SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SHCEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant Filed by a Party other than the Registrant Check the
appropriate box:
Preliminary Proxy Statement
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Confidential, for the use of the Commission Only (as permitted by Rule
14a-6(e)(2)
NATIONAL PATENT DEVELOPMENT CORPORATION
(Name of Registrant as Specified In Its Charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
Fee computed on table below per Exchange Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 4, 1997
To The Stockholders:
The Annual Meeting of Stockholders of National Patent Development
Corporation (the "Company") will be held at the Harbor Court Hotel, 550 Light
Street, Baltimore, Maryland on the 4th day of June 1997, at 10:30 a.m. local
time, for the following purposes:
1. To elect ten Directors to serve until the next Annual Meeting and until
their respective successors are elected and qualify.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record as of the close of business on April 25, 1997
are entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder during ordinary
business hours, for a period of ten days prior to the meeting, at the principal
executive offices of the Company, 9 West 57th Street, Suite 4170, New York, New
York.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
New York, New York
April 30, 1997
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.
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
---------------
New York, New York
April 30, 1997
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 Harbor Court Hotel, 550 Light Street, Baltimore, Maryland on the 4thday of
June, 1997 at 10:30 a.m., local time, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying Proxy were
first given or sent to security holders was April 30, 1997.
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, or the Inspectors of
Election, 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 ten nominees for election as directors named herein. 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 and Class B Capital Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors. 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 a plurality of the votes.
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 25, 1997 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting. The issued and outstanding stock of the
Company on April 25, 1997 consisted of 10,641,649 shares of Common Stock, each
entitled to one vote, and 62,500 shares of Class B Stock, each entitled to ten
votes. A quorum of the stockholders is constituted by the presence, in person or
by proxy, of holders of record of Common Stock and Class B Stock, representing a
majority of the number of votes entitled to be cast. The only difference in the
rights of the holders of Common Stock and the rights of holders of Class B Stock
is that the former class has one vote per share and the latter class has ten
votes per share. The Class B Stock is convertible at any time into shares of
Common Stock on a share for share basis at the option of the holders thereof.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock and
Class B Stock beneficially owned as of April 8, 1997, by each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock or Class B Stock.
Name and Address Amount and Nature of
Title of of Beneficial Beneficial Percent
Class Owners Ownership of Class (1)
- -------- ------------------- --------------- ------------
Class B Stock Jerome I. Feldman 316,575 shares(2)(3)(4) 50%(5)(6)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Stock Martin M. Pollak 316,575 shares(2)(3)(4) 50%(5)(6)
c/o National Patent
Development Corp.
9 West 57th Street
Suite 4170
New York, NY 10019
Common Stock Merrill Lynch & Co., Inc. 379,500 shares(7) 5.1%
P.O. Box 9011
Princeton, NJ 08536
- ----------
(1) The percentage of class calculation assumes for each beneficial owner that
all of the options are exercised in full only by the named beneficial owner
and that no other options are deemed to be exercised by any other
stockholder.
(2) Includes 285,325 shares each of Class B Stock issuable upon exercise of
currently exercisable stock options held by Messrs. Feldman and Pollak.
(3) 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".
(4) 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.
(5) Percentage could increase up to approximately 91% if either individual
exercised all of his stock options and the other individual did not exercise
any.
(6) Based upon the Common Stock and Class B Stock of the Company outstanding at
April 8, 1997, Mr. Feldman and Mr. Pollak controlled in the aggregate
approximately 6.7% of the voting power of all voting securities of the
Company. This percentage for Mr. Feldman and Mr. Pollak would increase to
approximately 39.4% if they exercised all of the currently exercisable stock
options to purchase shares of the Common Stock and Class B Stock of the
Company held by them.
(7) Based on a Schedule 13G filed by Merrill Lynch & Co., Inc., Merrill Lynch
Group, Inc., Princeton Services, Inc., Fund Asset Management, L.P., and
Merrill Lynch Phoenix Fund, Inc. (the "Funds") with the Securities and
Exchange Commission, which Funds have shared voting and dispositive power
with respect to the shares of Common Stock.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of April 8, 1997, beneficial ownership of
shares of Common Stock and Class B Stock of the Company and its subsidiary by
each director, each of the named executive officers and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL NUMBER OF
SHARES OF SHARES OF CLASS B
COMMON STOCK PERCENT OF STOCK BENEFICIALLY PERCENT OF
BENEFICIALLY COMMON STOCK(1) OWNED CLASS B
NAME OWNED STOCK(1)
<S> <C> <C> <C> <C>
Jerome I. Feldman(2)(3) 359,035(4) 3.29(5) 347,825(5) 91.02(5)
Martin M. Pollak(2)(3) 360,970(6) 3.31(5) 347,825(5) 91.02(5)
Scott N. Greenberg 50,025(7) * 24,975(7) 28.55
Sheldon L. Glashow - - - -
Paul A. Gould(3)(8) 85,455(9)
Roald Hoffmann(8) 8,030(9) * - -
Bernard M. Kauderer - - - -
John C. McAuliffe 7,664(9)(10) * - -
Ogden R. Reid(8) 8,580(9) * - -
Herbert R. Silverman(3) 6,580(9) * - -
Gordon Smale - - - -
Lawrence M. Gordon 36,653(9) * - -
Directors and Executive
Officers as a Group
(13 persons)(9) 923,992 8.16 658,125 100.00
</TABLE>
* The number of shares owned is less than one percent of the outstanding shares.
Being nominated as a Director for the first time.
(1) The percentage of class calculation assumes for each beneficial owner that
all of the options are exercised in full only by the named beneficial owner
and that no other options are deemed to be exercised by any other
stockholder.
(2) Member of the Executive Committee.
(3) Member of the Compensation Committee.
(4) Includes (i) 64,213 shares of Common Stock beneficially owne by Mr. Feldman
(ii) 292,542 shares of Common Stock issuable upon exercise of currently
exercisble stock options held by Mr. Feldman, (iii) 1,107 shares of Common
Stock issuable upon the conversion of the Company's 12% Subordinated
Debentures due 1997 (the "Bonds"), and (iv) 1,173 shares of Common Stock
held by members of his family. Mr. Feldman disclaims beneficial ownership
of the 1,173 shares of Common Stock held by members of his family, and 404
shares of Common Stock held by his wife issuable upon the conversion of the
Bonds.
(5) For information with respect to the shares of Class B Stock Beneficially
owned by Messrs. Feldman and Pollak, see footnotes 2, 5 and 6 to "Principal
Stockholders Table."
(6) Includes (i) 57,954 shares of Common Stock beneficially owned by Mr. Pollak
(ii) 295,042 shares of Common Stock issuable upon exercise of currently
exercisble stock options held by Mr. Pollak, (iii) 604 shares issuable upon
the conversion of the Company's Bonds, (iv) 5,752 shares of Common Stock
held by his wife; and (v) 1,618 shares of Common Stock for a foundation of
which Mr. Pollak is a trustee. Mr. Pollak disclaims beneficial ownership of
the 5,752 shares of Common Stock held by his wife.
(7) Includes (i) 4,150 shares of Common Stock beneficially owned by Mr.
Greenberg (ii) 45,875 shares of Common Stock issuable upon exercise of
currently exercisable stock options and (iii) 24,975 shares of Class B
Stock issuable upon exercise of currently exercisable stock options held by
Mr. Greenberg.
(8) Member of the Audit Committee.
(9) Includes 77,600, 450, 900, 250, 1,250, 125 and 206,892 shares of Common
Stock beneficially owned by Messrs. Gould, Hoffmann, McAuliffe, Reid,
Silverman, Gordon and all directors and named executive officers as a
group, respectively and (ii) 7,830, 7,580, 4,000, 8,530, 5,330, 36,026 and
711,384 shares of Common Stock issuable upon exercise of currently
exercisable stock options held by Messrs. Gould, Hoffmann, McAuliffe, Reid,
Silverman, Gordon and all directors and named executive officers as a
group, respectively. Also includes 25 shares of common stock beneficially
owned by Mr. Gould's daughter. Mr. Gould disclaims beneficial ownership of
the 25 shares of common stock held by his daughter.
(10) Includes 2,764 shares of Common Stock allocated to Mr. McAuliffe's account
pursuant to the provisions of the General Physics Profit Investment Plan.
As of April 8, 1997 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
Ten 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 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 a Director of
Interferon Sciences, Inc. ("Interferon") since 1981 and was Chairman of the
Executive Committee from 1981 to September 1996; a Director from 1981 to
November 1996 and Chairman of the Board from 1985 to 1995 of GTS Duratek Inc.,
("Duratek"); a Director since 1987, Chairman of the Executive Committee since
1988 and Chief Executive Officer since 1994 of GPC, a company which provides
engineering, environmental training and technical support services to commercial
nuclear and fossil power utilities and to the United States Departments of
Defense and Energy; President since 1994 and Chief Executive Officer, Chairman
of the Executive Committee and a Director of SGLG since 1991; director of GSE
Systems, Inc. ("GSE") since 1994 and Chairman of the Board of GSE since April
1997. Mr. Feldman is also a Trustee of the New England Colleges Fund and of Bard
College. Age 68
Martin M. Pollak is founder of, and since 1959, has been Executive Vice
President, Treasurer and a Director of the Company. He has been a Director of
Interferon since 1981and was Chairman of the Board from 1981 to September 1996;
a Director of Duratek from 1983 to November 1996 and Chairman of the Executive
Committee from 1985 to 1995; a Director of GPC since 1987 and Chairman of the
Board since 1988; Chairman of the Board of SGLG since 1991; President, Chief
Executive Officer and a director of ADC, which provides consulting services to
Western companies doing business in Russia and Eastern Europe, since 1994; and a
director of GSE since 1994. Mr. Pollak is the former Chairman of the Czech and
Slovak United States Economic Counsel and a trustee of the Board of Trustees of
the Worcester Foundation for Experimental Biology and was a Director of Brandon
Systems Corporation from 1986 to 1996. Age 69
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 of ADC since 1994, a Director of Interferon since
1996, and from 1991 to 1995, was a Director of Duratek. Age 40
Sheldon L. Glashow, Ph.D. is being nominated as a Director of the Company
for the first time. Dr. Glashow is the Higgins Professor of Physics and the
Mellon Professor of the Sciences at Harvard University and the recipient of the
Nobel Price in Physics in 1971. He has been a director of Interferon since 1991;
a director of GPC since 1986; a director of GSE since 1995 and a director of
CalCol, Inc., since 1994. He had been a director of Duratek from 1985 to 1995.
Dr. Glashow is a foreign member of the Russian Academy of Sciences. Age 65
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 59
Bernard M. Kauderer is being nominated as a Director of the Company for the
first time. He retired from the United States Navy in 1986 as Vice Admiral. He
was Former Commander, Submarine Force, United States Atlantic and Pacific Fleets
and a consultant to industry and government since 1986. He has been a director
of GPC since 1988. Age 65
John C. McAuliffe is being nominated as a Director of the Company for the
first time. He has been a Director of GPC from 1994; President since February
1997, Executive Vice President and Chief Operating Officer from 1994 to February
1997; Senior Vice President from 1993 to 1994; Chief Financial Officer and
Treasurer since 1992; Vice President, Finance from 1991 to 1993. Age 38
Ogden R. Reid has been a Director of the Company since 1979. He was a
Director of Interferon from 1982 to September 1996; a Director of GPC since 1988
and Vice Chairman and Director of SGLG since 1992; and from 1991 to 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 71
Gordon Smale is being nominated as a Director of the Company for the first
time. He has been President and a director of Atlantic Oil Corporation since
1970; President of Red Cedar Gathering Company since 1995 and Chairman of the
Board of CamWest Inc. since 1992. He has been a director of GPC since 1995. Age
65
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 79
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 six meetings in 1996. All of the directors attended at
least 75% of the meetings of the Board except for Mr. Gould and Dr. Hoffmann. In
addition, the Board acted through unanimous written consent on two occasions.
All of the Directors attended the meetings of the Committees on which they
served. Directors Compensation
Directors who are not employees of the Company receive an annual fee of
$5,000, payable quarterly, and $1,000 for each meeting of the Board of Directors
attended, but do not receive any additional compensation for service on
committees of the Board of Directors. Officers of the Company do not receive
additional compensation for serving as directors.
Executive Committee
The Executive Committee, consisting of Jerome I. Feldman and Martin M.
Pollak, meets on call and has authority to act on most matters during the
intervals between Board meetings. The committee formally acted thirteen times in
1996 through unanimous written consent.
Audit Committee
The Audit Committee reviews the internal controls of the Company and the
objectivity of its financial reporting. It meets with appropriate Company
financial personnel and the Company's independent certified public accountants
in connection with these reviews. This committee recommends to the Board the
appointment of the independent certified public accountants to serve as auditors
for the following year in examining the books and records of the Company. This
Committee met twice in 1996. The Audit Committee currently consists of Ogden R.
Reid and Roald Hoffmann.
Compensation Committee
The Compensation Committee, consisting of Jerome I. Feldman, Martin M.
Pollak and Herbert R. Silverman, meets on call and has the authority to act with
respect to the compensation of officers and the grant of options to officers and
employees of the Company. In 1996, the Compensation Committee held one meeting
and formally acted six times through unanimous written consent.
<PAGE>
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the Company
and subsidiary to its President and Chief Executive Officer and the Company's
most highly compensated executive officers.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long Term
Compensation Compensation
Stock/Options All Other Compensation
Salary Bonus (# Shares)
Name and Principal Position Year ($) ($) ($)
- ---------------------------- ----- -------------- ------------- ---------
<S> <C> <C> <C> <C>
Jerome I. Feldman 1996 321,805 - 244,667(1) 35,433(2)
President and Chief 1995 334,376(3) 161,250(4) 231,250(5) 33,910(6)
Executive Officer 1994 322,304 40,000(7) - 15,036(8)
Martin M. Pollak 1996 287,510(9)) - 247,167(1) 38,061(10)
Executive Vice President 1995 326,202(9) 161,250(4) 231,250(5) 36,240(6)
and Treasurer 1994 322,259(9) - 15,036(8)
40,000(7)
Scott N. Greenberg 1996 209,315 114,375(4) 78,750(11) 38,566(12)
Vice President and 1995 260,791 77,500(4) 30,000 4,028(12)
Chief Financial Officer 1994 216,375 20,000(7) 1,250 4,224(12)
Lawrence M. Gordon 1996 99,457(13) 114,375(4) 4,500 4,418(14)
General Counsel 1995 233,205 149,375(4) 25,000 4,418(14)
1994 233,205 50,000(7) - 4,614(14)
John C. McAuliffe 1996 172,750(15) - - 4,287(16)
President, General Physics 1995 148,756(15) - 10,000 4,078(16)
Corporation 1994 137,108(15) - - 4,924(16)
</TABLE>
(1) Includes options to purchase 150,000 shares of Class B Capital Stock granted
pursuant to the Employment Agreement, which was amended on November 19, 1996,
and options to purchase an aggregate of 94,667 shares of Common Stock. See
"Employment Contracts and Termination of Employment and Change in Control
Arrangements."
(2) Includes $3,500 as a matching contribution by the Company to the 401(k)
Savings Plan; $11,340 for Group Term Life Insurance paid by the Company and
$20,593 for the split dollar value of the insurance premium paid by the Company.
(3) Includes $20,000 received from General Physics Corporation ("GPC") for
services rendered to GPC.
(4) Bonus was received in shares of common stock of GTS Duratek, Inc.
("Duratek") from holdings of the Company's shares of Duratek common stock.
(5) Includes options to purchase 62,500 shares of Common Stock and 62,500 shares
of Class B Capital Stock, granted pursuant to the terms of the Employment
Agreement dated as of May 19, 1995. See "Employment Contracts and Termination of
Employment and Change in Control Arrangements."
(6) Includes $3,500 as a matching contribution by the Company to the 401(k)
Savings Plan, $11,340 for Groupt Term Life Insurance paid by the Company, and
$19,070 for Mr. Feldman and $21,400 for Mr. Pollak,respectively, which is the
split dollar value of the insurance premium paid by the Company for the benefit
of Messrs. Feldman and Pollak. See "Employment Contracts and Termination of
Employment and Change in Control Arrangements."
(7) Bonus was received from ISI for services rendered to ISI.
(8) Includes $3,696 for as matching contribution by the Company to the 401(k)
Savings Plan and $11,340 for Group Term Life Insurance paid by the Company.
(9) $150,000 of Mr. Pollak's compensation was paid by American Drug Company
("ADC") for his devoting a portion of his working hours to ADC.
(10) Constitutes $3,500 as a matching contribution made by the Company and ADC
equally, pursuant to the Company's 401(k) Savings Plan; $11,340 for Group Term
Life Insurance paid by the Company; and $23,221, for the split dollar value of
the insurance premium paid by the Company. "See "Employment Contracts and
Termination of Employment and Change in Control Arrangements."
(11) Includes options to purchase 75,000 shares of Class B Capital Stock and
3,750 shares of Common Stock..
(12) Includes $3,500 as a matching contribution made by the Company to the
401(k) Savings Plan and $816 for Group Term Life Insurance paid by the Company.
(13) Excludes $135,000, $75,000 and $75,000 for 1996. 1995 and 1994,
respectively, paid to Mr. Gordon for which the Company was reimbursed by ISI in
consideration of the Company's permitting Mr. Gordon's to devote a portion of
his working hours to ISI.
(14) Includes $3,500 as a matching contribution made by the Company to the
401(k) Savings Plan and $918 for Group Term Life Insurance paid by the Company.
(15) Consists of salary paid to Mr. McAuliffe for services rendered solely to
GPC.
(16) Includes the $3,957, which is the dollar value of GPC's contribution under
the Company's Profit Investment Plan, a defined contribution plan and $330 for
Group Term Life Insurance paid by GPC.
<PAGE>
The following table and notes contain information concerning the grant of
non-qualified stock options in 1996 to the named executive officers.
<TABLE>
OPTION GRANTS AT DECEMBER 31, 1996
<CAPTION>
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
% of Total Appreciation for
Options Option Granted Exercise or Option Term(4)
Granted to Employees at Base Price Expiration
Name (#)(1) December 31, 1996 ($/Sh) Date 5%($) 10%($)
- ------------------- --------- ----------------- ----------- ---------- ------ ------
Jerome I. Feldman
<S> <C> <C> <C> <C> <C> <C> <C>
Common Stock..... 94,667(1) 35 7.69 12/31/99 114,749 240,964
Class B Capital.. 150,000(2) 40 8.69 11/19/01 360,133 795,800
Martin M. Pollak
Common Stock..... 97,167(1) 36 7.69 12/31/99 117,780 247,328
Class B Capital.. 150,000(2) 40 8.69 11/19/01 360,133 795,800
Scott N. Greenberg
Common Stock..... 3,750(1) 1 7.69 12/32/99 4,546 9,545
Class B Capital 75,000(3) 20 8.69 11/19/01 180,067 397,900
Lawrence M. Gordon
Common Stock..... 4,500(1) 2 7.69 12/31/99 5,455 11,454
John C. McAuliffe
Common Stock - - - - - -
</TABLE>
(1) The options were granted pursuant to the terms of the Company's 1973
Non-Qualified Stock Option Plan at 100% of the fair market value on the date
of grant. The options are exercisable immediately for a period of three
years from the date of grant.
(2) The options were granted pursuant to the terms of an amendment to the
Employment Agreement dated November 19, 1996. (See "Employment Contracts and
Termination of Employment and Change in Control Arrangements").
(3) The options were granted pursuant to an Option Agreement.
(4) Represents gain that would be realized assuming the options were held for
the entire three and five year terms, and the stock price increased at
compounded rates of 5% and 10% from a base price of $7.69 and $8.69 per
share, respectively. The potential realizable values per option or per share
under such 5% and 10% rates of stock appreciation would be $1.21 and $2.55
from a base price of $7.69 and $2.40 and $5.31 from a base price of $8.69,
respectively. These amounts represent assumed rates of appreciation only.
Actual gain, if any, on stock exercise and Common Stock holdings will be
dependent on overall market conditions and on the future performance of the
Company and its Common Stock. There can be no assurance that the amounts
reflected in this table will be achieved.
<PAGE>
The following table and notes set forth information for the named executive
officers regarding unexercised options held at the end of 1996. No options were
exercised by the named executive officers in 1996.
AGGREGATED DECEMBER 31, 1996 OPTION VALUES
Exercisable/Unexercisable Value of Unexercised
Options at December 31, In-the-Money Options at
1996(#) December 31, 1996($)
Name Exercisable/Unexercisable Exercisable/Unexercisable(2)
Jerome I. Feldman 577,867(1) 141,800(1) - -
Martin M. Pollak 580,367(1) 141,800(1) - -
Scott N. Greenberg 70,850(1) 50,025(1) - -
Lawrence M. Gordon 36,025 -0- - -
John C McAuliffe 4,000 6,000 - -
- ----------
(1) Includes 285,325 and 120,925 unexercisable Class B Options for each of
Messrs. Feldman and Pollak and 24,975 exercisable and 50,025 unexercisable
Class B Options for Mr. Greenberg, which options are convertible into shares
of Common Stock on a share for share basis.
(2) Calculated based on the closing price of the Common Stock $7.6875 as
reported by the American Stock Exchange on December 31, 1996, which price was
higher than the exercise price.
The following table and notes set forth information for the named executive
officers regarding the exercise of stock options pursuant to the GTS Duratek,
Inc. Stock Option Plan of National Patent during 1996 and unexercised options
held at the end of 1996.
<TABLE>
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1996
AND YEAR-END OPTION VALUES
<CAPTION>
Shares Exercisable/Unexercisable Value of Unexercised
Acquired Value Options at December 31 In-the-Money Options at
on Exercise Realized 1996(#) December 31, 1996 ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ------------------- ------- --- ---- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Jerome I. Feldman 50,000 787,000 125,000 - 1,395,000 -
Martin M. Pollak 50,000 787,000 125,000 - 1,395,000 -
Scott N. Greenberg 2,000 34,250 25,000 - 277,500 -
Lawrence M. Gordon - - 25,000 - 277,500 -
John C McAuliffe - - - - - -
</TABLE>
(1) Calculated based on the closing price of the Common Stock , as reported by
Nasdaq National Market on December 31, 1996, which was $13.00. At March 31,
1997, the closing price of the Common Stock as reported by Nasdaq National
Market was $5.50.
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company. The Compensation
Committee is currently comprised of Jerome I. Feldman, Martin M. Pollak and
Herbert R. Silverman.
The Compensation Committee's executive compensation policies are designed to
offer competitive compensation opportunities for all executives which are based
on personal performance, individual initiative and achievement, as well as
assisting the Company in attracting and retaining qualified executives.
The Compensation Committee also endorses the position that stock ownership
by management and stock-based compensation arrangements are beneficial in
aligning management's and shareholders' interests in the enhancement of
shareholder value and recommends the grant of stock options to executive
officers whose performance have 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 long-term compensation in
the form of stock options and the 401(k) Savings Plan. The compensation for Mr.
Pollak is determined on the same basis as that of Mr. Feldman, the President and
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 and 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 1996, the Company also made
matching contributions to the 401(k) Savings Plan for those participants.
Mr. Feldman's 1996 Compensation
Mr. Feldman's compensation is determined principally by the terms of his
employment agreement, as defined below. As of May 19, 1995, 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 May 18, 1998 (the "Employment Period"). The Agreement
provides Mr. Feldman with an annual base salary of $325,000 for the first twelve
months of the Employment Period, subject to such increases as may be deemed
appropriate by the Board of Directors. The employment agreement was negotiated
with an independent committee of the Board of Directors of the Company comprised
of Paul A. Gould, Herbert R. Silverman and Roald Hoffmann. On November 19, 1996,
the Compensation Committee of the Board of Directors approved an amendment to
the Agreement which extended the Employment Period from May 18, 1998 to May 31,
1999 and granted Mr. Feldman options to purchase 150,000 shares of Class B
Capital Stock.
In reviewing Mr. Feldman's performance in 1996 and determining appropriate
compensation, the Committee took the following major accomplishments into
consideration: (1) the successful completion of the acquisition of 48% of the
common stock of General Physics Corporation that the Company did not already own
in exchange for shares of the Company's Common Stock (the "Merger") and (2) the
sale of one million shares of common stock the Company owned in GTS Duratek,
Inc. ("Duratek").
The Compensation Committee determined that the Merger represented a major
step toward the transformation of the Company from a holding company to an
operating company. In addition, the Company believes that the business of both
General Physics and the Company will be enhanced by the Merger and the Company
would have increased access to cash generated by General Physics as a result of
General Physics becoming a wholly-owned subsidiary. As a result of the Merger,
General Physics will be consolidated with the Company for federal income tax
purposes so that income taxes payable as a result of taxable income generated by
General Physics may be offset through consolidation by operating losses incurred
by the Company, to the extent such operating losses arise.
In addition, the Compensation Committee determined that Mr. Feldman
performed an integral role in the Company's sale in April l996 of 1,000,000
shares of Duratek common stock in an underwritten public offering at a price of
$18.50 per share, generating net proceeds to the Company of $17,700,000. This
transaction had a significant impact upon the Company's liquidity. At December
31, l996, the Company had cash and cash equivalents of approximately
$22,000,000.
Jerome I. Feldman Martin M. Pollak Herbert R. Silverman
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 "May Agreement") with its President and
Chief Executive Officer, Jerome I. Feldman, and with its Executive Vice
President and Treasurer, Martin M. Pollak (the "Employees"). On November 19,
1996, the Company amended the Agreement with the Employees, which amendment
extended the term of the Employment Period from May 18, 1998 to May 31, 1999
(the "Amendment").
Pursuant to the Agreement, 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 31, 1999. The
Agreement provides for each Employee to receive annual compensation (a minimum
base salary) of $325,000 for the first year of the Agreement, $350,000 for the
second year of the Agreement and $375,000 for the third year of the Agreement
(subject to increase by the Board of Directors). Under the terms of the May
Agreement, each of the Employees received options to purchase 62,500 shares of
Common Stock and 62,500 shares of Class B Stock. Under the terms of the
Amendment, each of the Employees received options to purchase 150,000 shares of
Class B Stock. The Agreement provides 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 Agreement terminate. 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
Transactions with The CineMasters Group, Inc.
In August 1996, certain directors, affiliates and employees of the Company,
including Messrs. Feldman, Pollak, Greenberg and Gordon contributed an aggregate
of $185,000 in cash to the capital of The CineMasters Group, Inc.
("CineMasters") in exchange for an aggregate of 123,338 shares of restricted
CineMasters common stock in a private placement transaction. Pursuant to a Share
Exchange Agreement, dated as of September 30, l996, among Mr. Cary Brokaw,
Avenue Pictures, Inc. ("Avenue") and CineMasters, CineMasters acquired all of
the outstanding capital stock of Avenue from Mr. Brokaw, the sole stockholder of
Avenue, in exchange for 1,425,000 shares of CineMasters common stock (the
"Business Combination"). In connection with the Business Combination, the
Company made a capital contribution of 90,566 shares to CineMasters in the form
of registered common stock of the Company in exchange for 407,500 shares of
CineMasters common stock. The Chairman of CineMasters and Jerome I. Feldman are
brothers. The Executive Vice President and a director of CineMasters is the son
of Mr. Feldman. On April 14, 1997, CineMasters was merged into Avenue
Entertainment Group, Inc. ("Avenue"), which became the surviving corporation. As
of April 30, 1997, the Company owned 1,060,500 shares of common stock of Avenue
which represented approximately 28% of the outstanding shares of Avenue common
stock.
Other Transactions
For the year ended December 31, l996 Michael Feldman received salary and
bonus from General Physics of approximately $103,000 as Director of
International Business Development. In addition, in 1996 Michael Feldman
received a stock bonus valued at $8,710 from the Company. Michael Feldman
devotes a portion of his working hours to General Physics and Avenue and is the
son of Jerome I. Feldman.
Jerome I. Feldman, the President and Chief Executive Officer and a director
of the Company, had loans outstanding to the Company aggregating approximately
$349,000 (including accrued interest thereon) for the period January 1, 1996
through April 29, 1997. Approximately $43,000 in principal amount of such loan
accrues interest at the rate of 6% per annum and the balance of such loan does
not accrue interest. As of April 30, 1997, approximately $299,000 of such loan
was outstanding. 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, 1991 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
MEASUREMENT PERIOD DOW JONES
(FISCAL YEAR COVERED) NPDC AMEX MARKET BIOTECH
1991 100.00 100.00 100.00
1992 59.67 101.05 84.84
1993 91.67 120.78 78.67
1994 40.28 109.83 70.30
1995 47.92 138.77 122.95
1996 43.75 147.64 126,99
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's 1998 proxy
statement provided they are received by the Company no later than January 13,
1998, and are otherwise in compliance with applicable Securities and Exchange
Commission regulations.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of KPMG Peat Marwick LLP to serve as independent auditors for
the Company for the year ending December 31, 1997. KPMG Peat Marwick LLP has
audited the Company's books since 1970. The Board considers KPMG Peat Marwick
LLP to be well qualified for the function of serving as the Company's auditors.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if so desires and
is expected to be available to respond to appropriate questions from
stockholders.
<PAGE>
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
<PAGE>
NATIONAL PATENT DEVELOPMENT CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held June 4 1997
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 Harbor Court Hotel, 550 Light Street, Baltimore, Maryland on June 4,
1997, at 10:30 a.m. Local 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 proposal (1).
1. Election of Directors: Jerome I. Feldman, Martin M. Pollak, Scott N.
Greenberg, Sheldon L, Glashow, Roald Hoffmann, Bernard M. Kauderer, John C.
McAuliffe, Ogden R. Reid, Gordon Smale and Herbert R. Silverman.
For Withhold For All Except
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
- ------------------------------------------------------------------
2. Upon any other matters which may properly come before the meeting or any
adjournments thereof.
<PAGE>
Please sign exactly as name appear below.
Dated , 1997
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 signer is a corporation,
please sign in full corporate name by
president or other authorized officer. If
a partnership name by authorized person.
