-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Px+7LGhfvS7KopRZTNDx5KEV61e6NbtbtmPX5DdbXV5NV5uw0zNLsKh5FIqv+r/I OjYMB2KTGAUU4ShF7760og== 0000070415-95-000030.txt : 19951120 0000070415-95-000030.hdr.sgml : 19951120 ACCESSION NUMBER: 0000070415-95-000030 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951116 SROS: AMEX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PATENT DEVELOPMENT CORP CENTRAL INDEX KEY: 0000070415 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 131926739 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07234 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 9 W 57TH ST STREET 2: SUITE 4170 CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2128268500 10-Q 1 THIS DOCUMENT IS A COPY OF THE FORM 10-Q FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 1995 FILED ON NOVEMBER 15, 1995 PURSUANT TO RULE 201 TEMPORARY HARDSHIP EXEMPTION. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended September 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 1-7234 NATIONAL PATENT DEVELOPMENT CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 13-1926739 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 9 West 57th Street, New York, NY 10019 (Address of principal executive offices) (Zip code) (212) 826-8500 (Registrant's telephone number, including area code) 212-230-9500 Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period) that the registrant was required to file such reports and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares outstanding of each of issuer's classes of common stock as of November 10, 1995: Common Stock 5,571,780 shares Class B Capital 62,500 shares NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS Page No. Part I. Financial Information Consolidated Condensed Balance Sheets - September 30, 1995 and December 31, 1994 1 Consolidated Condensed Statements of OperationsThree Months and Nine Months Ended September 30, 1995 and 1994 3 Consolidated Condensed Statements of Cash Flows Nine Months Ended September 30, 1995 and 1994 4 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Qualification Relating to Financial Information 13 Part II. Other Information 14 Signatures 15 PART I. FINANCIAL INFORMATION NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) September 30, December 31, 1995 1994 ASSETS (unaudited) (a) Current assets Cash and cash equivalents $ 6,838 $ 10,075 Accounts and other receivables, of which $8,881 and $15,152 is from government contracts 39,596 52,487 Inventories 18,734 20,642 Costs and estimated earnings in excess of billings on uncompleted contracts, of which $1,734 and $2,092 relates to government contracts 10,871 15,237 Prepaid expenses and other current assets 3,790 6,770 Total current assets 79,829 105,211 Investments 26,549 11,600 Property, plant and equipment, at cost 32,658 37,423 Less accumulated depreciation (23,635) (22,843) 9,023 14,580 Intangible assets, net of amortization 29,794 37,025 Investment in financed assets 684 Other assets 3,886 6,446 $149,081 $175,546 (a) The Consolidated Condensed Balance Sheet as of December 31, 1994 has been summarized from the Company's audited Balance Sheet as of that date. See accompanying notes to the consolidated condensed financial statements. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Continued) (in thousands) September 30, December 31, 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) (a) Current liabilities Current maturities of long-term debt $ 3,872 $ 14,279 Short-term borrowings 19,569 31,060 Accounts payable and accrued expenses 18,896 27,958 Billings in excess of costs and estimated earnings on uncompleted contracts 6,849 6,091 Total current liabilities 49,186 79,388 Long-term debt less current maturities 19,725 17,513 Minority interests and other 9,432 11,970 Common stock issued subject to repurchase obligation 1,646 1,510 Stockholders' equity * Common stock 67 60 Class B capital stock 2 2 Capital in excess of par value 123,211 120,037 Deficit (52,267) (53,151) Net unrealized loss on available-for-sale securities (1,921) (1,783) Total stockholders' equity 69,092 65,165 $149,081 $175,546 (a) The Consolidated Condensed Balance Sheet as of December 31, 1994 has been summarized from the Company's audited Balance Sheet as of that date. * Stockholders' equity has been restated to reflect the effect of the one for four reverse stock split (See Note 5(a) to the Consolidated Condensed Financial Statements). See accompanying notes to the consolidated condensed financial statements. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three months Nine months ended September 30, ended September 30, 1995 1994 1995 1994 Revenues Sales $ 47,551 $ 51,653 $142,519 $147,613 Investment and other income (expense), net 246 (139) 924 (2,149) 47,797 51,514 143,443 145,464 Costs and expenses Costs of goods sold 39,444 43,742 119,310 122,176 Selling, general & administrative 9,419 8,432 23,968 25,331 Interest 1,203 1,417 3,636 4,317 50,066 53,591 146,914 151,824 Minority interests (314) 86 (818) (18) Gain on sale of stock by affiliates 5,912 5,912 229 Gain on disposition of stock of a subsidiary 2,567 Income (loss) before income taxes, discontinued operation and extraordinary item 3,329 (1,991) 4,190 (6,149) Income tax expense (248) (183) (1,073) (301) Income (loss) before discontinued operation and extraordinary item 3,081 (2,174) 3,117 (6,450) Discontinued operation (1,015) (285) (2,154) (812) Income (loss) before extraordinary item 2,066 (2,459) 963 (7,262) Extraordinary item Extinguishment of debt, net of income tax (87) 35 (79) 35 Net income (loss) $ 1,979 $ (2,424) $ 884 $ (7,227) Income (loss) per share * Income (loss) before discontinued operation and extraordinary item $ .45 $ (.38) $ .47 $ (1.24) Discontinued operation (.15) (.05) (.33) (.16) Extraordinary item (.01) .01 (.01) .01 Income (loss) per share $ .29 $ (.42) $ .13 $ (1.39) Dividends per share none none none none * All periods have been restated to reflect the effect of the one for four reverse stock split (See Note 5(a) to the Consolidated Condensed Financial Statements). See accompanying notes to the consolidated condensed financial statements. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine months ended September 30, 1995 1994 Cash flows from operations: Net income (loss) $ 884 $ (7,227) Adjustments to reconcile net income to net cash provided by (used for) operating activities: Provision for discontinued operation 2,075 Depreciation and amortization 3,640 3,232 Loss (gain) from extinguishment of debt 79 (35) Gain from disposition of stock in subsidiaries (2,567) Gain on sale of stock by affiliates (5,912) Change in other operating assets and liabilities 3,792 (6,989) Net cash provided by (used for) operations 1,991 (11,019) Cash flows from investing activities: Proceeds from sale of stock of a subsidiary 5,000 Sales of certain net assets and businesses of a subsidiary 4,470 Additions to property, plant & equipment (1,701) (2,266) Additions to intangible assets (988) (3,626) Reduction of investments and other assets, net 139 2,331 Net cash provided by investing activitie $ 2,450 $ 909 See accompanying notes to the consolidated condensed financial statements. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) (in thousands) Nine months ended September 30, 1995 1994 Cash flows from financing activities: Proceeds from short-term borrowings $ 7,160 $ 17,810 Repayments of short-term borrowings (11,020) (5,655) Proceeds from issuance of long-term debt 4,910 3,871 Reduction of long-term debt (8,728) (3,491) Exercise of common stock options and warrants 100 Proceeds from issuance of common stock 188 Net cash provided by (used for) financing activities (7,678) 12,823 Net increase (decrease) in cash and cash equivalents (3,237) 2,713 Cash and cash equivalents at the beginning of the periods 10,075 10,976 Cash and cash equivalents at the end of the periods $ 6,838 $ 13,689 Supplemental disclosures of cash flow information: Cash paid during the periods for: Interest $ 3,939 $ 3,198 Income taxes $ 421 $ 480 See accompanying notes to the consolidated condensed financial statements. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Inventories Inventories are valued at the lower of cost or market,principally using the first-in, first-out (FIFO) method. Inventories consisting of material, labor, and overhead are classified as follows (in thousands): September 30, December 31, 1995 1994 Raw materials $ 663 $ 1,973 Work in process 505 462 Finished goods 17,566 15,557 Land held for resale 2,650 $ 18,734 $ 20,642 2. Long-term debt Long-term debt consists of the following (in thousands): September 30, December 31, 1995 1994 8% Swiss bonds $ 127 $ 2,999 8% Swiss bonds due 2000 2,365 Swiss convertible bonds 2,007 10,157 New 5% Swiss bonds 2,129 2,129 12% Subordinated debentures 6,759 6,783 Other 10,210 9,145 23,598 31,213 Less current maturities 3,872 13,700 $ 19,725 $ 17,513 NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) (Unaudited) 2. Long-term debt (Continued) On June 28, 1995, the Compan's Exchange Offer for certain issues of its outstanding indebtedness expired. The Company accepted for exchange Swiss Francs ("SFr.") 1,299,000 of its 8% Swiss Bonds due March 1, 1995, SFr. 1,120,000 of its Convertible Swiss Bonds due March 7, 1995, SFr. 945,000 of its 5.75% Convertible Bonds due May 9, 1995, SFr. 795,000 of its 5.625% Convertible Bonds due March 18, 1996, and $1,212,000 of its 7% Dual Currency Bonds due March 18, 1996. In exchange for the forgoing bonds, the Company issued an aggregate of SFr. 3,604,000 of new 8% Swiss Bonds, due June 28, 2000 (the "New 8% Bonds") and paid $2,873,000 in cash. The New 8% Bonds were valued at $ 2,340,000(after an original issue discount of 25%). The principal and interest on the New 8% Bonds are payable either in cash or in shares of common stock of the Company, at the option of the Company. The Company reduced its long-term debt due in 1995 and 1996 by $4,824,000 and realized a loss of $220,000 on the Exchange Offer. 3. Term loan On April 7, 1995, the Company entered into a $5,000,000 Term Loan Agreement, of which the Company received approximately $4,900,000 after closing fees. The Term Loan is payable in sixteen consecutive quarterly installments, commencing on June 30, 1996. The first fifteen installments will be $250,000 and the last installment shall be $1,250,000. The Company has used a portion of the proceeds in July 1995 to repay and refinance certain of its Swiss denominated long-term debt due in 1995 and 1996. The Term Loan is secured by certain assets of the Company and requires the Company to meet certain financial covenants. 4. Revolving credit agreement On April 7, 1995, General Physics Corporation (GP), the Company's 51% owned subsidiary, entered into a new $20,000,000 secured revolving credit agreement with a commercial bank, and terminated its previous credit agreement. Borrowings under the new credit agreement bear interest at the prime rate or at a rate which is 1.75% over LIBOR, whichever rate is elected by GP. The new credit agreement is secured by the accounts receivable of GP and certain of its subsidiaries, and contains certain covenants which, among other things, limit the amount and nature of certain expenditures by GP, and requires GP to maintain certain financial ratios. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) (Unaudited) 5. Subsequent events (a) On September 20, 1995, the Company's stockholders and Board of Directors approved the proposal to amend the Company's Restated Certificate of Incorporation to effect a one-for-four reverse stock split of its Common Stock. The reverse stock split was effective on October 6, 1995 (the "Effective Date"). As of September 20, 1995, there were 27,115,240 shares of common stock outstanding and after the Effective Date there were approximately 6,778,810 shares of Common Stock outstanding. On the Effective Date, the shares of common stock held by stockholders of record were converted into the amount of whole shares of new common stock equal to the number of their shares divided by four, with any fractional shares rounded up to the next whole share. The balance sheets at September 30, 1995 and December 31, 1994 as well as the earnings (loss) per share for the quarter and nine months ended September 30, 1995 and 1994 have been restated to reflect the reverse split as if it had occurred on January 1, 1994. (b) On October 23, 1995, Five Star, MXL and the Company entered into various amendments to the Five Star Loan Agreement and the MXL Loan Agreement. Under the terms of the amendments, (i) Five Star is allowed to borrow 80% of Eligible Receivables (as defined), (ii) MXL is allowed to lend Five Star and the Company up to an additional $750,000 and $500,000, respectively and (iii) the Five Star and MXL Term Loans were restructured and as of November 1, 1995, MXL owed $3,960,000 under the MXL Term Loan and Five Star's Term Loan was repaid in its entirety. In addition, both Five Star and MXL are permitted to loan or dividend to the Company 50% of their Excess Cash Flow (as defined). NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company realized income before income taxes, discontinued operation and extraordinary item of $3,329,000 and $4,190,000 for the quarter and nine months ended September 30, 1995, as compared with a loss of $(1,991,000) and ($6,149,000) for the corresponding periods of 1994. The improvement in the Company's results before discontinued operation and extraordinary item is due to several factors. The improved results were primarily the result of a $5,912,000 gain recognized during the third quarter of 1995 as a result of the issuance of common stock by Interferon Sciences, Inc. (ISI) and the initial public offering by GSE Systems, Inc. (GSES). At September 30, 1995, the Company owns approximately 22% of ISI and controls 26% of GSES. In addition, in January 1995, the Company recognized a $2,567,000 gain on the sale of 1,666,667 shares of the Company's GTS Duratek, Inc. (Duratek) common stock. As a result of the above transaction, the Company's ownership in Duratek fell below 50% and commencing in January 1995, the Company has accounted for this investment on the equity basis. Included in investment and other income(expense), net for the quarter and nine months ended September 30, 1995, is $70,000 and $1,061,000, respectively, of foreign currency transaction losses, compared to losses of $351,000 and $2,363,000 for the corresponding periods of 1994. The Physical Science and Optical Plastics Groups achieved increased operating profits in 1995, partially offset by reduced operating profits achieved by the Distribution Group. In addition, for the quarter and nine months ended September 30, 1995, the Company also achieved reduced interest expense at the corporate level, as a result of reduced long-term debt. Foreign currency valuation fluctuations may adversely affect the results of operations and financial condition of the Company. At September 30, 1995, the Company had not hedged its Swiss franc obligations. If the value of the Swiss franc to the U.S. dollar increases, the Company will recognize transaction losses on its Swiss franc obligations. On September 30, 1995, the value of the Swiss franc to the U.S. dollar was approximately 1.1553 to 1. There can be no assurance that the Company will be able to swap or hedge obligations denominated in foreign currencies at prices acceptable to the Company or at all. The Company will continue to review this policy on a continuing basis. At September 30, 1995, the Company had approximately SFr. 4,738,000 of Swiss denominated debt outstanding, of which approximately SFr. 4,338,000 represents principal amount outstanding and approximately SFr. 400,000 represents interest accrued thereon. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sales For the quarter ended September 30, 1995, consolidated sales decreased by $4,102,000 to $47,551,000 from the $51,653,000 recorded in the corresponding quarter of 1994. For the nine months ended September 30, 1995, consolidated sales decreased by $5,094,000 to $142,519,000 from $147,613,000 recorded for the nine months ended September 30, 1994. The decreased sales during the periods were the result of reduced sales in the Distribution Group, partially offset by increased sales within the Physical Science and Optical Plastics Group. The decreased sales within the Distribution Group was the result of the loss of a significant customer. The increased sales within the Physical Science Group were the result of consolidating the sales of General Physics Corporation (GP) since September 1994, partially offset by Duratek being accounted for on the equity basis since January 1995. Gross margin Consolidated gross margin of $8,107,000, or 17%, for the quarter ended September 30, 1995, decreased by $196,000 when compared to the consolidated gross margin of $7,911,000, or 15%, for the quarter ended September 30, 1994. For the nine months ended September 30, 1995, consolidated gross margin of $23,209,000 or 16% of consolidated sales decreased by $2,228,000 when compared to $25,437,000 or 17% of consolidated sales earned in the nine months ended September 30, 1994. The decreased gross margin in 1995 was principally the result of decreased gross margin achieved by the Distribution and Physical Science Groups. The decreased gross margin within the Physical Science Group is primarily due to the Company's ownership in Duratek falling below 50% in January 1995, and the Company accounting for the results of Duratek on the equity basis from that time, partially offset by GP being included in the consolidated results since September 1994. The reduced gross margin in the Distribution Group was the result of reduced sales. Selling, general and administrative expenses For the quarter and nine months ended September 30, 1995, selling, general and administrative expenses (SG&A) of $9,419,000 and $23,968,000 were $987,000 higher and $1,363,000 lower than the $8,432,000 and $25,331,000 of SG&A expenses incurred during the quarter and nine months ended September 30, 1994. The increase for the quarter ended September 30, 1995, was primarily the result of the recording of a reserve of approximately $1,015,000 by General Physics Corporation during the third quarter of 1995 related to potentially uncollectable revenue recorded in years prior to December 1993. The decrease in SG&A for the nine months ended September 30, 1995, was principally the result of Duratek being accounted for on the equity method since January 1995 partially offset by the above write-off. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Interest expense For the quarter and nine months ended September 30, 1995, interest expense was $1,203,000 and $3,636,000, compared to $1,417,000 and $4,317,000 for the second quarter and nine months ended September 30, 1994. The decreased interest expense for the nine months ended September 30, 1995, was the result of reduced long-term debt. Investment and other income (expense), net Investment and other income (expense), net, of $246,000 and $924,000 for the quarter and nine months ended September 30, 1995 increased by $385,000 and $3,073,000, respectively, as compared to $(139,000) and $(2,149,000) for the corresponding periods of 1994. The change was principally due to two factors; $70,000 and $1,061,000 of foreign currency transaction losses recognized during the quarter and nine months ended September 30, 1995, compared to losses of $351,000 and $2,363,000 for the corresponding periods of 1994, and reduced losses recognized in 1995 by Interferon Sciences, Inc. (ISI), the Company's 22% owned affiliate. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES LIQUIDITY AND CAPITAL RESOURCES At September 30, 1995, the Company had cash and cash equivalents totaling $6,838,000. GP, SGLG, Inc. and American Drug Company had cash and, cash equivalents of $645,000 at September 30, 1995. The minority interests of these three companies are owned by the general public, and therefore the assets of these subsidiaries have been dedicated to the operations of these companies and may not be readily available for the general corporate purpose of the parent. In addition, GP under its revolving credit agreement (See Note 4 to the Consolidated Condensed Financial Statements) can loan up to $2,000,000 to the Company at the prime rate of interest. The Company has sufficient cash, cash equivalents and marketable securities, and borrowing availability under existing and potential lines of credit to satisfy its cash requirements for its Swiss Franc denominated indebtedness due in 1995 and 1996, which totaled approximately $724,000 and $1,411,000, respectively at September 30, 1995. In order for the Company to meet its long-term cash needs, which include the repayment of approximately $6,759,000 of 12% Subordinated debentures scheduled to mature in 1997, the Company must obtain additional funds from various sources. The Company has historically reduced its longterm debt through the issuance of equity securities in exchange for long-term debt. In addition to its ability to issue equity securities, the Company believes that it has sufficient marketable long-term investments, as well as the ability to obtain additional funds from its operating subsidiaries and the potential to enter into new credit arrangements. The Company reasonably believes that it will be able to accomplish some or all of the above transactions in order to fund the scheduled repayment of the Company's 12% Subordinated debentures in 1997. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES QUALIFICATION RELATING TO FINANCIAL INFORMATION September 30, 1995 The financial information included herein is unaudited. In addition, the financial information does not include all disclosures required under generally accepted accounting principles because certain note information included in the Company's Annual Report has been omitted; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods. The results for the 1995 interim period are not necessarily indicative of results to be expected for the entire year. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of shareholders held on September 20, 1995, the following matters were voted upon: a. Jerome I. Feldman, Scott N. Greenberg, Paul A. Gould,Roald Hoffmann, Martin M. Pollak, Herbert A. Silverman and Ogden R. Reid were elected to serve as directors of the Registrant for a one year term. b. The proposal to amend the Company's Restated Certificate of Incorporation to effect a Reverse Stock Split in which each four shares of issued Common Stock of the Registrant, whether issued and outstanding or held in treasury was changed into one share of new Common Stock of the Company was adopted with a vote of 17,372,104 votes for and 1,997,020 votes against from the Common Stock and 2,500,000 votes for and no votes against from Class B Capital Stock for the adoption of this proposal. Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits (3) Amended Restated Certificate of Incorporation filed with the Secretary of State for the State of Delaware on October 6, 1995. (10.1) Amendment dated October 23, 1995 to the Loan Agreement dated April 29, 1993 between Five Star Group, Inc. and NatWest Bank N.A., filed herewith. (10.2) Amendment and Supplement dated October 23, 1995 to the Loan Agreement dated April 29, 1993 between MXL, Industries, Inc. and NatWest Bank N.A. filed herewith. (22) Copy of Notice and Proxy Statement for Annual Meeting of Shareholders held on September 20, 1995, filed with the Securities and Exchange Commission pursuant to Section 14 of the Securities Exchange Act of 1934 and incorporated herein by reference. b. Reports on Form 8-K There were no reports filed on Form 8-K for the period ended September 30, 1995. NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES September 30, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. NATIONAL PATENT DEVELOPMENT CORPORATION DATE: November 14, 1995 Jerome I. Feldman President & Chief Executive Officer DATE: November 14, 1995 Scott N. Greenberg Vice President & Chief Financial Officer EX-3 2 RESTATED CERTIFICATE OF INCORPORATION NATIONAL PATENT DEVELOPMENT CORPORATION Incorporated on March 11, 1995 ----------- This Restated Certificate of Incorporation of National Patent Development Corporation (hereinafter the "Corporation"), has been adopted by the stockholders and directors of the Corporation pursuant to Section 245 of the General Corporation Law of the State of Delaware. It restates, amends and integrates the provisions of the Corporation's Restated Certificate of Incorporation filed with the Secretary of State on June 24, 1982, as heretofore and hereinafter amended or supplemented. FIRST: The name of the Corporation (hereinafter called the "Corporation"), is NATIONAL PATENT DEVELOPMENT CORPORATION SECOND: The respective names of the County and of the City within the County in which the principal office of the Corporation is to be located in the state of Delaware are the County of New Castle and the City of Wilmington. The name of the resident agent of the Corporation is The Corporation Trust Company. The street and number of said principal office and the address by street and number of said resident agent is 1209 Orange Street, Wilmington, Delaware. THIRD: The nature of the business of the Corporation and the objects or purposes to be transacted, promoted or carried on by it are as follows: As principal agent, or broker, and on commission or otherwise, to buy, sell, exchange, lease, assign, license or take licenses in respect of domestic and foreign patents, patent rights, secret processes, formulae or procedures, copyrights, licenses to manufacture or sell, or both, patented or copyrighted things or articles, trademarks or trade names. To acquire, by purchase or otherwise, and to own, develop and perfect domestic and foreign patents, patent rights, copyrights, licenses to manufacture or sell, or both, patented or copyrighted things or articles, and to develop, perfect, improve or to manufacture or to sell, lease or license the use of the same or otherwise dispose of the same. To acquire, by purchase or otherwise, and to use, develop, finance, operate, sell, lease, license or sublicense or in any manner dispose of any and all inventions, improvements and processes and to carry on any business, manufacturing or otherwise, which may directly or indirectly effectuate these objects or any of them. To apply for, purchase, register, or in any manner to acquire, and to hold, own, use, operate and introduce, and to sell, lease assign, pledge, or in any manner dispose of, and in any manner deal with licenses, copyrights, trademarks and trade names, and to acquire, own use or in any manner dispose of any and all inventions, improvements and processes, labels, designs, brands, or other rights, and to work, operate, or develop the same. To set up, equip, outfit, maintain and conduct a laboratory or laboratories for research in connection with the manufacture of any of the products of this Corporation, to make analyses and inspections, invent and perfect formulae, carry on investigations of all kinds, and to buy, sell and generally deal in such machinery, tools, appliances, devices, equipment and supplies, necessary for the manufacture and perfection of any of the products of this Corporation, and to do every other act or acts, thing or things, incidental or pertaining to or growing out of, or connected with, the preparation, manufacture, distribution, application and sale of the products of this Corporation. To manufacture, buy, sell and generally deal in any article, product, or commodity produced as the result of or through the use of any such inventions, devices, processes, discoveries, formulae, improvements, or modifications of any thereof, or any articles, products, commodities, supplies and materials used or suitable to be used in connection therewith, or in any manner applicable or incidental thereto; to grant licenses, sublicenses, rights, interest and/or privileges in respect of any the foregoing, and to supervise or otherwise exercise such control over its licensees or grantees, and the business conducted by them as may be agreed upon in its contracts or agreements with such licensees and grantees, for the protection of its rights and interests therein, and to secure to it the payment of agreed royalties or other considerations. To acquire, by purchase, lease, gift, device or otherwise, and to own, use, hold, sell, convey, exchange, lease, mortgage, work, improve, develop, divide and otherwise handle, deal in and dispose of real estate, real property and any interest or right therein, whether as principal, agent, broker or otherwise. To manage, operate, service, equip, furnish, alter and keep in repair dwellings, apartment houses, hotels, office buildings and real and personal property of every kind, nature and description, whether as principal, agent, broker, or otherwise, and generally to do anything and everything necessary and proper and to the extent permitted by law in connection with the business of managing and operating real and personal property of any and all kinds. To lend money or make advances from time to time to such extent, to such borrowers, on such terms, and on such security, if any, as the Board of Directors of the Corporation may determine, but only to the extent permitted corporations organized under the General Corporation Law. To manufacture, process, purchase, sell and generally to trade and deal in and with goods, wares and merchandise of every kind, nature and description, and to engage and participate in any mercantile, industrial or trading business of any kind or character whatsoever. To purchase or otherwise acquire, and to hold, mortgage, pledge, sell, exchange or otherwise dispose of, securities (which term, for the purpose of this Article THIRD, includes, without limitation of the generality thereof, any shares of stock, bonds, debentures, notes, mortgages, or other obligations, and any certificates, receipts or other instruments representing rights to receive, purchase or subscribe for the same, or representing any other rights or interests therein or in any property or assets) created or issued by any persons, firms, associations, corporation, or governments or subdivisions thereof; to make payment therefor in any lawful manner; and to exercise, as owner or holder of any securities, any and all rights, powers and privileges in respect thereof. To make, enter into, perform and carry out contracts of every kind and description with any person, firm, association, corporation or government or subdivision thereof. To acquire, by purchase, exchange or otherwise, all or any part of, or any interest in, the properties, assets, business and good will of any one or more persons, firms, associations or corporations heretofore or hereafter engaged in any business for which a corporation may now or hereafter be organized under the laws of the State of Delaware; to pay for the same in cash, property or its own or other securities; to hold, operate, reorganize, liquidate, sell or in any manner dispose of the whole or any part thereof and in connection therewith, to assume or guarantee performance of any liabilities, obligations or contracts of such persons, firms, associations or corporations, and to conduct the whole or any part of any business thus acquired. To endorse or guarantee the payment of principal, interest or dividends upon, and to guarantee the performance of sinking fund or other obligations of, any securities, and to guarantee in any way permitted by law the performance of any of the contracts or other undertakings in which the Corporation my otherwise be or become interested, of any person, firm, association, corporation, government or subdivision thereof, or of any other combination, organization or entity whatsoever. To borrow money for any of the purposes of the Corporation, from time to time, and without limit as to the amount; from time to time to issue and sell its own securities in such amounts, on such terms and conditions, for such purposes and for such prices, now or hereafter permitted by the laws of the State of Delaware and by this Certificate of Incorporation, as the Board of Directors of the Corporation may determine and to secure such securities by mortgage upon, or the pledge of, or the conveyance or assignment in trust of, the whole or any part of the properties, assets, business and good will of the Corporation, then owned or thereafter acquired. To draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments and evidences of indebtedness whether secured by mortgage or otherwise, as well as to secure the same by mortgage or otherwise, so far as may be permitted by the laws of the State of Delaware. To purchase, hold, cancel, reissue, sell, exchange, transfer or otherwise deal in its own securities from time to time to such an extent and in such manner and upon such terms as the Board of Directors of the Corporation shall determine; provided that the Corporation shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital stock, except to the extent permitted by law; and provided further that shares of its own capital stock belonging to the Corporation shall not be voted directly or indirectly. To organize or cause to be organized under the laws of the state of Delaware, or any other state of the United States of America, or of the District of Columbia, or of any territory, dependency, colony or possession of the United States of America, or of any foreign country, a corporation or corporations for the purposes of transacting, promoting or carrying on any or all of the objects purposes for which the Corporation is organized, and to dissolve, wind up, liquidate, merge or consolidate any such corporation or corporations or to cause the same to be dissolved, would up, liquidated, merged or consolidated. To conduct its business in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all States of the United States of America, in the District of Columbia, in any or all territories, dependencies, colonies or possessions of the United States of America, and in foreign countries. To such extent as a corporation organized under the General Corporation Law of the State of Delaware may now or hereafter lawfully do, to do, either as principal or agent and either alone or in connection with other corporations, firms or individuals, all and everything necessary, suitable, convenient or proper for, or in connection with, or incident to, the accomplishment of any of the purposes or attainment of any one or more of the objects herein enumerated, or designed directly or indirectly to promote the interests of the Corporation or to enhance the value of its properties; and in general to do any and all things and exercise any and all powers, rights and privileges which a corporation may now or hereafter be organized to do or to exercise under the General Corporation Law of Delaware or under any act amendatory thereof, supplemental thereto or substituted therefor. The foregoing provisions of this Article THIRD shall be construed both as purposes and powers and each as an independent purpose and power. The foregoing enumeration of specific purposes and powers shall not be held to limit or restrict in any manner the purposes and powers of the Corporation, and the purposes and powers herein specified shall, except when otherwise provided in this Article THIRD, be in no way limited or restricted by reference to, or inference from, the terms of any provision of this or any other Article of this Certificate of Incorporation; provided that nothing herein contained shall be construed as authorizing the Corporation to issue bills, notes or other evidences of debt for circulation as money, or to carry on the business of receiving deposits of money or the business of buying gold or silver bullion or foreign coins or as authorizing the Corporation to engage in the business of bank or insurance or to carry on the business of constructing, maintaining or operating public utilities in the State of Delaware; and provided, further, that the Corporation shall not carry on any business or exercise any power in any state, territory, or country which under the laws thereof the Corporation may not lawfully carry on or exercise. FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is fifty two million eight hundred thousand (52,800,000) shares of which forty million (40,000,000) are to be Common Stock of the par value of One Cent ($.01) per share (hereinafter called the "Common Stock"); of which two million eight hundred thousand (2,800,000) shares are to be Class B Capital Stock with a par value of One Cent ($.01) per share (hereinafter called the "Class B Capital Stock"); and of which ten million (10,000,000) shares are to be Preferred Stock with a par value of One Cent ($.01 per share (hereinafter called the "Preferred Stock"), to be issued in such series and with such terms and conditions as the Board of Directors may determine. Each four (4) shares of authorized Common Stock issued and outstanding or standing in the name of the Corporation at the close of business on the date of filing and recording (the "Effective Date") of this Certificate of Amendment (the "Amendment") in the office of the Secretary of State of the State of Delaware, shall, upon the filing and recording of this Amendment in the Office of the Secretary of State of the State of Delaware, thereupon automatically be reclassified and changed into one (1) validly issued, fully paid and nonassessable share of Common Stock. Each holder of record of shares of Common Stock to be so reclassified and changed shall at the Effective Date become the record owner of the number of shares of Common Stock as shall result from such reclassification and change. Each such record holder shall be entitled to receive, upon the surrender of the certificate or certificates representing the shares of Common Stock to be so reclassified and changed at the office of the transfer agent of the Corporation in such form and accompanied by such documents, if any, as may be prescribed by the transfer agent of the Corporation, a new certificate or certificates representing the number of shares of Common Stock of which he or she is the record owner after giving effect to the provisions of this Article Fourth. The Corporation shall not issue fractional shares with respect to the reclassification and change, and instead, shall, in lieu of any fractional share of Common Stock which would otherwise result, issue to the holder entitled thereto one (1) whole share of Common Stock, which shares shall be validly issued, fully paid and nonassessable. (a) The designations, preferences, privileges and voting powers of the shares of the Common Stock and the Class B Capital Stock, and the restrictions or qualifications thereof, are as follows: (1) The holders of the Common Stock and the holders of the Class B Stock shall be entitled to the same rights and privileges, except as hereinafter set forth, and shall share equally, share and share alike, in the distribution of any funds which the Board of Directors may declare or set aside or pay out as dividends and shall share equally, share and share alike, in the distribution of all assets of the Corporation after the payment of its debts or liabilities in the event of any liquidation, dissolution or winding up of the Corporation. (2) In any and all matters requiring the vote or consent of the stockholders of the Corporation, each issued and outstanding share of Common Stock shall be entitled to one (1) vote and each issued and outstanding share of Class B Stock shall be entitled to ten (10) votes. (3) In case the Corporation shall at any time (i) declare a stock dividend upon its Common Stock payable in shares of its Common Stock or (ii) make any distribution upon its Common Stock payable in shares of its Common Stock or (iii) subdivide its outstanding shares of Common Stock into a greater number of shares or (iv) subdivide its outstanding shares of Common Stock into a smaller number of shares, then and in any of such events the Corporation shall make, declare or effect a similar but ratable stock dividend or distribution or subdivision of the shares of Class B Stock but payable in shares of Class B Stock and only on a share for share basis. (4) Any holders of Class B Stock may at any time convert all or any of the shares of such stock held by him into shares of Common Stock of the Corporation at the rate of (1) share of Common Stock for (1) share of Class B Stock, without any adjustment for dividends or otherwise, by surrender to the Corporation at any office of the Corporation or at the office of the Transfer Agent thereof for cancellation of the certificate or certificates representing the Class B Stock so to be converted, and, upon such surrender, shall be entitled to receive therefor one or more certificates for the same number of shares of Common Stock the Corporation shall be required to issue on said conversion as hereinabove specified. (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors of the Corporation. Each series shall be distinctly designated. All shares of any one series of the Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends (if any) thereon shall be cumulative, if made cumulative. The powers, preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. The Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of each particular series of the Preferred Stock, the designation, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof, if any, of such series, including, but without limiting the generality of the foregoing, the following: (1) the distinctive designation of, and the number of shares of the Preferred Stock which shall constitute the series, which number may be increased (except as otherwise fixed by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; (2) the rate and times at which, and the terms and conditions upon which, dividends, if any, on shares of the series may be paid, the extent of preferences or relation, if any, of such dividends to the dividends payable on any other class or classes of stock of the Corporation, or on any series of the Preferred Stock or of any other class or classes of stock of the Corporation, and whether such dividends shall be cumulative or non-cumulative; (3) the right, if any, of the holders of shares of the series to convert the same into, or exchange the same for, shares of any other class or classes of stock of the Corporation, or of any series of the Preferred Stock or of any other class or classes of stock of the Corporation, and the terms and conditions of such conversion or exchange; (4) whether shares of the series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and and conditions upon which, shares of the series may be redeemed; (5) the rights, if any, of the holders of shares of the series upon voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up of the Corporation; (6) the terms of the sinking fund or redemption or purchase account, if any, to be provided for shares of the series; and (7) the voting powers, if any, of the holders of shares of the series which may, without limiting the generality of the foregoing, include the right, voting as a series by itself or together with other series by itself or together with other series of the Preferred Stock or all series of the Preferred Stock as a class, (i) to vote more or less than one vote per share on any or all matters voted upon by the shareholders, (ii) to elect one or more Directors of the Corporation in the event there shall have been a default in the payment of dividends on any one or more series of the Preferred Stock or under such other circumstances and upon such conditions as the Board of Directors may fix. (c) The relative powers, preferences and rights of each series of Preferred Stock in relation to the powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in this Article FOURTH and the consent by class or series vote or otherwise, of the holders of the Preferred Stock of such of the series of the Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in such resolution or resolutions adopted with respect to any series of Preferred Stock that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. (d) Shares of Common Stock, Class B Stock and Preferred Stock (subject to the provisions of paragraph (c) of this Article FOURTH) of the Corporation may be issued by the Corporation, from time to time, for such consideration, wholly or partly, in cash, labor done, personal property, or real property or leases thereof, as may be determined, from time to time, by the Board of Directors, and such determination by the Board of Directors shall be final and conclusive. All shares of Common Stock, Class B Stock and Preferred Stock of the Corporation issued as herein provided shall be deemed fully paid stock and not liable for any further call or assessment thereon, and the holder of such shares shall not be liable for any further payments in respect thereto. (e) No holder of any of the shares of stock of the Corporation of any class shall be entitled, as such holder, to purchase or subscribe for any unissued stock of any class or any additional shares of any class to be issued by reason of any increase of the authorized capital stock of the Corporation of any class, or bonds, certificates of indebtedness, debentures or other securities convertible into stock of the Corporation, or carrying any right to purchase stock of any class, but any such unissued stock or such additional authorized issue of any stock or of other securities convertible into stock or carrying any right to purchase stock may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations and upon such terms as may be deemed advisable by the Board of Directors in exercise of its discretion. FIFTH: The minimum amount of capital stock with which the Corporation will commence business is One Thousand Dollars ($1,000). SIXTH: The Corporation is to have a perpetual existence. SEVENTH: The private property of the stockholders of the Corporation shall not be subject to the payment of corporate debts to any extent whatever. EIGHTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders, it is further provided: 1. The number of directors of the Corporation shall be as specified in the By-laws of the Corporation but such number may from time to time be increased or decreased in such manner as may be prescribed by the By-laws. In no event shall the number of directors be less than three (3). The election of directors need not be by ballot. Directors need not be stockholders. 2. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered: (a) To make, alter, amend, and repeal By- laws, subject to the power of the stockholders to alter or repeal the By-laws made by the Board of Directors. (b) Subject to the applicable provisions of the By-laws then in effect, to determine, from time to time, whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or documents of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. (c) Without the assent or vote of the stockholders, to authorize and issue obligations of the Corporation, secured or unsecured, to include therein such provisions as to redeemability, convertibility or otherwise, as the Board of Directors, in its sole discretion, may determine and to authorize the mortgaging or pledging, as security therefor, of any property of the Corporation, real or personal, including after acquired-property. (d) To determine whether any, and, if any, what part, of the net profits of the Corporation or of its net assets in excess of its capital shall be declared in dividends and paid to the stockholders, and to direct and determine the use and disposition of any such net profit or such net assets in excess of capital. (e) To fix from time to time the amount of profits of the Corporation to be reserved as working capital or for other lawful purposes. (f) to establish bonus, profit-sharing or other types of incentive or compensation plans for the employees (including officers and directors) of the Corporation and to fix the amount of profits to be distributed or shared and to determine the persons to participate in any such plans and the amounts of their respective participations. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware, of the Certificate of Incorporation and of the By-laws of the Corporation. 3. Any director or any officer elected or appointed by the stockholders or by the Board of Directors may be removed at any time in such manner as shall be provided in the By-laws of the Corporation. 4. No contract or other transaction between the Corporation and any other corporation and no other act of the Corporation shall, in the absence of fraud, in any way be affected or invalidated by the fact that any of the directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation. Any director of the Corporation individually or any firm or association of which any director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided that the fact he individually or such firm or association is so interested shall be disclosed or shall have been known to the Board of Directors or a majority of such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction shall be taken. Any director of the Corporation who is also a director or officer of such other corporation or who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors which shall authorize any such contract or transaction, and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested. Any director of the Corporation may vote upon any contract or other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that he is also a director of such subsidiary or affiliated corporation. Any contract, transaction or act of the Corporation, or of the Directors which shall be ratified by a majority of a quorum of the stockholders of the Corporation at any annual meeting, or at any special meeting called for such purpose, shall, in so far as permitted by law or by the Certificate of Incorporation of the Corporation, be as valid and as binding as though ratified by every stockholder of the Corporation; provided, however, that any failure of the stockholders to approve or ratify any such contract, transaction or act, when and if submitted, shall not be deemed in any way to invalidate the same or deprive the Corporation, its directors, officers or employees, of its or their right to proceed with such contract, transaction or act. 5. Subject to any limitation in the Bylaws, the members of the Board of Directors shall be entitled to reasonable fees, salaries or other compensation for their services and to reimbursement for their expenses as such members. Nothing contained herein shall preclude any director from serving the Corporation, or any subsidiary or affiliated corporation, in any other capacity and receiving proper compensation therefor. 6. If the By-laws so provide, the stockholders and Board of Directors of the Corporation shall have power to hold their meetings, to have an office or offices and to keep the books of the Corporation, subject to the provisions of the laws of Delaware, outside of said State at such place or places as may from time to time be designated by them. NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditor or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement, and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of this Corporation, as the case may be, and also on this Corporation. TENTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article TENTH. ELEVENTH: Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, office or employee of the Corporation or of any corporation which he served as such at the request of the Corporation shall be indemnified by the Corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. The foregoing right of indemnification shall not be deemed exclusive of any other rights to which any officer or director or employee may be entitled apart from the provisions of this section. TWELFTH: No director of this Corporation shall be liable to this Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to this corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper benefit. IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto affixed and this Restated Certificate of Incorporation to be signed by Jerome I. Feldman, its President and Chief Executive Officer, and attested by Lydia M. DeSantis, its Corporate Secretary, this 5th day of October, 1995. NATIONAL PATENT DEVELOPMENT CORPORATION Jerome I. Feldman President and Chief Executive Officer ATTEST: Lydia M. DeSantis Corporate Secretary EX-10 3 AMENDMENT AND SUPPLEMENT TO LOAN AGREEMENT AGREEMENT, made this 23rd day of October, 1995, by and among: MXL INDUSTRIES, INC., a Delaware corporation (the "Borrower"); The Banks that have executed the signature pages hereto (individually a "Bank" and collectively, the "Banks"); and NATWEST BANK N.A., a national banking association (the successor in interest to National Westminster Bank NJ), as Agent for the Banks (in such capacity, together with its successors in such capacity, the "Agent"); W I T N E S S E T H: WHEREAS: A. The Borrower, the Banks and National Westminster Bank N.J., as Agent (the predecessor in interest to the Agent) have heretofore entered into a Loan Agreement dated April 29, 1993 (the "Original Loan Agreement", and as the Original Loan Agreement is amended and supplemented hereby and as it may from time to time hereafter be amended and supplemented, the "Loan Agreement"); B. The parties hereto wish to amend and supplement the Original Loan Agreement to provide for an increase in the principal amount of the Term Loans, as defined therein, and for certain other matters as hereinafter set forth; and C. Capitalized terms used herein which are defined in the Original Loan Agreement and not otherwise defined herein shall have the respective meanings ascribed thereto in the Original Loan Agreement; NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: Article 1. Amended Term Loans; Release of Certain Collateral; Waiver as to Interest Rate Contract Section 1.1 The Borrower hereby acknowledges and confirms that as of the date hereof, the outstanding principal balance of each Bank's Term Loan (individually an "Original Term Loan" and collectively, the "Original Term Loans") is as follows: Outstanding Principal Bank Balance of Term Loan NatWest Bank N.A. (the $1,117,500.00 successor in interest to NatWest USA and hereinafter referred to as "NatWest") UJB $ 382,500.00 Concurrently herewith, each Bank is making an additional loan (individually, an "Additional Term Loan" and collectively, the "Additional Term Loans") to be added to such Bank's Original Term Loan in the following respective principal amounts: Principal Amount of Bank Additional Term Loan NatWest $1,800,395.00 UJB $ 659,605.00 Upon the making of the Additional Term Loans on the date hereof, the outstanding principal balance of each Bank's Original Term Loan and Additional Term Loan (individually, an "Amended Term Loan" and collectively, the "Amended Term Loans") is as follows: Outstanding Principal Balance of Amended Bank Term Loan NatWest $2,917,895.00 UJB $1,042,105.00 Section 1.2 The Amended Term Loans made by each Bank shall be evidenced by a single promissory note of the Borrower in form and substance satisfactory to the Banks and the Agent (each, an "Amended and Restated Term Note", and collectively, the "Amended and Restated Term Notes"). Each Amended and Restated Term Note shall be dated the date of this Amendment and Supplement, and shall be payable to the order of such Bank in a principal amount equal to such Bank's Term Loan Commitment, as amended hereby, advanced to the Borrower, and shall otherwise be duly completed. The Amended and Restated Term Notes shall be payable as provided in Section 1.3 hereof. The Amended and Restated Term Notes shall be deemed to amend and restate the Term Notes executed and delivered in connection with the Original Term Loans (individually, an "Original Term Note" and collectively, the "Original Term Notes"), and upon the execution and delivery to each Bank of the Amended and Restated Term Note payable to such Bank, such Bank shall mark the Original Term Note payable to such Bank "Paid by Substitution of New Note" and return it to the Borrower. Section 1.3 (a) The Borrower shall pay to the Agent for the account of each Bank the principal of the Amended Term Loan made by such Bank in sixteen (16) consecutive quarterly installments on the Payment Dates, commencing on October 31, 1995 (provided that the last such payment shall be on July 31, 1999, and shall be in an amount sufficient to repay in full the principal amount of such Amended Term Loans), with the aggregate amount of the installments paid on each Payment Date to be equal to $247,500, and such payments shall be distributed between NatWest and UJB in the respective amounts set forth below: Amount of Installment Amount of Installment to be Distributed to be Distributed Payment Dat e to NatWest to UJB The last day of each $182,368.43 $65,131.57 October, January, April and July from October 31, 1995 through April 30, 1999 July 31, 1999 $182,368.55 $65,131.45 b. The Amended Term Loans shall bear interest at the rates applicable to the Term Loans as set forth in the Original Loan Agreement, and such interest shall be payable in accordance with the terms of the Loan Agreement. Section 1.4 Concurrently with the execution and delivery of this Amendment and Supplement, the Borrower shall pay a non-refundable facility fee to NatWest in the amount of $14,500 and to UJB in the amount of $5,300. Section 1.5 The proceeds of the Additional Term Loans shall be used by the Borrower solely for the following purposes: (a) The amount of $1,666,666 shall be loaned by the Borrower to FSG simultaneously with the making of the Additional Term Loans to be used by FSG, simultaneously with its receipt of such amount, for the payment in full by FSG of the outstanding principal balance of the "Term Loans" outstanding under the FSG Loan Agreement; and (b) The reimbursement to the Borrower of its payment to the Banks of $793,334 made on July 31, 1995 in respect of the Loans. Section 1.6 Concurrently with the execution and delivery of this Amendment and Supplement, the Borrower shall execute and deliver to the Agent Mortgage Modification and Extension Agreements in form and substance satisfactory to the Agent and the Banks (the "Mortgage Modification Agreements") pursuant to which the Borrower agrees that the Borrower Mortgages secure, without limitation, the Borrower's obligations in respect of the Amended and Restated Term Notes and the Amended Term Loans (the Mortgage Modification Agreements, the Amended and Restated Term Notes and this Amendment and Supplement, and all other documents executed and delivered in connection herewith or therewith, are sometimes hereinafter referred to collectively as the "Supplemental Loan Documents"). Section 1.7 Concurrently herewith, the Banks and the Agent hereby release their lien on and security interest in: (a) Bonds denominated in Swiss francs issued by NPDC, bearing an 8% interest rate and due March 1, 1995 (the "Swiss Bonds") in the principal amount of SFr2,001,000, heretofore owned by the Borrower and pledged pursuant to the Borrower Debt Assignment Agreement; and (b) Swiss Bonds in the principal amount of SFr 4,581,000, heretofore owned by FSG and pledged pursuant to the Guarantor Debt Assignment Agreement. The Borrower and the Guarantors acknowledge that all of the foregoing Swiss Bonds are to be canceled, and that the Agent shall, concurrently herewith deliver the certificates representing such Swiss Bonds to NPDC. NPDC, by its countersignature hereof, agrees that, promptly upon its receipt of such certificates, it shall deliver such certificates to the Trustee in respect of the Swiss Bonds for cancellation, and shall take all other action required on its part to effect the cancellation of such Swiss Bonds. The Borrower further acknowledges that the foregoing release of Collateral shall not be deemed to be a waiver or consent by the Banks or the Agent for any purpose whatsoever, and that the Borrower's Obligations, as amended and supplemented hereby, remain in full force and effect without regard to such release of Collateral. Section 1.8 The Agent and the Banks acknowledge that the Borrower has heretofore entered into an Interest Rate Contract in accordance with Section 2.21 of the Loan Agreement, that such Interest Rate Contract has expired by its terms, and that the Borrower is not currently a party to an Interest Rate Contract as provided in such Section 2.21. The Agent and the Banks hereby consent to the Borrower's failure to have any such Interest Rate Contract in effect and waive any default under such Section 2.21 arising from such failure; provided, however, that the Borrower acknowledges that the foregoing consent and waiver shall be applicable only to the specific matter referred to in this Section 1.8 and shall not be deemed to be a consent or waiver for any other purpose whatsoever. Section 1.9 The Original Loan Agreement, the Loan Documents, and all agreements, instruments and documents executed and delivered in connection with any of the foregoing, shall each be deemed to be amended hereby to the extent necessary to give effect to the provisions of this Amendment and Supplement. Except as amended hereby, the Loan Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms. Article 2. Amendments to the Loan Agreement Without limiting the generality of Section 1.6, the Original Loan Agreement is hereby amended as follows: Section 2.1 Article 1 of the Original Loan Agreement is amended as follows: (a) The following new definitions are added: "'Adjusted Excess Cash Flow' - for any period, an amount equal to (i) the Borrower's Net Income for such period, (ii) plus, but only to the extent such items shall have been deducted in determining such Net Income, the sum of depreciation and amortization of assets, and other non-cash charges, and (iii) minus, without duplication, the sum of (1) all Capital Expenditures incurred by the Borrower during such period, but only to the extent that the Borrower did not incur Indebtedness in connection with the incurrence of such Capital Expenditures, and (2) all payments made by the Borrower of principal and interest that were due and payable during such period in respect of the Borrower's Long Term Debt (including, without limitation, such payments in respect of Capitalized Lease Obligations)." "'Amendment and Supplement' - the Amendment and Supplement to Loan Agreement dated October 23, 1995 by and among the Borrower, the Banks that have executed the signature pages thereto and the Agent (as such Amendment and Supplement to Loan Agreement may be amended, modified and supplemented from time to time)." "'Long Term Debt' - all Indebtedness which by its terms matures more than twelve (12) months from the date as of which any determination of Long Term Debt is made." (b) The definition of "Debt Service" is deleted and the following is substituted therefor: "Debt Service" - as to any Person as at any date, the sum of (a) all payments of principal and interest on Indebtedness (other than the Term Loan) of such Person for borrowed money and all payments in respect of Capital Leases of such Person that were due and payable during the immediately preceding four full fiscal quarters of such Person, plus (b) (i) during the period from January 1, 1996 through September 29, 1996, the aggregate amount of all payments of principal and interest on the Term Loan that were due and payable during the immediately preceding fiscal quarter of the Borrower, multiplied by four, and (ii) from and after September 30, 1996, all payments of principal and interest on the Term Loan that were due and payable during the immediately preceding four full fiscal quarters of the Borrower. (c) The definition of "Term Loan Commitment" is deleted and the following is substituted therefor: "'Term Loan Commitment' - as to each Bank, the amount set forth opposite such Bank's name on Schedule I to the Amendment and Supplement." (d) The definition of "Net Income" is amended by adding the following new sentence at the conclusion thereof: "Notwithstanding the foregoing, for purposes of computing the aggregate income (or loss) of the Borrower for any period in determining the Borrower's Net Income for such period, the income (or loss, as the case may be) of GPC and ISI for such period shall not be included to the extent that such income (or loss) otherwise would have been included in such computation in accordance with generally accepted accounting principles consistently applied. The Borrower acknowledges and confirms that to the extent the aggregate income (or loss) of the Borrower is used in computing the Borrower's Tangible Net Worth, such aggregate income (or loss) shall be computed in accordance with generally accepted accounting principles consistently applied, without regard to the immediately preceding sentence." (e) The definition of "Operating Cash Flow" is amended by adding in clause (iii) thereof the words "or provided for" immediately after the word "paid". (f) The definition of "Tangible Net Worth" is amended by changing the period at the conclusion thereof to a semicolon, and by adding the following after such semicolon: "and further provided, that the amount receivable by the Borrower from FSG in respect of the Borrower's advance to FSG of $1,666,666 (such advance consisting of the payment by the Borrower on behalf of FSG of the outstanding principal balance of the 'Term Loans' under the FSG Loan Agreement), shall be deemed to be an intangible for the purposes hereof." Section 2.2 Section 6.9 of the Original Loan Agreement is amended by deleting subsection 6.9(a) in its entirety and by substituting therefor the following: "(a) Have or maintain, as to the Borrower: (i) Tangible Net Worth as at the last day of each fiscal quarter of the Borrower which day occurs in the years set forth below at not less than the respective amounts set forth opposite each such year: Minimum Tangible Net Fiscal Quarter-End Worth on Such Fiscal Date Occurring In: Quarter-End Date 1993 $ 4,000,000 1994 5,000,000 1995 5,200,000 1996 6,000,000 1997 6,900,000 1998 7,900,000 1999 9,500,000 (ii) The ratio of Indebtedness to Tangible Net Worth of the Borrower as at the last day of each fiscal quarter of the Borrower at not more than 1.50 to 1.00. (iii) The excess of Current Assets over Current Liabilities of the Borrower as at the last day of each fiscal quarter of the Borrower at not less than $1,000,000. (iv) Debt Service Coverage of the Borrower for the four full fiscal quarters ending on the last day of each fiscal quarter of the Borrower at not less than 150%." Section 2.3 Section 7.5 of the Original Loan Agreement is amended by deleting subsection 7.5(b) in its entirety and by substituting therefor the following: "(b) Declare or pay any dividends or make any distribution of any kind on the Borrower's or FSG's outstanding stock, or set aside any sum for any such purpose, except that the Borrower or FSG may declare or pay any dividend payable solely in shares of its common stock; provided, however, that: (i) the Borrower shall be permitted to pay dividends from time to time to NPDC during any fiscal quarter in an amount not exceeding the aggregate amount of interest, if any, actually paid in cash by NPDC and received by the Borrower during the immediately preceding fiscal quarter in respect of any bonds issued by NPDC owned by the Borrower plus the amount of cash dividends, if any, actually received by the Borrower in respect of stock of GPC and ISI owned by the Borrower; provided further however, that: (1) the amount of such dividends permitted under this subsection 7.5(b)(i) in any fiscal quarter shall be reduced by the aggregate amount of loans made during such fiscal quarter by the Borrower to NPDC based upon the amount of bond interest and dividends received by the Borrower, as permitted under subsection 7.9(d) hereof; and (2) no such dividend shall be permitted if at the time of the proposed payment thereof, a Default shall have occurred and be continuing hereunder; and (ii) the Borrower shall be permitted to pay dividends from time to time to NPDC during each half of its fiscal year in an amount not in excess of 50% of the Borrower's Adjusted Excess Cash Flow for the immediately preceding half of its fiscal year; provided, further however, that: (1) in the event that the Borrower had positive Adjusted Excess Cash Flow for the first half of a fiscal year, and based upon such Adjusted Excess Cash Flow, the Borrower paid dividends pursuant to this subsection 7.5(b)(ii) during the second half of such fiscal year, and in the event that the financial statements delivered in accordance with Section 5.1 hereof reflect that the Adjusted Excess Cash Flow for such full fiscal year was less than $0, then the amount of dividends permitted under this subsection 7.5(b)(ii) to be paid in the immediately succeeding fiscal year shall be reduced by the amount of dividends paid during such second half of the fiscal year to which such financial statements relate; (2) the amount of such dividends permitted under this subsection 7.5(b)(ii) during any fiscal half-year of the Borrower shall be reduced by the aggregate amount of investments made by the Borrower during such fiscal half- year pursuant to subsection 7.9(c) hereof (and if the amount of such investments shall exceed the amount of dividends otherwise permitted to be paid pursuant to this subsection 7.5(b)(ii) during such fiscal half-year, then the amount of dividends permitted in the immediately ensuing fiscal half- years shall be accordingly reduced by the amount of such remaining excess); (3) the amount of such dividends permitted under this subsection 7.5(b)(ii) in any fiscal half-year shall be reduced by the aggregate amount of loans made during such fiscal half-year by the Borrower to NPDC as permitted under subsection 7.9(i) hereof; and (4) no such dividend shall be permitted if at the time of the proposed payment thereof, a Default shall have occurred and be continuing hereunder." Section 2.4 Section 7.9 of the Original Loan Agreement is amended as follows: (a) Subsection 7.9(c)(iv) is amended by changing the period at the conclusion thereof to a comma, and by adding the following after such comma: "reduced, in either event, by the aggregate amount of dividends paid by the Borrower during such fiscal year pursuant to subsection 7.5(b)(ii) hereof." (b) Section 7.9 is further amended by adding the following new subsections to read in their entirety as follows: "(g) (i) The advance by the Borrower to FSG in the amount of $1,666,666, such advance consisting of the payment by the Borrower on behalf of FSG of the outstanding principal balance of the 'Term Loans' under the FSG Loan Agreement, (ii) the advance heretofore made by the Borrower to FSG in the amount of $416,666, such advance constituting the payment by the Borrower on behalf of FSG of the July 31, 1995 principal installments of the 'Term Loans' under the FSG Loan Agreement and (iii) the advance heretofore made by the Borrower to FSG on December 21, 1994 in the amount of $300,000 for the working capital purposes of FSG. (h) Loans and advances from time to time by the Borrower to FSG (in addition to the advances permitted under subsection 7.9(g) hereof), provided that the outstanding principal amount of all such loans and advances shall at no time exceed $750,000. (i) Loans and advances from time to time by the Borrower to NPDC during each half of the Borrower's fiscal year in an amount not in excess of 50% of the Borrower's Adjusted Excess Cash Flow for the immediately preceding half of its fiscal year; provided, however, that: (1) in the event that the Borrower had positive Adjusted Excess Cash Flow for the first half of a fiscal year, and based upon such Adjusted Excess Cash Flow, the Borrower made loans and advances pursuant to this subsection 7.9(i) during the second half of such fiscal year, and in the event that the financial statements delivered in accordance with Section 5.1 hereof reflect that the Adjusted Excess Cash Flow for such full fiscal year was less than $0, then the amount of loans and advances permitted under this subsection 7.9(i) to be paid in the immediately succeeding fiscal year shall be reduced by the amount of loans and advances made during such second half of the fiscal year to which such financial statements relate; (2) the amount of such loans and advances permitted under this subsection 7.9(i) during any fiscal half-year of the Borrower shall be reduced by the aggregate amount of investments made by the Borrower during such fiscal half-year pursuant to subsection 7.9(c) hereof (and if the amount of such investments shall exceed the amount of loans and advances otherwise permitted pursuant to this subsection 7.9(i) during such fiscal half-year, then the amount of loans and advances permitted in the immediately ensuing fiscal half-years shall be accordingly reduced by the amount of such remaining excess; (3) the amount of such loans and advances permitted under this subsection 7.9(i) in any fiscal half- year shall be reduced by the aggregate amount of dividends paid during such fiscal half-year by the Borrower to NPDC as permitted under subsection 7.5(b)(ii) hereof; and (4) no such loan or advance shall be permitted if at the time of the proposed making thereof, a Default shall have occurred and be continuing hereunder. (j) Concurrently with the execution and delivery of the Amendment and Supplement, the Borrower shall be permitted to lend to NPDC the principal amount of $500,000." Section 2.5 Section 7.13 of the Original Loan Agreement is deleted in its entirety, and the following new Section 7.13 is substituted therefor: "Section 7.13 Capital Expenditures Make or become obligated to make Capital Expenditures in the aggregate for the Borrower during the period from April 1, 1993 through December 31, 1993 in excess of $250,000, and during each fiscal year of the Borrower thereafter, in excess of the respective amounts set forth below (provided, however, that the Capital Expenditures set forth on Exhibit M-2 annexed hereto shall not be included for purposes of determining compliance with this Section 7.13): Fiscal Year Ending Maximum Capital December 31 Expenditures 1994 $250,000 1995 500,000 1996 400,000 1997 250,000 1998 and each 250,000" year thereafter Section 2.6 Section 7.14 of the Loan Agreement is amended by deleting the period at the conclusion thereof, and by adding the following at the conclusion thereof: "other than the fiscal year ending December 31, 1995, and would exceed $700,000 during the fiscal year ending December 31, 1995." Section 2.7 Exhibit M to the Original Loan Agreement is amended by deleting in its entirety the list of debt and other arrangements guaranteed by NPDC attached thereto, and by substituting for such list the list annexed hereto as Schedule II. Section 2.8 Exhibit M-2 to the Original Loan Agreement is amended by adding, at the conclusion thereof, the following: "Any refinancing or substitute financing of the General Electric Credit Corp. obligation referred to above (whether or not the substitute lessor or financer is General Electric Credit Corp.), provided that the maximum principal amount of MXL's obligation thereunder shall not exceed $1,054,000." Article 3. Acknowledgments and Confirmations Section 3.1 a. The Borrower acknowledges and confirms that any term used in the Security Documents to which the Borrower is a party to refer to the Borrower's Indebtedness, liabilities and obligations to the Banks and the Agent, includes, without limitation, the Indebtedness, liabilities and obligations of the Borrower to the Banks, whether now existing or hereafter arising under the Amended and Restated Term Notes and the Original Loan Agreement as amended hereby, and that all of the collateral security provided for in such Security Documents secures the Borrower's full payment and performance of such Indebtedness, liabilities and obligations of the Borrower. (b) The Indebtedness, liabilities and obligations of the Borrower to the Banks and the Agent, whether now existing or hereafter arising, under the Amended and Restated Term Notes and the Original Loan Agreement as amended and supplemented hereby, are hereinafter referred to collectively as the "Supplemental Obligations". Section 3.2 Each of FSG and NPDC, as Guarantors, consents in all respects to the execution and delivery by the Borrower of this Amendment and Supplement and the Amended and Restated Term Notes and the transactions contemplated herein, including, without limitation, the release of Collateral provided for herein, and acknowledges and confirms that: (a) its Guaranty continues to be valid and in full force and effect, and guarantees, without limitation, the full payment and performance of the Supplemental Obligations as well as the Obligations; and (b) any term used in the Security Documents to which such Guarantor is a party to refer to the Borrower's Indebtedness, liabilities and obligations to the Banks and the Agent, includes, without limitation, the Supplemental Obligations, and that all of the collateral security provided for in such Security Documents secures, without limitation, the full payment and performance by each Guarantor of the Indebtedness, liabilities and obligations of such Guarantor under its Guaranty, as acknowledged and confirmed hereby. Section 3.3 Each of the Borrower, the Banks and the Agent hereby acknowledges and confirms that all references in the Loan Agreement, the other Loan Documents and any other agreement, instrument or document executed and delivered in connection herewith or therewith: (a) to the "Term Loans" shall be deemed to include the Amended Term Loans; (b) to the "Term Notes" shall be deemed to refer to the Amended and Restated Term Notes; (c) to the "Loan Agreement" or "this Agreement" (insofar as such term refers to the Loan Agreement) shall be deemed to refer to the Original Loan Agreement as amended and supplemented hereby; (d) to the "Loan Documents" shall be deemed to include, without limitation, the Supplemental Loan Documents, and all other documents executed and delivered in connection herewith or therewith; and (e) to the "Obligations" (or any other term used to describe or refer to the Borrower's Indebtedness, liabilities and Obligations to the Banks and the Agent) shall be deemed to include, without limitation, the Supplemental Obligations. Article 4. Representations and Warranties The Borrower hereby represents and warrants to the Agent and the Banks that: Section 4.1 After giving effect to the amendment and supplement of the Original Loan Agreement pursuant hereto and the consummation of the transactions contemplated hereby, b. each of the representations and warranties set forth in Article 3 of the Loan Agreement is true and correct in all respects as if made on the date hereof, and c. there exists no Default or Event of Default under the Loan Agreement. Section 4.2 The Borrower and each Guarantor has the power to execute, deliver and perform the Supplemental Loan Documents to be executed by it. The Borrower and each other Loan Party has taken all necessary action, corporate or otherwise, to authorize the execution, delivery and performance of the Supplemental Loan Documents to be executed by it. No consent or approval of any Person (including, without limitation, any stockholder of the Borrower or any Guarantor), no consent or approval of any landlord or mortgagee, no waiver of any Lien or right of distraint or other similar right and no consent, license, certificate of need, approval, authorization or declaration of any governmental authority, bureau or agency, is or will be required in connection with the execution, delivery or performance by the Borrower or any other Loan Party, or the validity, enforcement or priority, of the Supplemental Loan Documents. Section 4.3 The execution and delivery by the Borrower and each other Loan Party of each Supplemental Loan Document to which it is a party and performance by it hereunder and thereunder, will not conflict with or result in a breach of any order, writ, injunction, ordinance, resolution, decree, or other similar document or instrument of any court or governmental authority, bureau or agency, domestic or foreign, or any certificate of incorporation or by-laws of the Borrower or any other Loan Party, or create (with or without the giving of notice or lapse of time, or both) a default under or breach of any agreement, bond, note or indenture to which the Borrower or any other Loan Party, is a party, or by which it is bound or any of its properties or assets is affected, or result in the imposition of any Lien of any nature whatsoever upon any of the properties or assets owned by or used in connection with the business of the Borrower or any other Loan Party, except for the Liens created and granted pursuant to the Security Documents and acknowledged and confirmed hereby. Section 4.4 This Agreement and each other Supplemental Loan Document has been duly executed and delivered by the Loan Party that is a party thereto, and each constitutes the valid and legally binding obligations of the Loan Party that is a party thereto, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors' rights generally and except that the remedy of specific performance and other equitable remedies are subject to judicial discretion. Section 4.5 The Liens that have been created and granted pursuant to the Security Documents and confirmed hereby constitute valid perfected first Liens on the properties and assets covered by the Security Documents, subject to no prior or equal Lien except as permitted by Section 7.2 of the Loan Agreement and except for Liens on such properties and assets in favor of the FSG Agent. Article 5. Conditions to Amendment The effectiveness of this Amendment and Supplement shall be subject to the fulfillment (to the satisfaction of the Agent and the Banks) of the following conditions precedent: Section 5.1 The Borrower, the Banks and the Agent shall have executed and delivered this Amendment and Supplement. Section 5.2 The Borrower shall have executed and delivered to each Bank its Amended and Restated Term Note. Section 5.3 The Borrower shall have executed and delivered to the Agent the Mortgage Modification Agreements in recordable form. Section 5.4 The Agent shall have received copies of (1) a certificate of an officer of the Borrower and the Guarantors to the effect that the Borrower's and Guarantors' respective certificates of incorporation and by- laws have not been amended, modified or changed in any respect since the date of delivery to the Agent of the certificates of incorporation and by-laws of the Borrower and the Guarantors in connection with the execution and delivery of the Original Loan Agreement; (2) all corporate action taken by the Borrower and the Guarantors to authorize the execution, delivery and performance of each of this Amendment and Supplement, the Loan Agreement as amended hereby, the Amended and Restated Term Notes, the other agreements, instruments and documents executed in connection herewith and therewith and the consummation of the transactions contemplated hereby and thereby, certified by its secretary; and (3) an incumbency certificate (with specimen signatures) with respect to the Borrower and the Guarantors. Section 5.5 Counsel to the Borrower shall have delivered to the Agent an opinion in form and substance satisfactory to the Agent and its counsel. Section 5.6 d. The Borrower shall have complied and shall then be in compliance with all of the terms, covenants and conditions of this Amendment and Supplement and the Loan Agreement as amended hereby; (b) After giving effect to the transactions contemplated hereby, there shall exist no Default or Event of Default under the Loan Agreement; and (c) The representations and warranties contained in Article 3 of the Loan Agreement shall be true and correct on the date hereof and after giving effect to this Amendment and Supplement, the Loan Agreement as amended hereby and the transactions contemplated hereunder and thereunder; and the Agent shall have received a Compliance Certificate dated the date hereof to the foregoing effect. Section 5.7 All legal matters incident hereto shall be satisfactory to counsel to the Agent. Article 6. The Agent (a) The Banks and the Agent agree and confirm that Article 9 of the Loan Agreement applies in all respects to this Amendment and Supplement, the Loan Agreement as amended hereby and the transactions contemplated herein. Without limiting the generality of the foregoing, each Bank agrees that Section 9.6 of the Loan Agreement applies to this Amendment and Supplement and the transactions contemplated hereby, and that each Bank has, independently and without reliance on the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter this Amendment and Supplement. (b) Each Bank acknowledges that Natwest Bank N.A. is the successor in interest to National Westminster Bank N.J. in its capacity as Agent, and that Natwest Bank N.A., in such capacity, is vested with all the rights, powers, privileges and duties with which National Westminster Bank N.J. had been vested in its capacity as Agent, and each Bank consents to the foregoing in all respects. Article 7. Miscellaneous Section 7.1 THIS AMENDMENT AND SUPPLEMENT, THE AMENDED AND RESTATED TERM NOTES, THE LOAN AGREEMENT AS AMENDED HEREBY AND ALL OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 7.2 The provisions of this Amendment and Supplement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Amendment and Supplement in any jurisdiction. Section 7.3 This Amendment and Supplement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 7.4 This Amendment and Supplement shall be binding upon and inure to the benefit of the Borrower and the Guarantors and their respective successors and to the benefit of each of the Agent and the Banks and its respective successors and assigns. The rights and obligations of the Borrower and the Guarantors under this Amendment and Supplement shall not be assigned or delegated without the prior written consent of the Banks, and any purported assignment or delegation without such consent shall be void. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. MXL INDUSTRIES, INC. By: NATWEST BANK N.A. By: UNITED JERSEY BANK/CENTRAL, N.A. By: NATWEST BANK N.A., as Agent By: Consented to and Agreed in All Respects: NATIONAL PATENT DEVELOPMENT CORPORATION By: FIVE STAR GROUP, INC. By: Schedule I to Amendment and Supplement to Loan Agreement Amended Term Loan Commitments NatWest $2,917,895.00 UJB $1,042,105.00 Schedule II to Amendment and Supplement to Loan Agreement Debt and Other Arrangements Guaranteed by NPDC [to be supplied by L. Gordon]6 EX-27 4
5 0000070415 NATIONAL PATENT DEVELOPMENT CORPORATION 1,000 9-MOS DEC-31-1995 JAN-1-1995 SEP-30-1995 6,838 0 39,596 3,779 18,734 79,829 32,658 23,635 149,081 49,186 23,598 67 0 0 2 149,081 142,519 143,443 119,310 23,968 0 2,075 3,636 4,190 1,073 3,117 (2,154) (79) 0 884 .13 0
EX-10 5 AMENDMENT TO LOAN AGREEMENT AGREEMENT, made this 23rd day of October, 1995, by and among: FIVE STAR GROUP, INC., a Delaware corporation (the "Borrower"); The Banks that have executed the signature pages hereto (individually a "Bank" and collectively, the "Banks"); and NATWEST BANK N.A., a national banking association (the successor in interest to National Westminster Bank NJ), as Agent for the Banks (in such capacity, together with its successors in such capacity, the "Agent"); W I T N E S S E T H: WHEREAS: A. The Borrower, the Banks and National Westminster Bank N.J., as Agent (the predecessor in interest to the Agent) have heretofore entered into a Loan Agreement dated April 29, 1993 (as such Loan Agreement has heretofore been amended, the "Original Loan Agreement", and as the Original Loan Agreement is amended hereby and as it may from time to time hereafter be amended and supplemented, the "Loan Agreement"); B. The parties hereto wish to amend the Original Loan Agreement as hereinafter set forth; and C. Capitalized terms used herein which are defined in the Original Loan Agreement and not otherwise defined herein shall have the respective meanings ascribed thereto in the Original Loan Agreement; NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: Article 1. Amendments to the Loan Agreement The Original Loan Agreement is hereby amended as follows: Section 1.1 Article 1 of the Original Loan Agreement is amended as follows: (a) The following new definitions are added: "'Adjusted Excess Cash Flow' - for any period, an amount equal to (i) the Borrower's Net Income for such period, (ii) plus, but only to the extent such items shall have been deducted in determining such Net Income, the sum of depreciation and amortization of assets, and other non-cash charges, and (iii) minus, without duplication, the sum of (1) all Capital Expenditures incurred by the Borrower during such period, but only to the extent that the Borrower did not incur Indebtedness in connection with the incurrence of such Capital Expenditures, and (2) all payments made by the Borrower of principal and interest that were due and payable during such period in respect of the Borrower's Long Term Debt (including, without limitation, such payments in respect of Capitalized Lease Obligations)." "'Long Term Debt' - all Indebtedness which by its terms matures more than twelve (12) months from the date as of which any determination of Long Term Debt is made." (b) The definition of "Borrowing Base" is amended by deleting, in clause (a) thereof, the percentage "75%" and by substituting therefor the percentage "80%". (c) The definition of "Debt Service" is amended (i) by adding thereto the parenthetical phrase "(other than the Term Loan, as to the Borrower)", immediately after the phrase "Indebtedness of such Person for borrowed money", and (ii) by deleting therefrom the phrase "on all Leases" and by substituting therefor the phrase "in respect of Capital Leases". (d) The definition of "Net Income" is amended by adding the following new sentence at the conclusion thereof: "Notwithstanding the foregoing, for purposes of computing the aggregate income (or loss) of the Borrower for any period in determining the Borrower's Net Income for such period, the income (or loss, as the case may be) of GPC and ISI for such period shall not be included to the extent that such income (or loss) otherwise would have been included in such computation in accordance with generally accepted accounting principles consistently applied. The Borrower acknowledges and confirms that to the extent the aggregate income (or loss) of the Borrower is used in computing the Borrower's Tangible Net Worth, such aggregate income (or loss) shall be computed in accordance with generally accepted accounting principles consistently applied, without regard to the immediately preceding sentence." (e) The definition of "Operating Cash Flow" is amended by adding in clause (iii) thereof the words "or provided for" immediately after the word "paid". Section 1.2 Section 7.1 of the Original Loan Agreement is amended by deleting the word "and" at the conclusion of subsection 7.1(d), by redesignating the existing subsection 7.1(e) as subsection 7.1(g) and by adding new subsections 7.1(e) and (f), to read as follows: "(e) (i) Indebtedness of the Borrower to MXL in the principal amount of $1,666,666 in respect of MXL's payment on behalf of the Borrower of the outstanding principal balance of the Term Loans, (ii) Indebtedness of the Borrower to MXL in the amount of $416,666 in respect of MXL's payment on behalf of the Borrower of the July 31, 1995 principal installments of the Term Loans, and (iii) Indebtedness of the Borrower to MXL in respect of MXL's advance to the Borrower on December 21, 1994 in the amount of $300,000 for the working capital purposes of the Borrower; (f) Indebtedness of the Borrower to MXL (in addition to the Indebtedness permitted under subsection 7.1(e)) in respect of loans and advances from time to time by MXL to the Borrower provided that the outstanding principal amount of all such loans and advances shall at no time exceed $750,000; and" Section 1.3 Section 7.5 of the Original Loan Agreement is amended by deleting subsection 7.5(b) in its entirety and by substituting therefor the following: "(b) Declare or pay any dividends or make any distribution of any kind on the Borrower's or MXL's outstanding stock, or set aside any sum for any such purpose, except that the Borrower or MXL may declare or pay any dividend payable solely in shares of its common stock; provided, however, that: (1) the Borrower shall be permitted to pay dividends from time to time to NPDC during any fiscal quarter in an amount not exceeding the aggregate amount of interest, if any, actually paid in cash by NPDC and received by the Borrower during the immediately preceding fiscal quarter in respect of any bonds issued by NPDC owned by the Borrower plus the amount of cash dividends, if any, actually received by the Borrower in respect of stock of GPC and ISI owned by the Borrower; provided further however, that: (1) the amount of such dividends permitted under this subsection 7.5(b)(i) in any fiscal quarter shall be reduced by the aggregate amount of loans made during such fiscal quarter by the Borrower to NPDC based upon the amount of bond interest and dividends received by the Borrower, as permitted under subsection 7.9(d) hereof; and (2) no such dividend shall be permitted if at the time of the proposed payment thereof, a Default shall have occurred and be continuing hereunder; and (ii) the Borrower shall be permitted to pay dividends from time to time to NPDC during each half of its fiscal year in an amount not in excess of 50% of the Borrower's Adjusted Excess Cash Flow for the immediately preceding half of its fiscal year; provided, further however, that: (1) in the event that the Borrower had positive Adjusted Excess Cash Flow for the first half of a fiscal year, and based upon such Adjusted Excess Cash Flow, the Borrower paid dividends pursuant to this subsection 7.5(b)(ii) during the second half of such fiscal year, and in the event that the financial statements delivered in accordance with Section 5.1 hereof reflect that the Adjusted Excess Cash Flow for such full fiscal year was less than $0, then the amount of dividends permitted under this subsection 7.5(b)(ii) to be paid in the immediately succeeding fiscal year shall be reduced by the amount of dividends paid during such second half of the fiscal year to which such financial statements relate; (2) the amount of such dividends permitted under this subsection 7.5(b)(ii) during any fiscal half-year of the Borrower shall be reduced by the aggregate amount of investments made by the Borrower during such fiscal half-year pursuant to subsection 7.9(c) hereof (and if the amount of such investments shall exceed the amount of dividends otherwise permitted to be paid pursuant to this subsection 7.5(b)(ii) during such fiscal half-year, then the amount of dividends permitted in the immediately ensuing fiscal half- years shall be accordingly reduced by the amount of such remaining excess); (3) the amount of such dividends permitted under this subsection 7.5(b)(ii) in any fiscal half-year shall be reduced by the aggregate amount of loans made during such fiscal half-year by the Borrower to NPDC as permitted under subsection 7.9(g) hereof; and (4) no such dividend shall be permitted if at the time of the proposed payment thereof, a Default shall have occurred and be continuing hereunder." Section 1.4 Section 7.9 of the Original Loan Agreement is amended as follows: (a) Subsection 7.9(c)(iv) is amended by changing the period at the conclusion thereof to a comma, and by adding the following after such comma: "reduced, in either event, by the aggregate amount of dividends paid by the Borrower during such fiscal year pursuant to subsection 7.5(b)(ii) hereof." (b) Section 7.9 is further amended by adding the following new subsections to read in their entirety as follows: "(g) Loans and advances from time to time by the Borrower to NPDC during each half of the Borrower's fiscal year in an amount not in excess of 50% of the Borrower's Adjusted Excess Cash Flow for the immediately preceding half of its fiscal year; provided, however, that: (1) in the event that the Borrower had positive Adjusted Excess Cash Flow for the first half of a fiscal year, and based upon such Adjusted Excess Cash Flow, the Borrower made loans and advances pursuant to this subsection 7.9(g) during the second half of such fiscal year, and in the event that the financial statements delivered in accordance with Section 5.1 hereof reflect that the Adjusted Excess Cash Flow for such full fiscal year was less than $0, then the amount of loans and advances permitted under this subsection 7.9(g) to be paid in the immediately succeeding fiscal year shall be reduced by the amount of loans and advances made during such second half of the fiscal year to which such financial statements relate; (2) the amount of such loans and advances permitted under this subsection 7.9(g) during any fiscal half-year of the Borrower shall be reduced by the aggregate amount of investments made by the Borrower during such fiscal half-year pursuant to subsection 7.9(c) hereof (and if the amount of such investments shall exceed the amount of loans and advances otherwise permitted pursuant to this subsection 7.9(g) during such fiscal half- year, then the amount of loans and advances permitted in the immediately ensuing fiscal half- years shall be accordingly reduced by the amount of such remaining excess; (3) the amount of such loans and advances permitted under this subsection 7.9(g) in any fiscal half-year shall be reduced by the aggregate amount of dividends paid during such fiscal half-year by the Borrower to NPDC as permitted under subsection 7.5(b)(ii) hereof; and (4) no such loan or advance shall be permitted if at the time of the proposed making thereof, a Default shall have occurred and be continuing hereunder." Section 1.5 Section 7.13 of the Original Loan Agreement is deleted in its entirety, and the following new Section 7.13 is substituted therefor: "Section 7.13 Capital Expenditures Make or become obligated to make Capital Expenditures in the aggregate for the Borrower during each fiscal year of the Borrower in excess of the respective amounts set forth below (provided, however, that the Capital Expenditures set forth on Exhibit M-2 annexed hereto shall not be included for purposes of determining compliance with this Section 7.13): Fiscal Year Ending Maximum Capital December 31 Expenditures 1993 $750,000 1994 250,000 1995 500,000 1996 and each 250,000 year thereafter Section 1.6 Section 7.14 of the Loan Agreement is amended by deleting the amount "$2,400,000" and by substituting therefor the amount "$2,500,000". Section 1.7 Exhibit M to the Original Loan Agreement is amended by deleting in its entirety the list of debt and other arrangements guaranteed by NPDC attached thereto, and by substituting for such list the list annexed hereto as Schedule I. Section 1.8 Exhibit M-2 to the Original Loan Agreement is amended by adding, at the conclusion thereof, the following: "Any refinancing or substitute financing of the General Electric Credit Corp. obligation referred to above (whether or not the substitute lessor or financer is General Electric Credit Corp.), provided that the maximum principal amount of MXL's obligation thereunder shall not exceed $1,054,000." Section 1.9 The Original Loan Agreement, the Loan Documents, and all agreements, instruments and documents executed and delivered in connection with any of the foregoing, shall each be deemed to be amended hereby to the extent necessary to give effect to the provisions of this Amendment and Supplement. Except as amended hereby, the Loan Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms. Article 2. Release of Certain Collateral; Waiver as to Interest Rate Contract Section 2.1 Concurrently herewith, the Banks and the Agent hereby release their lien on and security interest in: (a) Bonds denominated in Swiss francs issued by NPDC, bearing an 8% interest rate and due March 1, 1995 (the "Swiss Bonds") in the principal amount of SFr4,581,000, heretofore owned by the Borrower and pledged pursuant to the Borrower Debt Assignment Agreement; and (b) Swiss Bonds in the principal amount of SFr2,001,000, heretofore owned by MXL and pledged pursuant to the Guarantor Debt Assignment Agreement. The Borrower and the Guarantors acknowledge that all of the foregoing Swiss Bonds are to be canceled, and that the Agent shall, concurrently herewith deliver the certificates representing such Swiss Bonds to NPDC. NPDC, by its countersignature hereof, agrees that, promptly upon its receipt of such certificates, it shall deliver such certificates to the Trustee in respect of the Swiss Bonds for cancellation, and shall take all other action required on its part to effect the cancellation of such Swiss Bonds. The Borrower further acknowledges that the foregoing release of Collateral shall not be deemed to be a waiver or consent by the Banks or the Agent for any purpose whatsoever, and that the Borrower's Obligations, as amended and supplemented hereby, remain in full force and effect without regard to such release of Collateral. Section 2.2 The Agent and the Banks acknowledge that the Borrower has heretofore entered into an Interest Rate Contract in accordance with Section 2.21 of the Loan Agreement, that such Interest Rate Contract has expired by its terms, and that the Borrower is not currently a party to an Interest Rate Contract as provided in such Section 2.21. The Agent and the Banks hereby consent to the Borrower's failure to have any such Interest Rate Contract in effect and waive any default under such Section 2.21 arising from such failure; provided, however, that the Borrower acknowledges that the foregoing consent and waiver shall be applicable only to the specific matter referred to in this Section 2.2 and shall not be deemed to be a consent or waiver for any other purpose whatsoever. Article 3. Acknowledgments and Confirmations Section 3.1 Each of MXL and NPDC, as Guarantors, consents in all respects to the execution and delivery by the Borrower of this Amendment, and to the release of Collateral provided for herein, and acknowledges and confirms that its Guaranty continues to be valid and in full force and effect. Section 3.2 Each of the Borrower, the Banks and the Agent hereby acknowledges and confirms that all references in the Loan Agreement, the other Loan Documents and any other agreement, instrument or document executed and delivered in connection herewith or therewith to the "Loan Agreement" or "this Agreement" (insofar as such term refers to the Loan Agreement) shall be deemed to refer to the Original Loan Agreement as amended hereby. Section 3.3 The Borrower, the Banks, the Agent and the Guarantors acknowledge (i) that, concurrently herewith, the parties to the MXL Loan Agreement are amending and supplementing the MXL Loan Agreement pursuant to an Amendment and Supplement to Loan Agreement of even date herewith, and (ii) all references in the Loan Agreement and any of the other Loan Documents to the "MXL Loan Agreement" shall be deemed to refer to the MXL Loan Agreement as so amended and supplemented. Article 4. Representations and Warranties b. there exists no Default or Event of Default under the Loan Agreement. Article 5. The Agent (a) The Banks and the Agent agree and confirm that Article 9 of the Loan Agreement applies in all respects to this Amendment, the Loan Agreement as amended hereby and the transactions contemplated herein. Without limiting the generality of the foregoing, each Bank agrees that Section 9.6 of the Loan Agreement applies to this Amendment and the transactions contemplated hereby, and that each Bank has, independently and without reliance on the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter this Amendment. (b) Each Bank acknowledges that Natwest Bank N.A. is the successor in interest to National Westminster Bank N.J. in its capacity as Agent, and that Natwest Bank N.A., in such capacity, is vested with all the rights, powers, privileges and duties with which National Westminster Bank N.J. had been vested in its capacity as Agent, and each Bank consents to the foregoing in all respects. Article 6. Miscellaneous Section 6.1 THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY AND ALL OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 6.2 The provisions of this Amendment are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Amendment and Supplement in any jurisdiction. Section 6.3 This Amendment may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 6.4 This Amendment shall be binding upon and inure to the benefit of the Borrower and the Guarantors and their respective successors and to the benefit of each of the Agent and the Banks and its respective successors and assigns. The rights and obligations of the Borrower and the Guarantors under this Amendment shall not be assigned or delegated without the prior written consent of the Banks, and any purported assignment or delegation without such consent shall be void. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. FIVE STAR GROUP, INC. By NATWEST BANK N.A. By: UNITED JERSEY BANK/CENTRAL, N.A. By: NATWEST BANK N.A., as Agent By: Consented to and Agreed in All Respects: NATIONAL PATENT DEVELOPMENT CORPORATION By: MXL INDUSTRIES, INC. By: Schedule I to Loan Agreement Debt and Other Arrangements Guaranteed by NPDC [to be supplied by L. Gordon] -----END PRIVACY-ENHANCED MESSAGE-----