Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.--)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14-11(c) or 240.14a-12
National Patent Development Corporation
(Name of Registrant as Specified In Its Charter)
Lawrence M. Gordon
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or,
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies: COMMON STOCK
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0.11:1
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and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
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NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 20, 1995
To The Stockholders:
The Annual Meeting of Stockholders of National Patent Development
Corporation (the "Company") will be held at the Columbia Inn, 10207 Wincopin
Circle, Columbia, Maryland on the 20th day of September, 1995, at 2:30 P.M.,
Eastern Standard Daylight Savings Time, for the following purposes:
1. To elect seven Directors to serve until the next Annual Meeting
and until their respective successors are elected and qualify.
2. To consider and act upon a proposal to amend the Companys
Restated Certificate of Incorporation to effect a reverse stock split (the
Reverse Stock Split) in which each four shares of issued Common Stock of the
Company, par value $.01 per share, whether issued and outstanding or held in
treasury, will be reclassified and changed into one share of new Common Stock
of the Company, par value $.01 per share.
</R)
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record as of the close of business on July 28, 1995
are entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder during
ordinary business hours, for a period of ten days prior to the meeting, at the
principal executive offices of the Company, 9 West 57th Street, Suite 4170,
New York, New York.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
New York, New York
August , 1995
If you do not expect to be present at the meeting, please fill in, date
and sign the enclosed Proxy and return it promptly in the enclosed return
envelope.
NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
August , 1995
New York, New York
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of National Patent Development Corporation, a Delaware corporation
(the "Company"), for use only at the Annual Meeting of Stockholders to be held
at the Columbia Inn, 10207 Wincopin Circle, Columbia, Maryland on the 20th day
of September, 1995 at 2:30 P.M., Eastern Standard Daylight Savings Time, and
at any adjournments thereof. The approximate date on which this Proxy
Statement and the accompanying Proxy were first given or sent to security
holders was August , 1995.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the Company, attention of
the Secretary, prior to the Annual Meeting, or to the Chairman of, or the
Inspectors of Election, in person, at the Annual Meeting, or by the execution
and return of a later-dated Proxy, except as to any matter voted upon prior to
such revocation.
The Proxies in the accompanying form will be voted in accordance with
the specifications made and where no specifications are given, such Proxies
will be voted FOR the seven nominees for election as directors named herein
and FOR the approval of the Reverse Stock Split. In the discretion of the
proxy holders, the Proxies will also be voted FOR or AGAINST such other
matters as may properly come before the meeting. The management of the Company
is not aware that any other matters are to be presented for action at the
meeting. Although it is intended that the Proxies will be voted for the
nominees named herein, the holders of the Proxies reserve discretion to cast
votes for individuals other than such nominees in the event of the
unavailability of any such nominee. The Company has no reason to believe that
any of the nominees will become unavailable for election. The Proxies may not
be voted for a greater number of persons than the number of nominees named.
The election of directors will be determined by a plurality of the votes of
the shares of common stock, par value $.01 per share (the "Common Stock") and
Class B Capital Stock, par value $.01 per shares (the "Class B Stock") present
in person or represented by proxy at the Annual Meeting and entitled to vote
on the election of directors. A majority of the votes represented by the
outstanding shares of Common Stock and a majority of the votes represented by
the outstanding shares of Class B Stock, each voting separately as a class, is
required to approve the Reverse Stock Split. Accordingly, in the case of
shares that are present or represented at the Annual Meeting for quorum
purposes, not voting such shares for a particular nominee for director,
including by withholding authority on the Proxy, will not operate to prevent
the election of such nominee if he or she otherwise receives affirmative
votes; with respect to the approval of the Reverse Stock Split, an abstention
will operate to prevent approval of the item to the same extent as a vote
against approval, and a broker "non-vote" (which results when a broker holding
shares for a beneficial owner has not received timely voting instructions on
certain matters from such beneficial owner) will effect the outcome of the
vote the same as a negative vote with respect to the approval of the Reverse
Stock Split.
VOTING SECURITIES
The Board of Directors has fixed the close of business on July 28, 1995
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting. The issued and outstanding stock
of the Company on July 28, 1995 consisted of [ ] shares of Common
Stock, each entitled to one vote, and 250,000 shares of Class B Stock, each
entitled to ten votes. A quorum of the stockholders is constituted by the
presence, in person or by proxy, of holders of record of Common Stock and
ClassB Stock representing a majority of the number of votes entitled to be
cast. The only difference in the rights of the holders of Common Stock and the
rights of holders of Class B Stock is that the former class has one vote per
share and the latter class has ten votes per share. The Class B Stock is
convertible at any time into shares of Common Stock on a share for share basis
at the option of the holders thereof.
PRINCIPAL HOLDERS OF SECURITIES
As of July 28, 1995, no person was known to the Company to own
beneficially more than 5% of the Common Stock or Class B Stock of the Company
except as set forth below.
The following table shows as of such date the Class B Stock beneficially
owned directly by Mr. Jerome I. Feldman, President and Chief Executive Officer
and a director of the Company, and Mr. Martin M. Pollak, Executive Vice
President and Treasurer and a director of the Company. (For information with
respect to the shares of Common Stock beneficially owned by Messrs. Feldman
and Pollak, see "Security Ownership of Directors and Named Executive
Officers"):
Amount of
Title of Name and Address Beneficial Percent
Class of Beneficial Owners Ownership of Class
Class B Jerome I. Feldman 983,333 shares(1) 50(2)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Martin M. Pollak 983,333 shares(1) 50(2)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
(1)Includes 858,333 shares each for Messrs. Feldman and Pollak which they
currently have the right to purchase pursuant to the exercise of stock
options.
(2)Percentage could increase up to approximately 88% if either individual
exercised all of his stock options and the other individual did not exercise
any.
Based upon the Common Stock and Class B Stock of the Company outstanding
at July 12, 1995, Mr. Feldman and Mr. Pollak controlled in the aggregate
approximately ___% of the voting power of all voting securities of the
Company. This percentage for Mr. Feldman and Mr. Pollak would increase to
approximately ___% if they exercised all the presently outstanding options to
purchase shares of the Common Stock and Class B Stock of the Company held by
them.
On March 26, 1986, Mr. Feldman and Mr. Pollak entered into an agreement
(i) granting each other the right of first refusal over the sale or
hypothecation of the Class B Stock and options to purchase Class B Stock now
owned or subsequently acquired by each of them and (ii) in the event of the
death of either of them granting the survivor a right of first refusal over
the sale or hypothecation of the Class B Stock or options to acquire shares of
Class B Stock held by the estate of the decedent. The aforesaid right of first
refusal is for the duration of the life of the survivor of Mr. Feldman or Mr.
Pollak.
Merrill Lynch & Co., Inc., Merrill Lynch Group, Inc., Princeton
Services, Inc., Fund Asset Management, L.P., Princeton Services, Inc. and
Merrill Lynch Phoenix Fund, Inc. filed a 13-G which disclosed the ownership of
1,426,100 shares of the Common Stock representing approximately 5.9% of the
outstanding Common Stock as of December 31, 1994.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of July 12, 1995, beneficial
ownership of shares of Common Stock of the Company and subsidiaries by each
director, each of the named executive officers and all directors and executive
officers as a group.
Total Number of
Shares Beneficially
Name Owned
Jerome I. Feldman(1)(2)(3)(4)(5) 2,328,302
Martin M. Pollak(1)(2)(3)(4)(5) 2,328,039
Scott N. Greenberg(3)(4) 201,300
Roald Hoffmann, Ph.D.(3)(4)(6) 31,466
Ogden R. Reid(3)(4)(5)(6) 19,000
Paul A. Gould(1)(4)(6) 316,500
Herbert R. Silverman 5,000
Lawrence M. Gordon(1)(3)(4) 146,612
Directors and Executive Officers as a Group
(9 persons) (1)(3)(4) 5,376,244
Percent of
Common Stock
Owned
Jerome I. Feldman (1)(2)(3)(4)(5) 8.03
Martin M. Pollak (1)(2)(3)(4)(5) 8.03
Scott N. Greenberg(3)(4) *
Ogden R. Reid(3)(4)(6) *
Roald Hoffmann, Ph.D.(3)(6) *
Paul A. Gould(1)(4)(6) 1.18
Herbert R. Silverman *
Lawrence M. Gordon (1)(3)(4) *
Directors and Executive Officers as a Group
(9 persons)(1)(3)(4) 17.10
Of Total Number of
Shares Beneficially
Owned,
Shares Which May Be
Acquired Within 60 Days
Jerome I. Feldman(1)(2)(3)(4)(5) 1,945,333
Martin M. Pollak(1)(2)(3)(4)(5) 1,955,333
Scott N. Greenberg(3)(4) 184,700
Roald Hoffmann, Ph.D.(3)(6) 29,666
Ogden R. Reid(3)(6) 18,000
Paul A. Gould(1)(6) 6,000
Herbert A. Silverman -0-
Lawrence M. Gordon(1)(3)(4) 144,100
Directors and Executive Officers as a Group
(9 persons)(1)(3)(4) 4,283,132
* The number of shares owned is less than one percent of the outstanding
shares of Common Stock.
(1) Included in the table are 125,000 shares for each of Messrs. Feldman and
Pollak which they currently have the right to acquire through the conversion
of shares of Class B Stock into shares of Common Stock which they currently
own, (see "Principal Holders of Securities"). Also included in the table is
6,469 shares for a foundation of which Mr. Pollak is a trustee. Also included
in the table are 4,426 shares for Mr. Feldman, 2,414 shares for Mr. Pollak and
2,012 shares for Mr. Gordon and 8,852 shares for all directors and executive
officers as a group, issuable upon the conversion of bonds issued with the
Company's 12% Subordinated Debentures Due 1997. Mr. Feldman disclaims
beneficial ownership of the 2,414 shares issuable upon conversion of bonds
held by his wife pursuant to the Debentures. Messrs. Feldman, Pollak and Gould
disclaim beneficial ownership of 4,691, 23,006 and 100 shares, respectively,
held by members of their families which are included in the table.
(2) Included in the table are options to purchase 858,333 shares of Class B
Options for each of Messrs. Feldman and Pollak which they currently have the
right to acquire through the exercise of stock options, which shares are
convertible into shares of Common Stock.
(3) Of the directors and executive officers of the Company, the following
beneficially own the number of shares of common stock of General Physics
Corporation ("GPC") indicated: Jerome I. Feldman-2,100 (.02%); Martin M.
Pollak-5,900 (.06%) and Scott N. Greenberg-1,000 (.01%). In addition, all
directors and executive officers as a group beneficially own 9,000 shares.
Mr. Feldman and Mr. Pollak through their ownership of the Company's Common
Stock, may be deemed to beneficially own an aggregate of 5,120,495 shares of
GPC beneficially owned by the Company, Five Star and MXL, wholly-owned
subsidiaries of the Company. However, Mr. Feldman and Mr. Pollak disclaim
beneficial ownership of such 5,120,495 shares (5,122,595 and 5,126,395 shares
in the aggregate for Mr. Feldman and Mr. Pollak, respectively). The total
number of shares owned by all directors and executive officers of the Company
as a group (other than Messrs. Feldman and Pollak) is .01% of the outstanding
shares of GPC's common stock. All such persons have sole voting and investment
power as to all shares except as indicated.
(4) Member of the Executive Committee.
(5) Member of the Audit Committee.
As of July 12, 1995 the Company owned 3,515,165 shares of GPC common
stock, constituting approximately 34% of the outstanding shares, Five Star
owned approximately 1,062,500 shares constituting approximately 10% and MXL
owned approximately 637,500 shares constituting approximately 6% of the
outstanding shares of GPC common stock. Accordingly, the Company's voting
control of GPC is approximately 50.89%.
As of July 12, 1995 the Company owned 2,842,300 shares of SGLG, Inc.
("SGLG") common stock, constituting approximately 92% of the outstanding
shares. In addition, Mr. Pollak owns 1,000 shares of SGLG common stock.
ELECTION OF DIRECTORS
Seven directors will be elected at the meeting to hold office until the
next Annual Meeting of Stockholders and until their respective successors are
elected and qualify. The By-Laws of the Company permit the Board of Directors
to fix the number of directors at no less than three nor more than fifteen
persons, and the Board of Directors has fixed the number of directors at seven
persons. The Proxies solicited by this proxy statement may not be voted for a
greater number of persons than the number of nominees named. It is intended
that these Proxies will be voted for the following nominees, but the holders
of these Proxies reserve discretion to cast votes for individuals other than
the nominees for director named below in the event of the unavailability of
any such nominee. The Company has no reason to believe that any of the
nominees will become unavailable for election. Set forth below are the names
of the nominees, the principal occupation of each, the year in which first
elected a director of the Company and certain other information concerning
each of the nominees.
Jerome I. Feldman is founder of, and since 1959, has been President and
Chief Executive Officer and a Director of the Company. He has been Chairman of
the Executive Committee and a Director of Interferon, which is a
biopharmaceutical company engaged in the manufacture and sale of ALFERON N
Injection since 1981; a Director since 1981 and Chairman of the Board from
1985 to January 1995 of GTS Duratek Inc, ("Duratek") a company which provides
environmental technology and consulting services to various utilities,
industrial and commercial clients; a Director since 1987, Chairman of the
Executive Committee since 1988 and Chief Executive Officer since September
1994 of GPC, a company which provides personnel training and technical support
services to the domestic commercial nuclear power industry and to the United
States Department of Energy; President since October 1994 and Chief Executive
Officer, Chairman of the Executive Committee and a Director of SGLG since
1991, a holding company; and a director and consultant to American Drug
Company ("ADC"), a generic drug distribution company since January 1994. He
has been a Director of Hamilton Financial Services, Inc., a financial service
holding company since 1983. Mr. Feldman is also a Trustee of the New England
Colleges Fund and of Bard College. Age 67
Martin M. Pollak is founder of, and since 1959, has been Executive Vice
President, Treasurer and a Director of the Company. He has been Chairman of
the Board of Interferon since 1981; a Director of Duratek since 1983 and
Chairman of the Executive Committee from 1985 to January 1995; a Director of
GPC since 1987 and Chairman of the Board since 1988; Chairman of the Board
of SGLG since 1991; and President, Chief Executive Officer and a director of
ADC since January 1994. Mr. Pollak is Chairman of the Czech and Slovak United
States Economic Counsel and a member of the Board of Trustees of the Worcester
Foundation for Experimental Biology and a Director of Brandon Systems
Corporation, a personnel recruiting company, since 1986. Age 68
Scott N. Greenberg has been a Director of the Company since 1987, Vice
President and Chief Financial Officer since 1989 and Vice President, Finance
from 1985. He has been a Director of GPC since 1987; a Director of SGLG since
1991; Chief Financial Officer and a Director of ADC since January 1994 and
from 1991 to January 1995, a Director of Duratek. Age 38
Ogden R. Reid has been a Director of the Company since 1979. He has been
a Director of Interferon since 1982; a Director of GPC since 1988 and Vice
Chairman and Director of SGLG since 1992; from 1991 to January 1995 he was
Vice Chairman of the Board of Duratek. Mr. Reid had been Editor and Publisher
of the New York Herald Tribune and of its International Edition; United States
Ambassador to Israel; a six-term member of the United States Congress and a
New York State Environmental Commissioner. Age 68
Roald Hoffmann, Ph.D. has been a Director of the Company since 1988 and a
Director of Interferon since 1991. He has been a John Newman Professor of
Physical Science at Cornell University since 1974. Dr. Hoffmann is a member of
the National Academy of Sciences and the American Academy of Arts and
Sciences. In 1981, he shared the Nobel Prize in Chemistry with Dr. Kenichi
Fukui. Age 57
Paul A. Gould has been a Director of the Company since 1993. He has been
Managing Director since 1979 of Allen & Company Incorporated, an investment
banking firm. He has been a Director since 1992 of Liberty Media Corp., a
cable programming company and a Director since April 1994 of Resource
Recycling Technologies, Inc., which is engaged in solid waste material
management alternatives. Age 49
Herbert R. Silverman has been a Director of the Company since November
1994. Since 1975 he has been a Senior Advisor to Bank Julius Baer (New York),
Zurich, Switzerland, Chairman of the Executive Committee of Baer American
Banking Corporation since 1976 and is a member of the Board of Directors of
Partners Funds, Inc. and Focus Fund, both of which are mutual stock funds
managed by Neuberger & Berman since 1965. He is also a life trustee of New
York University and New York University Medical Center. Age 77
Section 16 Reporting
Section 16(a) of the Securities Exchange Act 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC")
and the American Stock Exchange, Inc. Officers, directors and greater than
10% shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the period
January 1, 1994 to June 30, 1995, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied
with, except for Paul A. Gould, a Director of the Company, who filed a late
report on Form 4.
Board of Directors
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business by various reports and documents sent to
them as well as by operating and financial reports made at Board and Committee
meetings. The Board held three meetings in 1994, at which all of the directors
attended the meetings of the Board and Committees on which they served, except
for Roald Hoffmann, who attended fewer than 75% of the meetings.
Directors Compensation
Directors who are not employees of the Company receive a fee of $1,500
for each meeting of the Board of Directors attended, but do not receive any
additional compensation for service on committees of the Board of Directors.
Officers of the Company do not receive additional compensation for serving as
directors.
Executive Committee
The Executive Committee, consisting of Jerome I. Feldman and Martin M.
Pollak, meets on call and has authority to act on most matters during the
intervals between Board meetings. The committee formally acted 26 times in
1994 through unanimous written consents.
Audit Committee
The Audit Committee reviews the internal controls of the Company and the
objectivity of its financial reporting. It meets with appropriate Company
financial personnel and the Company's independent certified public accountants
in connection with these reviews. This committee recommends to the Board the
appointment of the independent certified public accountants, subject to the
ratification by the stockholders at the Annual Meeting, to serve as auditors
for the following year in examining the books and records of the Company. This
Committee met twice in 1994. The Audit Committee currently consists of Ogden
R. Reid, Roald Hoffmann and Paul A. Gould.
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the
Company and subsidiaries to its Chief Executive Officer and the Company's most
highly compensated executive officers for 1994.
SUMMARY COMPENSATION TABLE
Annual Compensation
Salary Bonus
Name and Principal Position Year ($) ($)
Jerome I. Feldman 1994 322,304 40,000 (1)
President and Chief 1993 316,526 120,000
Executive Officer 1992 326,243 -0-
Martin M. Pollak 1994 322,259 (2) 40,000 (1)
Executive Vice President 1993 315,110 -0-
and Treasurer 1992 325,110 151,250
Scott N. Greenberg 1994 216,375 20,000 (1)
Vice President and 1993 156,625 -0-
Chief Financial Officer 1992 151,000 -0-
Lawrence M. Gordon 1994 233,205 50,000 (1)
Vice President and 1993 183,205 50,000
General Counsel 1992 183,507 -0-
(1) For 1994, Messrs. Feldman, Pollak, Greenberg and Gordon received their
respective cash bonuses for services rendered to Interferon.
(2) For 1994, $150,000, of Mr. Pollak's compensation was paid by ADC, as a
consequence of his services to both companies.
Long Term
Compensation
Awards All Other
Options Compensation
Name and Principal Position ($) ($)
Jerome I. Feldman -0- 3,696(1)
President and Chief -0- 3,598(l)
Executive Officer -0- 253,491(1)
Martin M. Pollak -0- 3,696(1)(2)
Executive Vice President -0- 3,598(1)
and Treasurer -0- 253,491(1)
Scott N. Greenberg -0- 3,696(3)
Vice President and -0- 3,598
Chief Financial Officer 22,500 2,932
Lawrence M. Gordon -0- 3,696 (3)
Vice President and -0- 2,937
General Counsel -0- 3,392
(1) Includes $3,696, $3,598 and $3,491 as a matching contribution by the
Company to the 401(k) Savings Plan, and $250,000 in 1992 pursuant to a
Non-Compete Agreement between Messrs. Feldman and Pollak and SmithKline
Beecham Corporation. See "Employment Contracts and Termination of Employment
and Change in Control Arrangements."
(2) Constitutes matching contributions made by ADC and the Company equally
on behalf of Mr. Pollak pursuant to the Company's 401(k) Savings Plan.
(3) Matching contribution by the Company to the 401(k) Savings Plan.
For the year ended 1994, none of the named executive officers were
granted non-qualified stock options.
The following table and notes set forth information for the named
executive officers regarding the exercise of stock options during 1994 and
unexercised options held at the end of 1994.
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1994
AND YEAR-END OPTION VALUES
Shares Acquired
on Exercise
(#) (1) Value Realized
($)
Name
Jerome I. Feldman -0- -0-
Martin M. Pollak -0- -0-
Scott N. Greenberg -0- -0-
Lawrence M. Gordon -0- -0-
Number of Unexercised
Options at December 31,
1994 (#)
Exercisable/Unexercisable
Name
Jerome I. Feldman 1,778,667 (2) -0-
Martin M. Pollak 1,788,667 (2) -0-
Scott N. Greenberg 184,700 -0-
Lawrence M. Gordon 144,100 -0-
Value of Unexercised
In-the-Money Options at
December 31, 1994 ($)
Name Exercisable/Unexercisable
Jerome I. Feldman -0- -0-
Martin M. Pollak -0- -0-
Scott N. Greenberg -0- -0-
Lawrence M. Gordon -0- -0-
(1) None of the named executive officers exercised any stock options during
1994.
(2) Includes 775,000 Class B Options, which options are convertible into
shares of Common Stock on a share for share basis.
(3) Calculated based on the closing price of the Common Stock (1.8125) as
reported by the American Stock Exchange on December 30, 1994.
Board Compensation Committee Report on Executive Compensation
During the year ended December 31, 1994, the Company did not have a
Compensation Committee. Accordingly, the full Board of Directors was
responsible for determining and implementing the compensation policies of the
Company.
The executive compensation policies are designed to offer competitive
compensation opportunities for all executives which are based on personal
performance, individual initiative and achievement, and assist the Company in
attracting and retaining qualified executives.
The Board also endorses the position that stock ownership by management
and stock-based compensation arrangements are beneficial in aligning
managements' and shareholders' interests in the enhancement of shareholder
value and recommends to the Stock Option Committee the grant of stock options
to executive officers whose performance has a significant effect on the
success of the Company.
Compensation paid to the Company's executive officers generally consists
of the following elements: base salary, annual bonus and grant of stock
options. The compensation for Mr. Pollak is determined on the same basis as
that of Mr. Feldman, the Chief Executive Officer. The compensation for the
other executive officers of the Company is determined by a consideration of
each officer's initiative and contribution to overall corporate performance,
the officer's managerial abilities and performance in any special projects
that the officer may have undertaken. Competitive base salaries that reflect
the individual's level of responsibility are important elements of the
Company's executive compensation philosophy. Subjective considerations of
individual performance are considered by the Board in establishing annual
bonuses and other incentive compensation.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executives are permitted to participate on the
same terms and conditions relating to eligibility and subject to the same
limitations on amounts that may be contributed. In 1994, the Company also made
matching contributions to the 401(k) Savings Plan for those participants.
Mr. Feldman's 1994 Compensation
Mr. Feldman's compensation is determined principally by the terms of his
employment agreement. As of January 1, 1989, the Company entered into an
Employment Agreement (the "Agreement") with Mr. Feldman which provided that
Mr. Feldman serve as President and Chief Executive Officer of the Company for
the period through December 31, 1994. The Agreement provides Mr. Feldman with
annual compensation (a minimum base salary) of $300,000 (subject to review by
the Board of Directors). Mr. Feldman also received a cash bonus of $40,000 in
1994 from Interferon for his substantial efforts in seeking to obtain
additional financing for Interferon. In addition, Mr. Feldman played a
significant role in attempting to secure marketing and distribution
opportunities for Interferon with a number of independent national
distributors and multi-national pharmaceutical companies. In 1994 Mr. Feldman
received compensation of $8,000 for serving as a Director and Chairman of the
Executive Committee of GPC.
The Board of Directors
Jerome I. Feldman
Martin M. Pollak
Scott N. Greenberg
Ogden R. Reid
Roald Hoffmann, Ph.D.
Paul A. Gould
Herbert R. Silverman
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1994 the Company did not have a
Compensation Committee and the entire Board of Directors made decisions on
compensation of the Company's executives. Mr. Feldman, the Company's Chief
Executive Officer and a director, Mr. Pollak, the Company's Executive Vice
President and Treasurer and a director and Mr. Greenberg, the Company's Vice
President and Chief Financial Officer and a director participated in Board
executive compensation deliberations.
Employment Contracts and Termination of Employment
and Change in Control Arrangements
Agreements with Messrs. Feldman and Pollak. As of May 19, 1995, the
Company entered into a three year agreement (the "Agreement") with its
President and Chief Executive Officer, Jerome I. Feldman, and with its
Executive Vice President and Treasurer, Martin M. Pollak (the "Employees").
Pursuant to the Agreements, Mr. Feldman will serve as President and
Chief Executive Officer of the Company and Mr. Pollak will serve as Executive
Vice President and Treasurer of the Company for the period through May 18,
1998. The Agreements provide for each Employee to receive annual compensation
(a minimum base salary) of $325,000 for the first year of the Agreeemnts, $
350,000 for the second year of the Agreements and $ 375,000 for the third year
of the Agreements (subject to increase by the Board of Directors). Under the
terms of the Agreements, each of the Employees received options to purchase
250,000 shares of Common Stock and 250,000 shares of Class B Stock. The
Agreements provide for the termination of employment upon the Employee's
death, physical or mental disability or retirement. In addition, the Company
may terminate the Employee's employment "for cause" (including a failure to
perform required duties or the engaging in of gross misconduct) and each
Employee may voluntarily terminate his employment for "Good Reason", which
occurs if the Employee determines in good faith that due to a change in
control of the Company he is not able to effectively discharge his duties.
"Change in control" is defined to include (1) any "person" (other than the
Employees or certain persons who may acquire securities of the Company from an
Employee) acquiring the beneficial ownership of more than 30% of the Company's
outstanding securities or (2) certain changes in the composition of the Board
of Directors of the Company.
Upon termination by the Company "for cause", all obligations of the
Company under the Employee's Agreement terminates. Upon termination by the
Company other than "for cause", disability, or retirement, or by the Employee
for "Good Reason", such Employee is entitled to receive as severance pay an
amount equal to his full base salary (which at the present time is a minimum
of $325,000 for each of the Employees) at the rate then in effect, multiplied
by the greater of (1) the number of years (including fractions thereof)
remaining in the term of the employment, or (2) the number three. In addition,
the Employee would receive an amount in cash equal to the aggregate spread
between the exercise prices of all options held by the Employee under the
Company's 1973 Non-Qualified Stock Option Plan and the higher of (x) the
market value of the Common Stock, and (y) the highest price paid in connection
with any change in control of the Company. Subject to certain conditions, the
Company would also maintain for two years (or until the Employee's
commencement of full-time employment with a new employer) certain insurance,
health and disability plans in effect, or arrange for substantially similar
benefits. The Agreements also contain non-competition and confidentiality
provisions.
Certain Transactions
GTS Duratek, Inc.
On January 24, 1995, the Company sold 1,666,667 shares of its Duratek
common stock at a price of $3.00 per share to the Carlyle Group ("Carlyle") in
connection with a $16 million financing by Duratek with Carlyle, a Washington,
D.C. based private merchant bank. In addition, the Company granted Carlyle an
option to purchase up to an additional 500,000 shares of Duratek common stock
over the next year at $3.75 per share (the "Carlyle Transaction").
Duratek received $16 million from Carlyle in exchange for 160,000 shares
of new issued 8% cumulative convertible preferred stock (convertible into
5,333,333 shares of Duratek common stock at $3.00 per share). Duratek granted
Carlyle an option to purchase up to 1,250,000 shares of newly issued Duratek
common stock from Duratek over the next four years.
As of March 1, 1995, the Company owns 3,534,972 shares of Duratek common
stock (approximately 40.4% of the currently outstanding shares of common
stock). Assuming, (i) Carlyle converted all of its cumulative convertible
preferred stock into Duratek common stock and exercised its option to purchase
additional shares of Duratek common stock from each of Duratek and the Company
and (ii) the Company's employees exercised their options to purchase an
aggregate of 497,750 shares of Duratek common stock, the Company would own
2,537,222 shares of Duratek common stock (approximately 16.5% of the then
outstanding shares of common stock).
In connection with the Carlyle Transaction, Carlyle will have the right,
through its preferred stock, to elect a majority of Duratek's Board of
Directors. Upon conversation of the preferred stock, Carlyle would own
approximately 50% of Duratek's common stock if all of its options are
exercised.
PERFORMANCE GRAPH
The following table compares the performance of the Company for the
periods indicated with the performance of the AMEX Market Value Index and the
Dow Jones Industry Group BTC _ Biotechnology. Total Return Indices reflect
reinvested dividends and are weighted on a market capitalization basis at the
time of each reported data point. Assumes $100 invested on December 31, 1989
in National Patent Common Stock, AMEX Market Value Index and Dow Jones
Industry Group BTC - Biotechnology. Values are as of December 31 of specified
year assuming that dividends are reinvested.
Comparison of 5-Year Cumulative Total Return
Index 1989 1990 1991 1992 1993 1994
NPDC 114 41 71 42 64
AMEX Market 127 103 126 135 159
Dow Jones
Biotech 131.28 159.48 335.74 310.57 292.04
PROPOSAL TO EFFECT
THE ONE-FOR-FOUR REVERSE COMMON STOCK SPLIT
The Board of Directors believes that the recent per share price of the
Common Stock has affected the marketability of the existing shares, increased
the amount and percentage of transaction costs paid by individual stockholders
and affected the potential ability of the Company to raise capital by issuing
additional shares. The Company believes there are several reasons for these
effects, as summarized below.
As a means of improving marketability of the Common Stock, reducing
stockholders' transaction costs, and other considerations, on July , 1995,
the Board of Directors of the Company approved, subject to the stockholder
approval solicited hereby, a proposal to amend the Restated Certificate of
Incorporation to effect a one-for-four reverse Common Stock split
(the "Reverse Stock Split").
Although the Company's Board of Directors believes as of the date of
this Proxy Statement that a one-for-four Reverse Stock Split is advisable, the
Reverse Stock Split may be abandoned by the Board of Directors at any time
before, during or after the Annual Meeting. In addition, depending upon
prevailing market conditions, the Board of Directors may deem it advisable to
implement the Reverse Stock Split and concurrently declare a stock-for-stock
dividend in a ratio to be determined, the latter of which does not require
stockholder approval. Depending upon the amount of any such stock-for-stock
dividend, this would partially offset the decrease in the number of issued
shares of new Common Stock resulting from the one-for-four Reverse Stock
Split, potentially to the extent that the result will be the same as if a
none-for-three, one-for-two or other reverse stock split ratio had been
approved by the Company's stockholders. The net effect of implementation of
the Reverse Stock Split and any subsequent dividend declarations described
herein will not result in more than four shares being surrendered for each
share of new Common Stock.
Reasons for the Reverse Stock Split Proposal
The Board of Directors of the Company believes that the relatively low
per share market price of the Common Stock may impair the acceptability of the
Common Stock to certain institutional investors and other members of the
investing public. Theoretically, the number of shares outstanding should not,
by itself, affect the marketability of the stock, the type of investor who
acquires it, or the Company's reputation in the financial community. In
practice this is not necessarily the case, as certain investors view low-
priced stock as unattractive or, as a matter of policy, will not extend margin
credit on stock trading at low prices, although certain other investors may be
attracted to low-priced stock because of the greater trading volatility
sometimes associated with such securities. Many brokerage houses are reluctant
to recommend lower-priced stock to their clients or to hold it in their own
portfolios. Further, a variety of brokerage house policies and practices
discourage individual brokers within those firms from dealing in low-priced
stock because of the time-consuming procedures that make the handling of low-
priced stock unattractive to brokerage houses from an economic standpoint.
In addition, since the broker's commissions on low-priced stock
generally represent a higher percentage of the stock price than commissions on
higher priced stock, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commissions, markups or
markdowns) which are a higher percentage of their total share value than
would be the case if the share price were substantially higher. This factor is
also believed to limit the willingness of institutions to purchase the Common
Stock at its current relatively low per share market price. If approved, the
Reverse Stock Split may result in some stockholders owning "odd-lots" of less
than 100 shares of Common Stock. Brokerage commissions and other costs of
transactions in odd-lots may be higher, particularly on a per-share basis,
than the cost of transactions in even multiples of 100 shares.
The Board of Directors believes that the decrease in the number of
shares of Common Stock outstanding as a consequence of the proposed Reverse
Stock Split and the resulting anticipated increased price level will encourage
greater interest in the Common Stock by the financial community and the
investment public and possibly promote greater liquidity for the Company's
stockholders, although it is possible that such liquidity could be affected
adversely by the reduced number of shares outstanding after the Reverse Stock
Split. Also, although any increase in the market price of the new Common Stock
resulting from the Reverse Stock Split may be proportionately less than the
decrease in the number of shares outstanding, the proposed Reverse Stock Split
could result in a market price for the shares that would be high enough to
overcome the reluctance, policies and practices of brokerage houses and
investors referred to above and to diminish the adverse impact of
correspondingly high trading commissions on the market for the shares.
There can be no assurances, however, that the foregoing effects will
occur or that the market price of the new Common Stock immediately after
implementation the proposed Reverse Stock Split will be maintained for any
period of time, that such market price will approximate four times (or some
other multiple of) the market price before the proposed Reverse stock Split,
or that such market price will exceed or remain in excess of the current
market price.
If the Reverse Stock Split is approved, the total number of shares of
Common Stock held by each stockholder would be converted automatically into a
right to receive an amount of whole shares of new Common Stock equal to the
number of shares owned immediately prior to the Reverse Stock Split divided by
four. No fractional shares would be issued and, in lieu of any fractional
shares, fractional shares otherwise issuable to a given stockholder would be
rounded up to the next whole share.
Approval of the Reverse Stock Split would not affect any stockholder's
percentage ownership interest in the Company or proportional voting power,
except for minor differences resulting from the rounding of fractional shares.
The Reverse Stock Split should not reduce the number of stockholders of the
Company since fractional shares will be rounded up to a whole share of new
Common Stock. The shares of Common Stock which will be issued upon approval of
the Reverse Stock Split will be fully paid and nonassessable. The voting
rights and other privileges of the holders of Common Stock would not be
affected substantially by adoption of the Reverse Stock Split or subsequent
implementation thereof. If for any reason the Board of Directors deems it
advisable to do so, the Reverse Stock Split may be abandoned by the Board of
Directors at any time before, during or after the Annual Meeting and prior to
filing and effectiveness of the amendment to the Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, pursuant
to Section 242(c) of the Delaware General Corporation Law, without further
action by the stockholders of the Company. In addition, the effect of the
Reverse Stock Split may be partially offset if the Board of Directors elects
to declare a stock-for-stock dividend as described above.
Effective Date
If the Reverse Stock Split is approved by the stockholders at the Annual
Meeting, and upon a determination by the Board of Directors that a Reverse
Stock Split is in the best interest of the Company and its stockholders, an
amendment to Article Fourth of the Restated Certificate of Incorporation, in
the form set forth in Exhibit A hereto, would be filed with the Secretary of
State of the State of Delaware on any date (the "Effective Date") selected by
the Board of Directors on or prior to the Company's next Annual Meeting of
Stockholders, and the Reverse Stock Split would become effective as of 5:00
p.m. E.S.T. on the date of such filing. Without any further action on the part
of the Company or the stockholders, the shares of Common Stock held by
stockholders of record as of the Effective Date will be converted by 5:00 p.m.
E.S.T. on the Effective Date into the right to receive an amount of whole
shares of new Common Stock equal to the number of their shares divided by
four, with any fractional share rounded up to the next whole share.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company will send a
letter of transmittal to each stockholder of record on the Effective Date for
use in transmitting certificates representing share of Common Stock ("old
certificates") to the Company's transfer agent, Harris Trust Company (the
"Exchange Agent"). The letter of transmittal will contain instruction for the
surrender of old certificates to the Exchange Agent in exchange for
certificates representing the number of whole shares of new Common Stock. No
new certificates will be issued to a stockholder until such stockholder has
surrendered all old certificates together with a properly completed and
executed letter of transmittal to the Exchange Agent.
Upon proper completion and execution of the letter of transmittal and
return thereof to the Exchange Agent, together with all old certificates,
stockholders will receive a new certificate or certificates representing the
number of whole shares of new Common Stock into which their shares of Common
Stock represented by the old certificates have been converted as a result of
the Reverse Stock Split. Until surrendered, outstanding old certificates held
by stockholders will be deemed for all purposes to represent the number of
whole share of Common Stock to which such stockholders are entitled as a
result of the Reverse Stock Split. Stockholders should not send their old
certificates to the Exchange Agent until they have received the letter of
transmittal. Shares not presented for surrender as soon as is practicable
after the letter of transmittal is sent shall be exchanged at the first time
they are presented for transfer.
No service charges will be payable by stockholders in connection with
the exchange of certificates, all expenses of which will be borne by the
Company.
Effect of the Reverse Stock Split
If the Reverse Stock Split is approved at the Annual Meeting and the
Company's Board of Directors subsequently determines that it is advisable to
proceed with the Reverse Stock Split, the result (without giving effect to the
stock dividend, if any, referred to above) would be that each Company
stockholder who owns four or more shares of Common Stock will receive one
share of new Common Stock for each four shares of Common Stock held at the
time of the Reverse Stock Split, and one additional share in lieu of the
issuance of a fractional share of new Common Stock. Each Company stockholder
who owns fewer than four shares of Common Stock on the date the Reverse Stock
Split is effected will be entitled to receive one share of new Common Stock in
lieu of receiving a fractional share resulting from the Reverse Stock Split.
The rounding up of fractional shares to the next whole share is being done to
avoid the expense and inconvenience of issuing fractional shares, and is not
separately bargained-for consideration.
As of July 28, 1995, the number of issued shares of Common Stock was
_______, which includes ______ shares held in treasury. Based upon the
Company's best estimates, the aggregate number of shares of new Common Stock
will be issued as a result of the Reverse Stock Split will be ________,
including ______shares held as treasury stock.
Dissenting stockholders have no appraisal rights under Delaware law or
under the Company's Amended and Restated Certificate of Incorporation or
Bylaws in connection with the Reverse Stock Split.
Federal Income Tax Consequences
The following is a summary of the material anticipated Federal income
tax consequences of the Reverse Stock Split to stockholders of the Company.
This summary is based on the Federal income tax laws now in effect and as
currently interpreted; it does not take into account possible changes in such
laws or interpretations, including amendments to applicable statutes,
regulations and proposed regulations or changes in judicial or administrative
rulings, some of which may have retroactive effect. This summary is provided
for general information only and does not purport to address all aspects of
the possible Federal income tax consequences of the Reverse Stock Split and IS
NOT INTENDED AS TAX ADVICE TO ANY PERSON. In particular, and without limiting
the foregoing, this summary does not consider the Federal income tax
consequences to stockholders of the Company in light of their individual
investment circumstances or to holders subject to special treatment under the
Federal income tax laws (for example, life insurance companies, regulated
investment companies and foreign taxpayers). The summary does not address any
consequence of the Reverse Stock Split under any state, local or foreign tax
laws.
No ruling from the Internal Revenue Service ("Service") or opinion of
counsel will be obtained regarding the Federal income tax consequences to the
stockholders of the Company as a result of the Reverse Stock Split.
ACCORDINGLY, EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH
STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse Stock
Split qualifies as a recapitalization under Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended, a stockholder of the Company who
exchanges his or her Common Stock solely for new Common Stock should recognize
no gain or loss for Federal income tax purposes. A stockholder's aggregate tax
basis in his or her shares of new Common Stock received from the Company
should be the same as his or her aggregate tax basis in the Common Stock
exchanged therefor. The holding period of the new Common Stock received by
such stockholder should include the period during which the Common Stock
surrendered in exchange therefor was held, provided all such Common Stock was
held as a capital asset on the date of the exchange.
Vote Required
In order to effect the Reverse Stock Split, the Restated Certificate of
Incorporation must be amended, which requires, under Delaware law, the
affirmative vote of holders of a majority of the outstanding shares of Common
Stock.
The Board of Directors recommends that you vote FOR the proposal to
amend the Restated Certificate of Incorporation to effect the one-for-four
reverse split of the Common Stock.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's 1996
proxy statement provided they are received by the Company no later than
January 13, 1996, and are otherwise in compliance with applicable Securities
and Exchange Commission regulations.
GENERAL
So far as is now known, there is no business other than that described
above to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but regular
employees or representatives of the Company may also solicit proxies by
telephone or telegraph and in person, and arrange for brokerage houses and
other custodians, nominees and fiduciaries to send proxy material to their
principals at the expense of the Company.
Lydia M. DeSantis
Secretary
NATIONAL PATENT DEVELOPMENT CORPORATION
COMMON STOCK Annual Meeting of Stockholders
PROXY
To Be Held September 20, 1995
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a stockholder of
National Patent Development Corporation hereby appoints Jerome I. Feldman and
Martin M. Pollak, and each of them, attorneys and agents of the undersigned,
with full power of substitution, to vote all shares of the Common Stock of the
undersigned in said Company at the Annual Meeting of Stockholders of said
Company to be held at the Columbia Inn, 10207 Wincopin Circle, Columbia,
Maryland on September 20, 1995, at 2:30 P.M. Eastern Standard Daylight Savings
Time and at any adjournments thereof, as fully and effectually as the
undersigned could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or their
substitutes may lawfully do in place of the undersigned as indicated below.
This proxy when properly executed will be voted as directed. If no direction
is indicated, this proxy will be voted for proposals (1) (2) and (3).
1. Election of Directors: Jerome I. Feldman, Martin M. Pollak, Scott N.
Greenberg, Roald Hoffmann, Odgen R. Reid, Paul A. Gould and Herbert R.
Silverman.
For All
(Except
Nominees
Written
(INSTRUCTION: To withhold For Withhold Below)
authority to vote for any
individual nominee, write
that nominee's name in the
space provided below)
2. Proposal to amend the Company;s Restated Certuficate of Incorporation to
effect a reverse stock split in which each four shares of issued and
outstanding shares of common stock will be reclassified and changed into
one share of new Common Stock of the Company.
FOR AGAINST ABSTAIN
3. Upon any other matters which may properly come before the meeting or any
adjournments thereof.
Please sign exactly as name appear below.
Dated , 1995
Signature
Signature if held jointly
Please mark, sign, date and return the
proxy card promptly using the enclosed
envelope. When shares are held by joint
tenants both should sign. When signing as
attorney, as executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership please sign in partnership
name by authorized person.
