuance by the Board of Directors of
any other series of Preferred Stock whether the powers,
preferences and rights of such other series shall be fixed by
the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or
any of them; provided, however, that the Board of Directors
may provide in such resolution or resolutions adopted with
respect to any series of Preferred Stock that the consent of
the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of
any or all other series of Preferred Stock.
(d) Shares of Common Stock, Class B Stock and Preferred
Stock (subject to the provisions of paragraph (c) of this
Article FOURTH) of the Corporation may be issued by the
Corporation, from time to time, for such consideration,
wholly or partly, in cash, labor done, personal property, or
real property or leases thereof, as may be determined, from
time to time, by the Board of Directors, and such
determination by the Board of Directors shall be final and
conclusive. All shares of Common Stock, Class B Stock and
Preferred Stock of the Corporation issued as herein provided
shall be deemed fully paid stock and not liable for any
further call or assessment thereon, and the holder of such
shares shall not be liable for any further payments in
respect thereto.
(e) No holder of any of the shares of stock of the
Corporation of any class shall be entitled, as such holder,
to purchase or subscribe for any unissued stock of any class
or any additional shares of any class to be issued by reason
of any increase of the authorized capital stock of the
Corporation of any class, or bonds, certificates of
indebtedness, debentures or other securities convertible into
stock of the Corporation, or carrying any right to purchase
stock of any class, but any such unissued stock or such
additional authorized issue of any stock or of other
securities convertible into stock or carrying any right to
purchase stock may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms,
corporations or associations and upon such terms as may be
deemed advisable by the Board of Directors in exercise of its
discretion.
FIFTH: The minimum amount of capital stock with
which the Corporation will commence business is One Thousand
Dollars ($1,000).
SIXTH: The Corporation is to have a perpetual
existence.
SEVENTH: The private property of the stockholders of
the Corporation shall not be subject to the payment of
corporate debts to any extent whatever.
EIGHTH: For the management of the business and for
the conduct of the affairs of the Corporation, and in further
definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders, it is
further provided:
1. The number of directors of the
Corporation shall be as specified in the By-laws of
the Corporation but such number may from time to
time be increased or decreased in such manner as
may be prescribed by the By-laws. In no event
shall the number of directors be less than three
(3). The election of directors need not be by
ballot. Directors need not be stockholders.
2. In furtherance and not in limitation of
the powers conferred by the laws of the State of
Delaware, the Board of Directors is expressly
authorized and empowered:
(a) To make, alter, amend, and repeal By-
laws, subject to the power of the stockholders to alter
or repeal the By-laws made by the Board of Directors.
(b) Subject to the applicable provisions
of the By-laws then in effect, to determine, from
time to time, whether and to what extent and at
what times and places and under what conditions and
regulations the accounts and books of the
Corporation, or any of them shall be open to the
inspection of the stockholders, and no stockholder
shall have any right to inspect any account or book
or documents of the Corporation, except as
conferred by the laws of the State of Delaware,
unless and until authorized so to do by resolution
of the Board of Directors or of the stockholders of
the Corporation.
(c) Without the assent or vote of the
stockholders, to authorize and issue obligations of
the Corporation, secured or unsecured, to include
therein such provisions as to redeemability,
convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine and
to authorize the mortgaging or pledging, as security
therefor, of any property of the Corporation, real or
personal, including after acquired-property.
(d) To determine whether any, and, if
any, what part, of the net profits of the
Corporation or of its net assets in excess of its
capital shall be declared in dividends and paid to
the stockholders, and to direct and determine the
use and disposition of any such net profit or such
net assets in excess of capital.
(e) To fix from time to time the amount
of profits of the Corporation to be reserved as
working capital or for other lawful purposes.
(f) to establish bonus, profit-sharing or
other types of incentive or compensation plans for
the employees (including officers and directors) of
the Corporation and to fix the amount of profits to
be distributed or shared and to determine the
persons to participate in any such plans and the
amounts of their respective participations.
In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon
it, the Board of Directors may exercise all such
powers and do all such acts and things as may be
exercised or done by the Corporation, subject,
nevertheless, to the provisions of the laws of the
State of Delaware, of the Certificate of
Incorporation and of the By-laws of the Corporation.
3. Any director or any officer elected or
appointed by the stockholders or by the Board of
Directors may be removed at any time in such manner
as shall be provided in the By-laws of the
Corporation.
4. No contract or other transaction between
the Corporation and any other corporation and no
other act of the Corporation shall, in the absence
of fraud, in any way be affected or invalidated by
the fact that any of the directors of the
Corporation are pecuniarily or otherwise interested
in, or are directors or officers of, such other
corporation. Any director of the Corporation
individually or any firm or association of which any
director may be a member, may be a party to, or may
be pecuniarily or otherwise interested in, any
contract or transaction of the Corporation, provided
that the fact he individually or such firm or
association is so interested shall be disclosed or
shall have been known to the Board of Directors or a
majority of such members thereof as shall be present at any
meeting of the Board of Directors at which action upon
any such contract or transaction shall be taken. Any
director of the Corporation who is also a director or
officer of such other corporation or who is so
interested may be counted in determining the existence
of a quorum at any meeting of the Board of Directors
which shall authorize any such contract or transaction,
and may vote thereat to authorize any such contract or
transaction, with like force and effect as if he were
not such director or officer of such other corporation
or not so interested. Any director of the Corporation
may vote upon any contract or other transaction between
the Corporation and any subsidiary or affiliated corporation
without regard to the fact that he is also a director of
such subsidiary or affiliated corporation.
Any contract, transaction or act of the
Corporation, or of the Directors which shall be
ratified by a majority of a quorum of the stockholders
of the Corporation at any annual meeting, or at any
special meeting called for such purpose, shall, in so
far as permitted by law or by the Certificate of
Incorporation of the Corporation, be as valid and as
binding as though ratified by every stockholder of the
Corporation; provided, however, that any failure of
the stockholders to approve or ratify any such
contract, transaction or act, when and if submitted,
shall not be deemed in any way to invalidate the same
or deprive the Corporation, its directors, officers or
employees, of its or their right to proceed with such
contract, transaction or act.
5. Subject to any limitation in the Bylaws, the
members of the Board of Directors shall be entitled to
reasonable fees, salaries or other compensation for
their services and to reimbursement for their expenses
as such members. Nothing contained herein shall
preclude any director from serving the Corporation, or
any subsidiary or affiliated corporation, in any other
capacity and receiving proper compensation therefor.
6. If the By-laws so provide, the
stockholders and Board of Directors of the Corporation
shall have power to hold their meetings, to have an
office or offices and to keep the books of the
Corporation, subject to the provisions of the laws of
Delaware, outside of said State at such place or
places as may from time to time be designated by them.
NINTH: Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any
class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or any
creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the
Delaware Code, or on the application of trustees in
dissolution or of any receiver or receivers appointed for
this Corporation under the provisions of Section 279 of Title
8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be
summoned in such manner as the said court directs.
If a majority in number representing three-fourths in
value of the creditor or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as
the case may be, agree to any compromise or arrangement, and
to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be
binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders of this
Corporation, as the case may be, and also on this Corporation.
TENTH: From time to time any of the provisions of
this Certificate of Incorporation may be amended, altered or
repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or
inserted in the manner and at the time prescribed by said
laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH: Any person made a party to any action, suit or
proceeding by reason of the fact that he, his testator or
intestate, is or was a director, office or employee of the
Corporation or of any corporation which he served as such at
the request of the Corporation shall be indemnified by the
Corporation against the reasonable expenses, including
attorney's fees, actually and necessarily incurred by him in
connection with the defense of such action, suit or
proceeding, or in connection with any appeal therein, except
in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such officer, director
or employee is liable for negligence or misconduct in the
performance of his duties. The foregoing right of
indemnification shall not be deemed exclusive of any other
rights to which any officer or director or employee may be
entitled apart from the provisions of this section.
TWELFTH: No director of this Corporation shall be
liable to this Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's
duty of loyalty to this corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an
improper benefit.
IN WITNESS WHEREOF, the Corporation has caused its
corporate seal to be hereunto affixed and this Restated
Certificate of Incorporation to be signed by Jerome I.
Feldman, its President and Chief Executive Officer, and
attested by Lydia M. DeSantis, its Corporate Secretary, this
5th day of October, 1995.
NATIONAL PATENT DEVELOPMENT
CORPORATION
Jerome I. Feldman
President and Chief
Executive Officer
ATTEST:
Lydia M. DeSantis
Corporate Secretary
AMENDMENT AND SUPPLEMENT
TO
LOAN AGREEMENT
AGREEMENT, made this 23rd day of October, 1995, by
and among:
MXL INDUSTRIES, INC., a Delaware corporation (the
"Borrower");
The Banks that have executed the signature pages
hereto (individually a "Bank" and collectively, the "Banks"); and
NATWEST BANK N.A., a national banking association
(the successor in interest to National Westminster Bank NJ),
as Agent for the Banks (in such capacity, together with its
successors in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS:
A. The Borrower, the Banks and National
Westminster Bank N.J., as Agent (the predecessor in interest
to the Agent) have heretofore entered into a Loan Agreement
dated April 29, 1993 (the "Original Loan Agreement", and as
the Original Loan Agreement is amended and supplemented
hereby and as it may from time to time hereafter be amended
and supplemented, the "Loan Agreement");
B. The parties hereto wish to amend and
supplement the Original Loan Agreement to provide for an
increase in the principal amount of the Term Loans, as
defined therein, and for certain other matters as
hereinafter set forth; and
C. Capitalized terms used herein which are
defined in the Original Loan Agreement and not otherwise defined herein
shall have the respective meanings ascribed thereto in the Original Loan
Agreement;
NOW, THEREFORE, for good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
Article 1. Amended Term Loans; Release of
Certain Collateral; Waiver as to Interest Rate Contract
Section 1.1 The Borrower hereby acknowledges
and confirms that as of the date hereof, the outstanding
principal balance of each Bank's Term Loan (individually an
"Original Term Loan" and collectively, the "Original Term
Loans") is as follows:
Outstanding Principal
Bank Balance of Term Loan
NatWest Bank N.A. (the $1,117,500.00
successor in interest to
NatWest USA and hereinafter
referred to as "NatWest")
UJB $ 382,500.00
Concurrently herewith, each Bank is making an additional
loan (individually, an "Additional Term Loan" and
collectively, the "Additional Term Loans") to be added to
such Bank's Original Term Loan in the following respective
principal amounts:
Principal Amount of
Bank Additional Term Loan
NatWest $1,800,395.00
UJB $ 659,605.00
Upon the making of the Additional Term Loans on the date
hereof, the outstanding principal balance of each Bank's Original Term
Loan and Additional Term Loan (individually, an "Amended
Term Loan" and collectively, the "Amended Term Loans") is as
follows:
Outstanding Principal
Balance of Amended
Bank Term Loan
NatWest $2,917,895.00
UJB $1,042,105.00
Section 1.2 The Amended Term Loans made by each
Bank shall be evidenced by a single promissory note of the
Borrower in form and substance satisfactory to the Banks and
the Agent (each, an "Amended and Restated Term Note", and
collectively, the "Amended and Restated Term Notes"). Each
Amended and Restated Term Note shall be dated the date of
this Amendment and Supplement, and shall be payable to the
order of such Bank in a principal amount equal to such
Bank's Term Loan Commitment, as amended hereby, advanced to
the Borrower, and shall otherwise be duly completed. The
Amended and Restated Term Notes shall be payable as provided
in Section 1.3 hereof. The Amended and Restated Term Notes
shall be deemed to amend and restate the Term Notes executed
and delivered in connection with the Original Term Loans
(individually, an "Original Term Note" and collectively, the
"Original Term Notes"), and upon the execution and delivery
to each Bank of the Amended and Restated Term Note payable
to such Bank, such Bank shall mark the Original Term Note
payable to such Bank "Paid by Substitution of New Note" and
return it to the Borrower.
Section 1.3 (a) The Borrower shall pay to the
Agent for the account of each Bank the principal of the
Amended Term Loan made by such Bank in sixteen (16)
consecutive quarterly installments on the Payment Dates,
commencing on October 31, 1995 (provided that the last such
payment shall be on July 31, 1999, and shall be in an amount
sufficient to repay in full the principal amount of such
Amended Term Loans), with the aggregate amount of the
installments paid on each Payment Date to be equal to
$247,500, and such payments shall be distributed between
NatWest and UJB in the respective amounts set forth below:
Amount of Installment Amount of Installment
to be Distributed to be Distributed
Payment Dat e to NatWest to UJB
The last day of each $182,368.43 $65,131.57
October, January,
April and July from
October 31, 1995
through April 30, 1999
July 31, 1999 $182,368.55 $65,131.45
b. The Amended Term Loans shall bear interest at
the rates applicable to the Term Loans as set forth in the
Original Loan Agreement, and such interest shall be payable
in accordance with the terms of the Loan Agreement.
Section 1.4 Concurrently with the execution and
delivery of this Amendment and Supplement, the Borrower
shall pay a non-refundable facility fee to NatWest in the
amount of $14,500 and to UJB in the amount of $5,300.
Section 1.5 The proceeds of the Additional Term
Loans shall be used by the Borrower solely for the following
purposes:
(a) The amount of $1,666,666 shall be loaned
by the Borrower to FSG simultaneously with the making of the
Additional Term Loans to be used by FSG, simultaneously with
its receipt of such amount, for the payment in full by FSG
of the outstanding principal balance of the "Term Loans"
outstanding under the FSG Loan Agreement; and
(b) The reimbursement to the Borrower of its
payment to the Banks of $793,334 made on July 31, 1995 in
respect of the Loans.
Section 1.6 Concurrently with the execution and
delivery of this Amendment and Supplement, the Borrower
shall execute and deliver to the Agent Mortgage Modification
and Extension Agreements in form and substance satisfactory
to the Agent and the Banks (the "Mortgage Modification
Agreements") pursuant to which the Borrower agrees that the
Borrower Mortgages secure, without limitation, the
Borrower's obligations in respect of the Amended and
Restated Term Notes and the Amended Term Loans (the Mortgage
Modification Agreements, the Amended and Restated Term Notes
and this Amendment and Supplement, and all other documents
executed and delivered in connection herewith or therewith,
are sometimes hereinafter referred to collectively as the
"Supplemental Loan Documents").
Section 1.7 Concurrently herewith, the Banks
and the Agent hereby release their lien on and security
interest in:
(a) Bonds denominated in Swiss francs issued by
NPDC, bearing an 8% interest rate and due March 1, 1995 (the "Swiss Bonds")
in the principal amount of SFr2,001,000, heretofore owned by the Borrower and
pledged pursuant to the Borrower Debt Assignment Agreement; and
(b) Swiss Bonds in the principal amount of SFr 4,581,000,
heretofore owned by FSG and pledged pursuant to the Guarantor Debt Assignment
Agreement.
The Borrower and the Guarantors acknowledge that
all of the foregoing Swiss Bonds are to be canceled,
and that the Agent shall, concurrently herewith deliver
the certificates representing such Swiss Bonds to NPDC.
NPDC, by its countersignature hereof, agrees that, promptly
upon its receipt of such certificates, it shall deliver such
certificates to the Trustee in respect of the Swiss Bonds
for cancellation, and shall take all other action required
on its part to effect the cancellation of such Swiss Bonds.
The Borrower further acknowledges that the foregoing release
of Collateral shall not be deemed to be a waiver or consent
by the Banks or the Agent for any purpose whatsoever, and
that the Borrower's Obligations, as amended and supplemented
hereby, remain in full force and effect without regard to
such release of Collateral.
Section 1.8 The Agent and the Banks acknowledge
that the Borrower has heretofore entered into an Interest
Rate Contract in accordance with Section 2.21 of the Loan
Agreement, that such Interest Rate Contract has expired by
its terms, and that the Borrower is not currently a party to
an Interest Rate Contract as provided in such Section 2.21.
The Agent and the Banks hereby consent to the Borrower's
failure to have any such Interest Rate Contract in effect
and waive any default under such Section 2.21 arising from
such failure; provided, however, that the Borrower
acknowledges that the foregoing consent and waiver shall be
applicable only to the specific matter referred to in this
Section 1.8 and shall not be deemed to be a consent or
waiver for any other purpose whatsoever.
Section 1.9 The Original Loan Agreement, the
Loan Documents, and all agreements, instruments and
documents executed and delivered in connection with any of
the foregoing, shall each be deemed to be amended hereby to
the extent necessary to give effect to the provisions of
this Amendment and Supplement. Except as amended hereby,
the Loan Agreement and the other Loan Documents shall remain
in full force and effect in accordance with their respective
terms.
Article 2. Amendments to the Loan Agreement
Without limiting the generality of Section 1.6,
the Original Loan Agreement is hereby amended as follows:
Section 2.1 Article 1 of the Original Loan
Agreement is amended as follows:
(a) The following new definitions are added:
"'Adjusted Excess Cash Flow' - for any period, an
amount equal to (i) the Borrower's Net Income for such period, (ii)
plus, but only to the extent such items shall have been
deducted in determining such Net Income, the sum of
depreciation and amortization of assets, and other non-cash
charges, and (iii) minus, without duplication, the sum of
(1) all Capital Expenditures incurred by the Borrower during
such period, but only to the extent that the Borrower did
not incur Indebtedness in connection with the incurrence of
such Capital Expenditures, and (2) all payments made by the
Borrower of principal and interest that were due and payable
during such period in respect of the Borrower's Long Term
Debt (including, without limitation, such payments in
respect of Capitalized Lease Obligations)."
"'Amendment and Supplement' - the Amendment and
Supplement to Loan Agreement dated October 23, 1995 by and
among the Borrower, the Banks that have executed the
signature pages thereto and the Agent (as such Amendment and
Supplement to Loan Agreement may be amended, modified and
supplemented from time to time)."
"'Long Term Debt' - all Indebtedness which by its
terms matures more than twelve (12) months from the date as of
which any determination of Long Term Debt is made."
(b) The definition of "Debt Service" is
deleted and the following is substituted therefor:
"Debt Service" - as to any Person as at any
date, the sum of (a) all payments of principal and interest on
Indebtedness (other than the Term Loan) of such Person for
borrowed money and all payments in respect of Capital Leases
of such Person that were due and payable during the
immediately preceding four full fiscal quarters of such
Person, plus (b) (i) during the period from January 1, 1996
through September 29, 1996, the aggregate amount of all
payments of principal and interest on the Term Loan that
were due and payable during the immediately preceding fiscal
quarter of the Borrower, multiplied by four, and (ii) from
and after September 30, 1996, all payments of principal and
interest on the Term Loan that were due and payable during
the immediately preceding four full fiscal quarters of the
Borrower.
(c) The definition of "Term Loan Commitment"
is deleted and the following is substituted therefor:
"'Term Loan Commitment' - as to each Bank, the
amount set forth opposite such Bank's name on Schedule I to the
Amendment and Supplement."
(d) The definition of "Net Income" is
amended by adding the following new sentence at the
conclusion thereof:
"Notwithstanding the foregoing, for purposes of
computing the aggregate income (or loss) of the Borrower for any
period in determining the Borrower's Net Income for such
period, the income (or loss, as the case may be) of GPC and
ISI for such period shall not be included to the extent that
such income (or loss) otherwise would have been included in
such computation in accordance with generally accepted
accounting principles consistently applied. The Borrower
acknowledges and confirms that to the extent the aggregate
income (or loss) of the Borrower is used in computing the
Borrower's Tangible Net Worth, such aggregate income (or
loss) shall be computed in accordance with generally
accepted accounting principles consistently applied, without
regard to the immediately preceding sentence."
(e) The definition of "Operating Cash Flow"
is amended by adding in clause (iii) thereof the words "or
provided for" immediately after the word "paid".
(f) The definition of "Tangible Net Worth"
is amended by changing the period at the conclusion thereof
to a semicolon, and by adding the following after such
semicolon:
"and further provided, that the amount receivable
by the Borrower from FSG in respect of the Borrower's
advance to FSG of $1,666,666 (such advance consisting of the
payment by the Borrower on behalf of FSG of the outstanding
principal balance of the 'Term Loans' under the FSG Loan
Agreement), shall be deemed to be an intangible for the
purposes hereof."
Section 2.2 Section 6.9 of the Original Loan
Agreement is amended by deleting subsection 6.9(a) in its
entirety and by substituting therefor the following:
"(a) Have or maintain, as to the Borrower:
(i) Tangible Net Worth as at the last day of
each fiscal quarter of the Borrower which day occurs in the years
set forth below at not less than the respective amounts set
forth opposite each such year:
Minimum Tangible Net
Fiscal Quarter-End Worth on Such Fiscal
Date Occurring In: Quarter-End Date
1993 $ 4,000,000
1994 5,000,000
1995 5,200,000
1996 6,000,000
1997 6,900,000
1998 7,900,000
1999 9,500,000
(ii) The ratio of Indebtedness to Tangible
Net Worth of the Borrower as at the last day of each fiscal
quarter of the Borrower at not more than 1.50 to 1.00.
(iii) The excess of Current Assets over
Current Liabilities of the Borrower as at the last day of
each fiscal quarter of the Borrower at not less than
$1,000,000.
(iv) Debt Service Coverage of the Borrower
for the four full fiscal quarters ending on the last day of each
fiscal quarter of the Borrower at not less than 150%."
Section 2.3 Section 7.5 of the Original Loan
Agreement is amended by deleting subsection 7.5(b) in its
entirety and by substituting therefor the following:
"(b) Declare or pay any dividends or make any
distribution of any kind on the Borrower's or FSG's
outstanding stock, or set aside any sum for any such
purpose, except that the Borrower or FSG may declare or pay
any dividend payable solely in shares of its common stock;
provided, however, that:
(i) the Borrower shall be permitted to pay
dividends from time to time to NPDC during any fiscal
quarter in an amount not exceeding the aggregate amount of
interest, if any, actually paid in cash by NPDC and received
by the Borrower during the immediately preceding fiscal
quarter in respect of any bonds issued by NPDC owned by the
Borrower plus the amount of cash dividends, if any, actually
received by the Borrower in respect of stock of GPC and ISI
owned by the Borrower; provided further however, that:
(1) the amount of such dividends permitted
under this subsection 7.5(b)(i) in any fiscal quarter shall
be reduced by the aggregate amount of loans made during such
fiscal quarter by the Borrower to NPDC based upon the amount
of bond interest and dividends received by the Borrower, as
permitted under subsection 7.9(d) hereof; and
(2) no such dividend shall be permitted if
at the time of the proposed payment thereof, a Default shall
have occurred and be continuing hereunder; and
(ii) the Borrower shall be permitted to pay
dividends from time to time to NPDC during each half of its
fiscal year in an amount not in excess of 50% of the
Borrower's Adjusted Excess Cash Flow for the immediately
preceding half of its fiscal year; provided, further
however, that:
(1) in the event that the Borrower had
positive Adjusted Excess Cash Flow for the first half of a
fiscal year, and based upon such Adjusted Excess Cash Flow,
the Borrower paid dividends pursuant to this subsection
7.5(b)(ii) during the second half of such fiscal year, and
in the event that the financial statements delivered in
accordance with Section 5.1 hereof reflect that the Adjusted
Excess Cash Flow for such full fiscal year was less than $0,
then the amount of dividends permitted under this subsection
7.5(b)(ii) to be paid in the immediately succeeding fiscal
year shall be reduced by the amount of dividends paid during
such second half of the fiscal year to which such financial
statements relate;
(2) the amount of such dividends permitted
under this subsection 7.5(b)(ii) during any fiscal half-year
of the Borrower shall be reduced by the aggregate amount of
investments made by the Borrower during such fiscal half-
year pursuant to subsection 7.9(c) hereof (and if the amount
of such investments shall exceed the amount of dividends
otherwise permitted to be paid pursuant to this subsection
7.5(b)(ii) during such fiscal half-year, then the amount of
dividends permitted in the immediately ensuing fiscal half-
years shall be accordingly reduced by the amount of such
remaining excess);
(3) the amount of such dividends permitted
under this subsection 7.5(b)(ii) in any fiscal half-year
shall be reduced by the aggregate amount of loans made
during such fiscal half-year by the Borrower to NPDC as
permitted under subsection 7.9(i) hereof; and
(4) no such dividend shall be permitted if
at the time of the proposed payment thereof, a Default shall
have occurred and be continuing hereunder."
Section 2.4 Section 7.9 of the Original Loan
Agreement is amended as follows:
(a) Subsection 7.9(c)(iv) is amended by changing
the period at the conclusion thereof to a comma, and by
adding the following after such comma:
"reduced, in either event, by the aggregate amount
of dividends paid by the Borrower during such fiscal year
pursuant to subsection 7.5(b)(ii) hereof."
(b) Section 7.9 is further amended by adding the
following new subsections to read in their entirety as
follows:
"(g) (i) The advance by the Borrower to FSG in the
amount of $1,666,666, such advance consisting of the payment
by the Borrower on behalf of FSG of the outstanding
principal balance of the 'Term Loans' under the FSG Loan
Agreement, (ii) the advance heretofore made by the Borrower
to FSG in the amount of $416,666, such advance constituting
the payment by the Borrower on behalf of FSG of the July 31,
1995 principal installments of the 'Term Loans' under the
FSG Loan Agreement and (iii) the advance heretofore made by
the Borrower to FSG on December 21, 1994 in the amount of
$300,000 for the working capital purposes of FSG.
(h) Loans and advances from time to time by the
Borrower to FSG (in addition to the advances permitted under
subsection 7.9(g) hereof), provided that the outstanding
principal amount of all such loans and advances shall at no
time exceed $750,000.
(i) Loans and advances from time to time by the
Borrower to NPDC during each half of the Borrower's fiscal
year in an amount not in excess of 50% of the Borrower's
Adjusted Excess Cash Flow for the immediately preceding half
of its fiscal year; provided, however, that:
(1) in the event that the Borrower had
positive Adjusted Excess Cash Flow for the first half of a
fiscal year, and based upon such Adjusted Excess Cash Flow,
the Borrower made loans and advances pursuant to this
subsection 7.9(i) during the second half of such fiscal
year, and in the event that the financial statements
delivered in accordance with Section 5.1 hereof reflect that
the Adjusted Excess Cash Flow for such full fiscal year was
less than $0, then the amount of loans and advances
permitted under this subsection 7.9(i) to be paid in the
immediately succeeding fiscal year shall be reduced by the
amount of loans and advances made during such second half of
the fiscal year to which such financial statements relate;
(2) the amount of such loans and advances
permitted under this subsection 7.9(i) during any fiscal
half-year of the Borrower shall be reduced by the aggregate
amount of investments made by the Borrower during such
fiscal half-year pursuant to subsection 7.9(c) hereof (and
if the amount of such investments shall exceed the amount of
loans and advances otherwise permitted pursuant to this
subsection 7.9(i) during such fiscal half-year, then the
amount of loans and advances permitted in the immediately
ensuing fiscal half-years shall be accordingly reduced by
the amount of such remaining excess;
(3) the amount of such loans and advances
permitted under this subsection 7.9(i) in any fiscal half-
year shall be reduced by the aggregate amount of dividends
paid during such fiscal half-year by the Borrower to NPDC as
permitted under subsection 7.5(b)(ii) hereof; and
(4) no such loan or advance shall be
permitted if at the time of the proposed making thereof, a
Default shall have occurred and be continuing hereunder.
(j) Concurrently with the execution and delivery
of the Amendment and Supplement, the Borrower shall be
permitted to lend to NPDC the principal amount of $500,000."
Section 2.5 Section 7.13 of the Original Loan
Agreement is deleted in its entirety, and the following new
Section 7.13 is substituted therefor:
"Section 7.13 Capital Expenditures
Make or become obligated to make Capital
Expenditures in the aggregate for the Borrower during the
period from April 1, 1993 through December 31, 1993 in
excess of $250,000, and during each fiscal year of the
Borrower thereafter, in excess of the respective amounts set
forth below (provided, however, that the Capital
Expenditures set forth on Exhibit M-2 annexed hereto shall
not be included for purposes of determining compliance with
this Section 7.13):
Fiscal Year Ending Maximum Capital
December 31 Expenditures
1994 $250,000
1995 500,000
1996 400,000
1997 250,000
1998 and each 250,000"
year thereafter
Section 2.6 Section 7.14 of the Loan Agreement
is amended by deleting the period at the conclusion thereof,
and by adding the following at the conclusion thereof:
"other than the fiscal year ending December 31,
1995, and would exceed $700,000 during the fiscal year
ending December 31, 1995."
Section 2.7 Exhibit M to the Original Loan
Agreement is amended by deleting in its entirety the list of
debt and other arrangements guaranteed by NPDC attached
thereto, and by substituting for such list the list annexed
hereto as Schedule II.
Section 2.8 Exhibit M-2 to the Original Loan
Agreement is amended by adding, at the conclusion thereof,
the following:
"Any refinancing or substitute financing of the
General Electric Credit Corp. obligation referred to above
(whether or not the substitute lessor or financer is General
Electric Credit Corp.), provided that the maximum principal
amount of MXL's obligation thereunder shall not exceed
$1,054,000."
Article 3. Acknowledgments and Confirmations
Section 3.1 a. The Borrower acknowledges and
confirms that any term used in the Security Documents to
which the Borrower is a party to refer to the Borrower's
Indebtedness, liabilities and obligations to the Banks and
the Agent, includes, without limitation, the Indebtedness,
liabilities and obligations of the Borrower to the Banks,
whether now existing or hereafter arising under the Amended
and Restated Term Notes and the Original Loan Agreement as
amended hereby, and that all of the collateral security
provided for in such Security Documents secures the
Borrower's full payment and performance of such
Indebtedness, liabilities and obligations of the Borrower.
(b) The Indebtedness, liabilities and obligations
of the Borrower to the Banks and the Agent, whether now
existing or hereafter arising, under the Amended and
Restated Term Notes and the Original Loan Agreement as
amended and supplemented hereby, are hereinafter referred to
collectively as the "Supplemental Obligations".
Section 3.2 Each of FSG and NPDC, as
Guarantors, consents in all respects to the execution and
delivery by the Borrower of this Amendment and Supplement
and the Amended and Restated Term Notes and the transactions
contemplated herein, including, without limitation, the
release of Collateral provided for herein, and acknowledges
and confirms that:
(a) its Guaranty continues to be valid and in
full force and effect, and guarantees, without limitation,
the full payment and performance of the Supplemental
Obligations as well as the Obligations; and
(b) any term used in the Security Documents to
which such Guarantor is a party to refer to the Borrower's
Indebtedness, liabilities and obligations to the Banks and
the Agent, includes, without limitation, the Supplemental
Obligations, and that all of the collateral security
provided for in such Security Documents secures, without
limitation, the full payment and performance by each
Guarantor of the Indebtedness, liabilities and obligations
of such Guarantor under its Guaranty, as acknowledged and
confirmed hereby.
Section 3.3 Each of the Borrower, the Banks and
the Agent hereby acknowledges and confirms that all
references in the Loan Agreement, the other Loan Documents
and any other agreement, instrument or document executed and
delivered in connection herewith or therewith:
(a) to the "Term Loans" shall be deemed to
include the Amended Term Loans;
(b) to the "Term Notes" shall be deemed to refer
to the Amended and Restated Term Notes;
(c) to the "Loan Agreement" or "this Agreement"
(insofar as such term refers to the Loan Agreement) shall be
deemed to refer to the Original Loan Agreement as amended
and supplemented hereby;
(d) to the "Loan Documents" shall be deemed to
include, without limitation, the Supplemental Loan
Documents, and all other documents executed and delivered in
connection herewith or therewith; and
(e) to the "Obligations" (or any other term used
to describe or refer to the Borrower's Indebtedness,
liabilities and Obligations to the Banks and the Agent)
shall be deemed to include, without limitation, the
Supplemental Obligations.
Article 4. Representations and Warranties
The Borrower hereby represents and warrants to the
Agent and the Banks that:
Section 4.1 After giving effect to the
amendment and supplement of the Original Loan Agreement
pursuant hereto and the consummation of the transactions
contemplated hereby, b. each of the representations and
warranties set forth in Article 3 of the Loan Agreement is
true and correct in all respects as if made on the date
hereof, and c. there exists no Default or Event of Default
under the Loan Agreement.
Section 4.2 The Borrower and each Guarantor has
the power to execute, deliver and perform the Supplemental
Loan Documents to be executed by it. The Borrower and each
other Loan Party has taken all necessary action, corporate
or otherwise, to authorize the execution, delivery and
performance of the Supplemental Loan Documents to be
executed by it. No consent or approval of any Person
(including, without limitation, any stockholder of the
Borrower or any Guarantor), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of
distraint or other similar right and no consent, license,
certificate of need, approval, authorization or declaration
of any governmental authority, bureau or agency, is or will
be required in connection with the execution, delivery or
performance by the Borrower or any other Loan Party, or the
validity, enforcement or priority, of the Supplemental Loan
Documents.
Section 4.3 The execution and delivery by the
Borrower and each other Loan Party of each Supplemental Loan
Document to which it is a party and performance by it
hereunder and thereunder, will not conflict with or result
in a breach of any order, writ, injunction, ordinance,
resolution, decree, or other similar document or instrument
of any court or governmental authority, bureau or agency,
domestic or foreign, or any certificate of incorporation or
by-laws of the Borrower or any other Loan Party, or create
(with or without the giving of notice or lapse of time, or
both) a default under or breach of any agreement, bond, note
or indenture to which the Borrower or any other Loan Party,
is a party, or by which it is bound or any of its properties
or assets is affected, or result in the imposition of any
Lien of any nature whatsoever upon any of the properties or
assets owned by or used in connection with the business of
the Borrower or any other Loan Party, except for the Liens
created and granted pursuant to the Security Documents and
acknowledged and confirmed hereby.
Section 4.4 This Agreement and each other
Supplemental Loan Document has been duly executed and
delivered by the Loan Party that is a party thereto, and
each constitutes the valid and legally binding obligations
of the Loan Party that is a party thereto, enforceable in
accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or
hereafter in effect, relating to or affecting the
enforcement of creditors' rights generally and except that
the remedy of specific performance and other equitable
remedies are subject to judicial discretion.
Section 4.5 The Liens that have been created
and granted pursuant to the Security Documents and confirmed
hereby constitute valid perfected first Liens on the
properties and assets covered by the Security Documents,
subject to no prior or equal Lien except as permitted by
Section 7.2 of the Loan Agreement and except for Liens on
such properties and assets in favor of the FSG Agent.
Article 5. Conditions to Amendment
The effectiveness of this Amendment and Supplement
shall be subject to the fulfillment (to the satisfaction of
the Agent and the Banks) of the following conditions
precedent:
Section 5.1 The Borrower, the Banks and the
Agent shall have executed and delivered this Amendment and
Supplement.
Section 5.2 The Borrower shall have executed
and delivered to each Bank its Amended and Restated Term
Note.
Section 5.3 The Borrower shall have executed
and delivered to the Agent the Mortgage Modification
Agreements in recordable form.
Section 5.4 The Agent shall have received
copies of (1) a certificate of an officer of the Borrower
and the Guarantors to the effect that the Borrower's and
Guarantors' respective certificates of incorporation and by-
laws have not been amended, modified or changed in any
respect since the date of delivery to the Agent of the
certificates of incorporation and by-laws of the Borrower
and the Guarantors in connection with the execution and
delivery of the Original Loan Agreement; (2) all corporate
action taken by the Borrower and the Guarantors to authorize
the execution, delivery and performance of each of this
Amendment and Supplement, the Loan Agreement as amended
hereby, the Amended and Restated Term Notes, the other
agreements, instruments and documents executed in connection
herewith and therewith and the consummation of the
transactions contemplated hereby and thereby, certified by
its secretary; and (3) an incumbency certificate (with
specimen signatures) with respect to the Borrower and the
Guarantors.
Section 5.5 Counsel to the Borrower shall have
delivered to the Agent an opinion in form and substance
satisfactory to the Agent and its counsel.
Section 5.6 d. The Borrower shall have complied
and shall then be in compliance with all of the terms,
covenants and conditions of this Amendment and Supplement
and the Loan Agreement as amended hereby;
(b) After giving effect to the transactions
contemplated hereby, there shall exist no Default or Event
of Default under the Loan Agreement; and
(c) The representations and warranties contained
in Article 3 of the Loan Agreement shall be true and correct
on the date hereof and after giving effect to this Amendment
and Supplement, the Loan Agreement as amended hereby and the
transactions contemplated hereunder and thereunder; and the
Agent shall have received a Compliance Certificate dated the
date hereof to the foregoing effect.
Section 5.7 All legal matters incident hereto
shall be satisfactory to counsel to the Agent.
Article 6. The Agent
(a) The Banks and the Agent agree and confirm
that Article 9 of the Loan Agreement applies in all respects
to this Amendment and Supplement, the Loan Agreement as
amended hereby and the transactions contemplated herein.
Without limiting the generality of the foregoing, each Bank
agrees that Section 9.6 of the Loan Agreement applies to
this Amendment and Supplement and the transactions
contemplated hereby, and that each Bank has, independently
and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter this Amendment and Supplement.
(b) Each Bank acknowledges that Natwest Bank N.A.
is the
successor in interest to National Westminster Bank N.J. in
its capacity as Agent, and that Natwest Bank N.A., in such
capacity, is vested with all the rights, powers, privileges
and duties with which National Westminster Bank N.J. had
been vested in its capacity as Agent, and each Bank consents
to the foregoing in all respects.
Article 7. Miscellaneous
Section 7.1 THIS AMENDMENT AND SUPPLEMENT, THE
AMENDED AND RESTATED TERM NOTES, THE LOAN AGREEMENT AS
AMENDED HEREBY AND ALL OTHER AGREEMENTS, DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH
AND THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
Section 7.2 The provisions of this Amendment
and Supplement are severable, and if any clause or provision
shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision,
or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other
jurisdiction, or any other clause or provision in this
Amendment and Supplement in any jurisdiction.
Section 7.3 This Amendment and Supplement may
be signed in any number of counterparts with the same effect
as if the signatures thereto and hereto were upon the same
instrument.
Section 7.4 This Amendment and Supplement shall
be binding upon and inure to the benefit of the Borrower and
the Guarantors and their respective successors and to the
benefit of each of the Agent and the Banks and its
respective successors and assigns. The rights and
obligations of the Borrower and the Guarantors under this
Amendment and Supplement shall not be assigned or delegated
without the prior written consent of the Banks, and any
purported assignment or delegation without such consent
shall be void.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date first above
written.
MXL INDUSTRIES, INC.
By:
NATWEST BANK N.A.
By:
UNITED JERSEY BANK/CENTRAL,
N.A.
By:
NATWEST BANK N.A.,
as Agent
By:
Consented to and
Agreed in All Respects:
NATIONAL PATENT DEVELOPMENT
CORPORATION
By:
FIVE STAR GROUP, INC.
By:
Schedule I to
Amendment and Supplement
to Loan Agreement
Amended Term Loan Commitments
NatWest $2,917,895.00
UJB $1,042,105.00
Schedule II to
Amendment and Supplement
to Loan Agreement
Debt and Other Arrangements
Guaranteed by NPDC
[to be supplied by L. Gordon]6
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000070415
<NAME> NATIONAL PATENT DEVELOPMENT CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,838
<SECURITIES> 0
<RECEIVABLES> 39,596
<ALLOWANCES> 3,779
<INVENTORY> 18,734
<CURRENT-ASSETS> 79,829
<PP&E> 32,658
<DEPRECIATION> 23,635
<TOTAL-ASSETS> 149,081
<CURRENT-LIABILITIES> 49,186
<BONDS> 23,598
<COMMON> 67
0
0
<OTHER-SE> 2
<TOTAL-LIABILITY-AND-EQUITY> 149,081
<SALES> 142,519
<TOTAL-REVENUES> 143,443
<CGS> 119,310
<TOTAL-COSTS> 23,968
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,075
<INTEREST-EXPENSE> 3,636
<INCOME-PRETAX> 4,190
<INCOME-TAX> 1,073
<INCOME-CONTINUING> 3,117
<DISCONTINUED> (2,154)
<EXTRAORDINARY> (79)
<CHANGES> 0
<NET-INCOME> 884
<EPS-PRIMARY> .13
<EPS-DILUTED> 0
</TABLE>
AMENDMENT TO
LOAN AGREEMENT
AGREEMENT, made this 23rd day of October, 1995, by and
among:
FIVE STAR GROUP, INC., a Delaware corporation (the
"Borrower");
The Banks that have executed the signature pages hereto
(individually a "Bank" and collectively, the "Banks"); and
NATWEST BANK N.A., a national banking association (the
successor in interest to National Westminster Bank NJ), as Agent
for the Banks (in such capacity, together with its successors in
such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS:
A. The Borrower, the Banks and National Westminster
Bank N.J., as Agent (the predecessor in interest to the Agent)
have heretofore entered into a Loan Agreement dated April 29,
1993 (as such Loan Agreement has heretofore been amended, the
"Original Loan Agreement", and as the Original Loan Agreement is
amended hereby and as it may from time to time hereafter be
amended and supplemented, the "Loan Agreement");
B. The parties hereto wish to amend the Original Loan
Agreement as hereinafter set forth; and
C. Capitalized terms used herein which are defined in
the Original Loan Agreement and not otherwise defined herein
shall have the respective meanings ascribed thereto in the
Original Loan Agreement;
NOW, THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
Article 1. Amendments to the Loan Agreement
The Original Loan Agreement is hereby amended as
follows:
Section 1.1 Article 1 of the Original Loan Agreement
is amended as follows:
(a) The following new definitions are added:
"'Adjusted Excess Cash Flow' - for any
period, an amount equal to (i) the Borrower's Net
Income for such period, (ii) plus, but only to the
extent such items shall have been deducted in
determining such Net Income, the sum of
depreciation and amortization of assets, and other
non-cash charges, and (iii) minus, without
duplication, the sum of (1) all Capital
Expenditures incurred by the Borrower during such
period, but only to the extent that the Borrower
did not incur Indebtedness in connection with the
incurrence of such Capital Expenditures, and (2)
all payments made by the Borrower of principal and
interest that were due and payable during such
period in respect of the Borrower's Long Term Debt
(including, without limitation, such payments in
respect of Capitalized Lease Obligations)."
"'Long Term Debt' - all Indebtedness which by
its terms matures more than twelve (12) months
from the date as of which any determination of
Long Term Debt is made."
(b) The definition of "Borrowing Base" is amended
by deleting, in clause (a) thereof, the percentage "75%" and by
substituting therefor the percentage "80%".
(c) The definition of "Debt Service" is amended
(i) by adding thereto the parenthetical phrase "(other than the
Term Loan, as to the Borrower)", immediately after the phrase
"Indebtedness of such Person for borrowed money", and (ii) by
deleting therefrom the phrase "on all Leases" and by substituting
therefor the phrase "in respect of Capital Leases".
(d) The definition of "Net Income" is amended by
adding the following new sentence at the conclusion thereof:
"Notwithstanding the foregoing, for purposes
of computing the aggregate income (or loss) of the
Borrower for any period in determining the
Borrower's Net Income for such period, the income
(or loss, as the case may be) of GPC and ISI for
such period shall not be included to the extent
that such income (or loss) otherwise would have
been included in such computation in accordance
with generally accepted accounting principles
consistently applied. The Borrower acknowledges
and confirms that to the extent the aggregate
income (or loss) of the Borrower is used in
computing the Borrower's Tangible Net Worth, such
aggregate income (or loss) shall be computed in
accordance with generally accepted accounting
principles consistently applied, without regard to
the immediately preceding sentence."
(e) The definition of "Operating Cash Flow" is
amended by adding in clause (iii) thereof the words "or provided
for" immediately after the word "paid".
Section 1.2 Section 7.1 of the Original Loan
Agreement is amended by deleting the word "and" at the conclusion
of subsection 7.1(d), by redesignating the existing subsection
7.1(e) as subsection 7.1(g) and by adding new subsections 7.1(e)
and (f), to read as follows:
"(e) (i) Indebtedness of the Borrower to MXL
in the principal amount of $1,666,666 in respect
of MXL's payment on behalf of the Borrower of the
outstanding principal balance of the Term Loans,
(ii) Indebtedness of the Borrower to MXL in the
amount of $416,666 in respect of MXL's payment on
behalf of the Borrower of the July 31, 1995
principal installments of the Term Loans, and
(iii) Indebtedness of the Borrower to MXL in
respect of MXL's advance to the Borrower on
December 21, 1994 in the amount of $300,000 for
the working capital purposes of the Borrower;
(f) Indebtedness of the Borrower to MXL (in
addition to the Indebtedness permitted under
subsection 7.1(e)) in respect of loans and
advances from time to time by MXL to the Borrower
provided that the outstanding principal amount of
all such loans and advances shall at no time
exceed $750,000; and"
Section 1.3 Section 7.5 of the Original Loan
Agreement is amended by deleting subsection 7.5(b) in its
entirety and by substituting therefor the following:
"(b) Declare or pay any dividends or make any
distribution of any kind on the Borrower's or
MXL's outstanding stock, or set aside any sum for
any such purpose, except that the Borrower or MXL
may declare or pay any dividend payable solely in
shares of its common stock; provided, however,
that:
(1) the Borrower shall be permitted to pay
dividends from time to time to NPDC during any
fiscal quarter in an amount not exceeding the
aggregate amount of interest, if any, actually
paid in cash by NPDC and received by the Borrower
during the immediately preceding fiscal quarter in
respect of any bonds issued by NPDC owned by the
Borrower plus the amount of cash dividends, if
any, actually received by the Borrower in respect
of stock of GPC and ISI owned by the Borrower;
provided further however, that:
(1) the amount of such dividends
permitted under this subsection 7.5(b)(i) in any
fiscal quarter shall be reduced by the aggregate
amount of loans made during such fiscal quarter by
the Borrower to NPDC based upon the amount of bond
interest and dividends received by the Borrower,
as permitted under subsection 7.9(d) hereof; and
(2) no such dividend shall be permitted
if at the time of the proposed payment thereof, a
Default shall have occurred and be continuing
hereunder; and
(ii) the Borrower shall be permitted to
pay dividends from time to time to NPDC during
each half of its fiscal year in an amount not in
excess of 50% of the Borrower's Adjusted Excess
Cash Flow for the immediately preceding half of
its fiscal year; provided, further however, that:
(1) in the event that the Borrower had
positive Adjusted Excess Cash Flow for the first
half of a fiscal year, and based upon such
Adjusted Excess Cash Flow, the Borrower paid
dividends pursuant to this subsection 7.5(b)(ii)
during the second half of such fiscal year, and in
the event that the financial statements delivered
in accordance with Section 5.1 hereof reflect that
the Adjusted Excess Cash Flow for such full fiscal
year was less than $0, then the amount of
dividends permitted under this subsection
7.5(b)(ii) to be paid in the immediately
succeeding fiscal year shall be reduced by the
amount of dividends paid during such second half
of the fiscal year to which such financial
statements relate;
(2) the amount of such dividends
permitted under this subsection 7.5(b)(ii) during
any fiscal half-year of the Borrower shall be
reduced by the aggregate amount of investments
made by the Borrower during such fiscal half-year
pursuant to subsection 7.9(c) hereof (and if the
amount of such investments shall exceed the amount
of dividends otherwise permitted to be paid
pursuant to this subsection 7.5(b)(ii) during such
fiscal half-year, then the amount of dividends
permitted in the immediately ensuing fiscal half-
years shall be accordingly reduced by the amount
of such remaining excess);
(3) the amount of such dividends
permitted under this subsection 7.5(b)(ii) in any
fiscal half-year shall be reduced by the aggregate
amount of loans made during such fiscal half-year
by the Borrower to NPDC as permitted under
subsection 7.9(g) hereof; and
(4) no such dividend shall be permitted
if at the time of the proposed payment thereof, a
Default shall have occurred and be continuing
hereunder."
Section 1.4 Section 7.9 of the Original Loan
Agreement is amended as follows:
(a) Subsection 7.9(c)(iv) is amended by changing the
period at the conclusion thereof to a comma, and by adding the
following after such comma:
"reduced, in either event, by the aggregate
amount of dividends paid by the Borrower during
such fiscal year pursuant to subsection 7.5(b)(ii)
hereof."
(b) Section 7.9 is further amended by adding the
following new subsections to read in their entirety as follows:
"(g) Loans and advances from time to time by
the Borrower to NPDC during each half of the
Borrower's fiscal year in an amount not in excess
of 50% of the Borrower's Adjusted Excess Cash Flow
for the immediately preceding half of its fiscal
year; provided, however, that:
(1) in the event that the Borrower had
positive Adjusted Excess Cash Flow for the first
half of a fiscal year, and based upon such
Adjusted Excess Cash Flow, the Borrower made loans
and advances pursuant to this subsection 7.9(g)
during the second half of such fiscal year, and in
the event that the financial statements delivered
in accordance with Section 5.1 hereof reflect that
the Adjusted Excess Cash Flow for such full fiscal
year was less than $0, then the amount of loans
and advances permitted under this subsection
7.9(g) to be paid in the immediately succeeding
fiscal year shall be reduced by the amount of
loans and advances made during such second half of
the fiscal year to which such financial statements
relate;
(2) the amount of such loans and
advances permitted under this subsection 7.9(g)
during any fiscal half-year of the Borrower shall
be reduced by the aggregate amount of investments
made by the Borrower during such fiscal half-year
pursuant to subsection 7.9(c) hereof (and if the
amount of such investments shall exceed the amount
of loans and advances otherwise permitted pursuant
to this subsection 7.9(g) during such fiscal half-
year, then the amount of loans and advances
permitted in the immediately ensuing fiscal half-
years shall be accordingly reduced by the amount
of such remaining excess;
(3) the amount of such loans and
advances permitted under this subsection 7.9(g) in
any fiscal half-year shall be reduced by the
aggregate amount of dividends paid during such
fiscal half-year by the Borrower to NPDC as
permitted under subsection 7.5(b)(ii) hereof; and
(4) no such loan or advance shall be
permitted if at the time of the proposed making
thereof, a Default shall have occurred and be
continuing hereunder."
Section 1.5 Section 7.13 of the Original Loan
Agreement is deleted in its entirety, and the following new
Section 7.13 is substituted therefor:
"Section 7.13 Capital Expenditures
Make or become obligated to make Capital
Expenditures in the aggregate for the Borrower
during each fiscal year of the Borrower in excess
of the respective amounts set forth below
(provided, however, that the Capital Expenditures
set forth on Exhibit M-2 annexed hereto shall not
be included for purposes of determining compliance
with this Section 7.13):
Fiscal Year Ending Maximum Capital
December 31 Expenditures
1993 $750,000
1994 250,000
1995 500,000
1996 and each 250,000
year thereafter
Section 1.6 Section 7.14 of the Loan Agreement is
amended by deleting the amount "$2,400,000" and by substituting
therefor the amount "$2,500,000".
Section 1.7 Exhibit M to the Original Loan Agreement
is amended by deleting in its entirety the list of debt and other
arrangements guaranteed by NPDC attached thereto, and by
substituting for such list the list annexed hereto as Schedule I.
Section 1.8 Exhibit M-2 to the Original Loan
Agreement is amended by adding, at the conclusion thereof, the
following:
"Any refinancing or substitute financing of
the General Electric Credit Corp. obligation
referred to above (whether or not the substitute
lessor or financer is General Electric Credit
Corp.), provided that the maximum principal amount
of MXL's obligation thereunder shall not exceed
$1,054,000."
Section 1.9 The Original Loan Agreement, the Loan
Documents, and all agreements, instruments and documents executed
and delivered in connection with any of the foregoing, shall each
be deemed to be amended hereby to the extent necessary to give
effect to the provisions of this Amendment and Supplement.
Except as amended hereby, the Loan Agreement and the other Loan
Documents shall remain in full force and effect in accordance
with their respective terms.
Article 2. Release of
Certain Collateral; Waiver as to
Interest Rate Contract
Section 2.1 Concurrently herewith, the Banks and the
Agent hereby release their lien on and security interest in:
(a) Bonds denominated in Swiss francs issued by
NPDC, bearing an 8% interest rate and due March 1, 1995 (the
"Swiss Bonds") in the principal amount of SFr4,581,000,
heretofore owned by the Borrower and pledged pursuant to the
Borrower Debt Assignment Agreement; and
(b) Swiss Bonds in the principal amount of
SFr2,001,000, heretofore owned by MXL and pledged pursuant to the
Guarantor Debt Assignment Agreement.
The Borrower and the Guarantors acknowledge that
all of the foregoing Swiss Bonds are to be canceled, and that the
Agent shall, concurrently herewith deliver the certificates
representing such Swiss Bonds to NPDC. NPDC, by its
countersignature hereof, agrees that, promptly upon its receipt
of such certificates, it shall deliver such certificates to the
Trustee in respect of the Swiss Bonds for cancellation, and shall
take all other action required on its part to effect the
cancellation of such Swiss Bonds. The Borrower further
acknowledges that the foregoing release of Collateral shall not
be deemed to be a waiver or consent by the Banks or the Agent for
any purpose whatsoever, and that the Borrower's Obligations, as
amended and supplemented hereby, remain in full force and effect
without regard to such release of Collateral.
Section 2.2 The Agent and the Banks acknowledge that
the Borrower has heretofore entered into an Interest Rate
Contract in accordance with Section 2.21 of the Loan Agreement,
that such Interest Rate Contract has expired by its terms, and
that the Borrower is not currently a party to an Interest Rate
Contract as provided in such Section 2.21. The Agent and the
Banks hereby consent to the Borrower's failure to have any such
Interest Rate Contract in effect and waive any default under such
Section 2.21 arising from such failure; provided, however, that
the Borrower acknowledges that the foregoing consent and waiver
shall be applicable only to the specific matter referred to in
this Section 2.2 and shall not be deemed to be a consent or
waiver for any other purpose whatsoever.
Article 3. Acknowledgments and Confirmations
Section 3.1 Each of MXL and NPDC, as Guarantors,
consents in all respects to the execution and delivery by the
Borrower of this Amendment, and to the release of Collateral
provided for herein, and acknowledges and confirms that its
Guaranty continues to be valid and in full force and effect.
Section 3.2 Each of the Borrower, the Banks and the
Agent hereby acknowledges and confirms that all references in the
Loan Agreement, the other Loan Documents and any other agreement,
instrument or document executed and delivered in connection
herewith or therewith to the "Loan Agreement" or "this Agreement"
(insofar as such term refers to the Loan Agreement) shall be
deemed to refer to the Original Loan Agreement as amended hereby.
Section 3.3 The Borrower, the Banks, the Agent and
the Guarantors acknowledge (i) that, concurrently herewith, the
parties to the MXL Loan Agreement are amending and supplementing
the MXL Loan Agreement pursuant to an Amendment and Supplement to
Loan Agreement of even date herewith, and (ii) all references in
the Loan Agreement and any of the other Loan Documents to the
"MXL Loan Agreement" shall be deemed to refer to the MXL Loan
Agreement as so amended and supplemented.
Article 4. Representations and Warranties
b. there exists no Default or Event of Default
under the Loan Agreement.
Article 5. The Agent
(a) The Banks and the Agent agree and confirm that
Article 9 of the Loan Agreement applies in all respects to this
Amendment, the Loan Agreement as amended hereby and the
transactions contemplated herein. Without limiting the
generality of the foregoing, each Bank agrees that Section 9.6 of
the Loan Agreement applies to this Amendment and the transactions
contemplated hereby, and that each Bank has, independently and
without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter this Amendment.
(b) Each Bank acknowledges that Natwest Bank N.A. is
the successor in interest to National Westminster Bank N.J. in
its capacity as Agent, and that Natwest Bank N.A., in such
capacity, is vested with all the rights, powers, privileges and
duties with which National Westminster Bank N.J. had been vested
in its capacity as Agent, and each Bank consents to the foregoing
in all respects.
Article 6. Miscellaneous
Section 6.1 THIS AMENDMENT, THE LOAN AGREEMENT AS
AMENDED HEREBY AND ALL OTHER AGREEMENTS, DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND
THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 6.2 The provisions of this Amendment are
severable, and if any clause or provision shall be held invalid
or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such clause
or provision, or part thereof, in such jurisdiction and shall not
in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision in this Amendment
and Supplement in any jurisdiction.
Section 6.3 This Amendment may be signed in any
number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Section 6.4 This Amendment shall be binding upon and
inure to the benefit of the Borrower and the Guarantors and their
respective successors and to the benefit of each of the Agent and
the Banks and its respective successors and assigns. The rights
and obligations of the Borrower and the Guarantors under this
Amendment shall not be assigned or delegated without the prior
written consent of the Banks, and any purported assignment or
delegation without such consent shall be void.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
FIVE STAR GROUP, INC.
By
NATWEST BANK N.A.
By:
UNITED JERSEY BANK/CENTRAL,
N.A.
By:
NATWEST BANK N.A.,
as Agent
By:
Consented to and
Agreed in All Respects:
NATIONAL PATENT DEVELOPMENT
CORPORATION
By:
MXL INDUSTRIES, INC.
By:
Schedule I
to Loan Agreement
Debt and Other Arrangements
Guaranteed by NPDC
[to be supplied by L. Gordon]
