SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EMISPHERE TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
EMISPHERE TECHNOLOGIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
EMISPHERE TECHNOLOGIES, INC.
15 Skyline Drive
Hawthorne, New York 10532
January 5, 1996
Dear Stockholder:
The Company's Annual Meeting of Stockholders has been rescheduled so
that we can include an additional proposal for your consideration.
The meeting, previously scheduled for January 23, 1996, will now be held
on Tuesday, February 6, 1996 at 10:00 a.m. local time at the Westchester
Marriott Hotel, 670 White Plains Road, Tarrytown.
At this meeting, you will be asked to consider and vote upon the
election of directors of the Company, to approve and adopt the Company's 1995
Non-Qualified Stock Option Plan and to ratify the Board of Directors'
selection of Coopers & Lybrand L.L.P. to serve as the Company's independent
accountants for the fiscal year ending July 31, 1996.
The Board of Directors appreciates and encourages stockholder
participation in the Company's affairs and cordially invites you to attend
the meeting in person. It is in any event important that your shares be
represented and we ask that you sign, date and mail the enclosed proxy in the
envelope provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
MICHAEL M. GOLDBERG, M.D.
Chairman of the Board of Directors
EMISPHERE TECHNOLOGIES, INC.
15 Skyline Drive
Hawthorne, New York 10532
________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
________________________________
Hawthorne, New York
January 5, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
EMISPHERE TECHNOLOGIES, INC. (the "Company"), a Delaware corporation,
previously scheduled for January 23, 1996 has been rescheduled and will now
be held at the Westchester Marriott Hotel, 670 White Plains Road, Tarrytown,
New York on Tuesday, February 6, 1996 at 10:00 a.m. local time, for the
purposes of considering and voting upon the following matters, as more fully
described in the attached Proxy Statement:
1. To elect six directors to serve until the next annual meeting
of stockholders and until their respective successors are elected and
qualified;
2. To approve and adopt the 1995 Non-Qualified Stock Option Plan
providing for the issuance of up to 1,800,000 shares of the Company's
Common Stock thereunder
3. To ratify the Board of Directors' selection of Coopers &
Lybrand L.L.P. to serve as the Company's independent accountants for the
fiscal year ending July 31, 1996; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only those stockholders of record at the close of business on December
12, 1995 will be entitled to receive notice of, and vote at, said meeting. A
list of stockholders entitled to vote at the meeting is open to examination
by any stockholder at the principal offices of the Company, 15 Skyline Drive,
Hawthorne, New York 10532.
All stockholders are cordially invited to attend the meeting in person.
In any event, please mark your votes, then date, sign and return the
accompanying form of proxy in the envelope enclosed for that purpose (to
which no postage need be affixed if mailed in the United States) whether or
not you expect to attend the meeting in person. Please note that the
accompanying form of proxy must be returned to record your vote and that the
white proxy card previously sent to you will be disregarded. The proxy is
revocable by you at any time prior to its exercise. The prompt return of the
proxy will be of assistance in preparing for the meeting and your cooperation
in this respect will be appreciated.
By order of the Board of Directors
SAM J. MILSTEIN, PH.D.
Secretary
EMISPHERE TECHNOLOGIES, INC.
15 Skyline Drive
Hawthorne, New York 10532
________________________________
PROXY STATEMENT
________________________________
This Proxy Statement is furnished to holders of Common Stock, $.01 par
value per share (the "Common Stock"), of Emisphere Technologies, Inc. (the
"Company") in connection with the solicitation of proxies, in the
accompanying form, by the Board of Directors of the Company, for use at the
Annual Meeting of Stockholders to be held at the Westchester Marriott Hotel,
670 White Plains Road, Tarrytown, on Tuesday, February 6, 1996, at 10:00 a.m.
local time, and at any and all adjournments thereof. Stockholders may revoke
the authority granted by their execution of proxies at any time prior to
their use by filing with the Secretary of the Company a written revocation or
duly executed proxy bearing a later date or by attending the meeting and
voting in person. Solicitation of proxies will be made chiefly through the
mails, but additional solicitation may be made by telephone or telegram by
the officers or regular employees of the Company. The Company may also
enlist the aid of brokerage houses or the Company's transfer agent in
soliciting proxies. All solicitation expenses, including costs of preparing,
assembling and mailing proxy material, will be borne by the Company. This
proxy statement and accompanying form of proxy are being mailed to
stockholders on or about January 5, 1996.
Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. It is the intention of the persons named in the proxy,
unless otherwise specifically instructed in the proxy, to vote all proxies
received by them FOR the election of the six nominees named herein, FOR the
approval and adoption of the 1995 Non-Qualified Stock Option Plan and FOR
ratification of the Board of Directors' selection of Coopers & Lybrand L.L.P.
to serve as the Company's independent accountants for the fiscal year ending
July 31, 1996.
If a quorum is present at the meeting, those nominees receiving a
plurality of the votes cast will be elected as directors. A majority of the
votes cast (excluding abstentions and broker non-votes) will be required for
the approval and adoption of the 1995 Non-Qualified Stock Option Plan and the
ratification of the Board's selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants.
VOTING
Only stockholders of record at the close of business on December 12,
1995 will be entitled to vote at the meeting or any and all adjournments
thereof. As of December 12, 1995 the Company had outstanding 8,323,159
shares of Common Stock, the Company's only class of voting securities
outstanding. Each stockholder of the Company will be entitled to one vote
for each share of Common Stock registered in his or her name on the record
date. A majority of all the outstanding shares of Common Stock constitutes a
quorum and is required to be present in person or by proxy to conduct
business at the meeting.
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<TABLE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of November 28,
1995, except as noted, regarding the beneficial ownership of the Common Stock
by (i) each person or group known to the Company to be the beneficial owner
of more than 5% of the outstanding Common Stock, (ii) each director and
nominee for director of the Company, (iii) each executive officer of the
Company named below and (iv) all directors and executive officers of the
Company as a group. Except as otherwise specified, the named beneficial
owner has sole voting and investment power over the shares listed.
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner<F1> Beneficial Ownership<F2> of Class
<S> <C> <C>
State of Wisconsin Investment Board 700,000 8.4%
121 East Wilson Street
Madison, Wisconsin 53703
Elan International Services Ltd 600,000 7.2%
102 St. James Court
Flatts Smiths FL04
Bermuda
Invesco Funds Group, Inc. 520,000 6.2%
7800 East Union Avenue
Denver, Colorado 80237
Michael M. Goldberg, M.D. 783,996<F3> 8.6%
Sam J. Milstein, Ph.D. 443,248 5.1%
Howard M. Pack 143,383<F4> 1.6%
Jere E. Goyan, Ph.D. 50,000 <F5>
Peter Barton Hutt, Esq. 50,000 <F5>
Mark I. Greene, M.D., Ph.D. 17,000 <F5>
Robert A. Baughman, Jr., Pharm.D.,Ph.D. 89,925 1.1%
All directors and executive officers 1,571,438<F3><F4> 16.1%
as a group
<FN>
<F1> Unless otherwise specified, the address of each beneficial owner is c/o
the Company, 15 Skyline Drive, Hawthorne, New York 10532.
<F2> The number of shares set forth for each director and executive officer
of the Company includes the following number of shares with respect to
which such individual has the right, exercisable within 60 days, to acquire
beneficial ownership upon exercise of options granted by the Company:
Number of Shares
Dr. Goldberg 757,497
Dr. Milstein 437,757
Mr. Pack 50,000
Dr. Goyan 50,000
Mr. Hutt 50,000
Dr. Greene 17,000
Dr. Baughman 89,925
All directors and executive 1,453,675
officers as a group
<F3> Does not include 130,000 shares with respect to which members of Dr.
Goldberg's family have the right to acquire beneficial ownership upon
exercise of options and with respect to which Dr. Goldberg disclaims
beneficial ownership.
<F4> Does not include 439,040 shares beneficially owned by various members of
Mr. Pack's family, with respect to which Mr. Pack disclaims beneficial
ownership.
<F5> Less than 1%
</FN>
</TABLE>
-3-
PROPOSAL I: ELECTION OF DIRECTORS
At the meeting, six directors (constituting the entire Board of
Directors) are to be elected to serve until the next annual meeting of
stockholders and until their respective successors are elected and qualified.
The proxies given pursuant to this solicitation will be voted in favor of the
six nominees listed below unless authority is withheld. Should a nominee
become unavailable to serve for any reason, the proxies will be voted for an
alternative nominee to be determined by the persons named in the proxy. The
Board of Directors has no reason to believe that any nominee will be
unavailable. Proxies cannot be voted for a greater number of persons than
the number of nominees named. The election of directors requires a plurality
vote of those shares voted at the meeting with respect to the election of
directors.
Information Concerning Nominees
The persons nominated as directors of the Company (all of whom are
currently directors of the Company), their respective ages, the year in which
each first became a director of the Company and their principal occupations
or employment during the past five years are as follows:
Year
First
Elected
Name Age Director Position with the Company
Michael M. Goldberg, M.D. 36 1990 Chairman of the Board of Directors
and Chief Executive Officer
Sam J. Milstein, Ph.D 46 1991 Director, President, Chief
Scientific Officer and Secretary
Howard M. Pack 78 1985 Director
Jere E. Goyan, Ph.D. 66 1992 Director
Peter Barton Hutt, Esq. 61 1992 Director
Mark I. Greene, M.D., Ph.D.47 1995 Director
Michael M. Goldberg, M.D. has served as Chairman of the Board of
Directors since November 1991 and President and Chief Executive Officer and a
director of the Company since August 1990. In addition, Dr. Goldberg served
as President from August 1990 to October 1995. In February 1990, Dr.
Goldberg founded Montaur Capital Corporation, a health care investment
banking firm. Prior thereto he was a vice president of The First Boston
Corporation, and was a founding member of the firm's healthcare banking
group.
Sam J. Milstein, Ph.D. has been with the Company since September 1990,
as a director and Chief Scientific Officer since November 1991, as President
since October 1995, as Secretary since December 1990 and as Co-Director of
Science and Research and Development prior to November 1991. In addition,
Dr. Milstein served as Executive Vice President from November 1990 to October
1995. Prior to September 1990, Dr. Milstein served as President of Mortar &
Pestle Consulting, Inc., a consulting firm.
Howard M. Pack has served as a director of the Company since its
inception in April 1985 and served as Executive Vice President of Finance
from the Company's inception until October 1988. For more than five years
until November 1992, Mr. Pack served as Chairman of the Board for Seatrain
Lines, Inc., a cargo company that filed a consent to an involuntary petition
for reorganization under the Federal Bankruptcy Code in February 1981 and a
plan of complete liquidation under Chapter 7 thereof in November 1992.
-4-
Jere E. Goyan, Ph.D., is President, Chief Operating Officer, and a
director of Alteon, Inc., a development stage pharmaceutical company, where
he started as Senior Vice President Research and Development in January 1993.
Prior thereto he was a Professor of Pharmacy and Pharmaceutical Chemistry and
the Dean of the School of Pharmacy at the University of California, San
Francisco, and has served in various other academic, administrative and
advisory positions, including that of Commissioner of the Food and Drug
Administration. He currently serves as a director of Atrix Corporation,
SciClone Pharmaceuticals and Boeringer Ingelheim.
Peter Barton Hutt, Esq., has for more than the past five years been a
partner at the law firm of Covington & Burling in Washington, D.C., where he
specializes in the practice of food and drug law. He currently serves as a
director of IDEC Pharmaceuticals, Inc., Cell Genesys, Inc., Interneuron
Pharmaceuticals, Inc., Vivus Inc. and Sparta Pharmaceuticals, Inc.
Mark I. Greene, M.D., Ph.D. has been Professor of Medicine, Department
of Pathology, School of Medicine at the University of Pennsylvania for more
than the past five years.
Meetings and Committees of the Board of Directors
During the fiscal year ended July 31, 1995, the Board of Directors of
the Company held three meetings. Each of the incumbent directors attended
more than 75% of the aggregate number of meetings held by the Board and the
Committees thereof on which he served.
The Company has an Audit Committee and a Compensation Committee of the
Board of Directors. Dr. Goyan and Messrs. Hutt and Pack serve on both
committees. The Audit Committee consults with the Company's independent
accountants, reviews the services provided by such independent accountants
and oversees the internal accounting procedures of the Company. The Audit
Committee held one meeting during the fiscal year ended July 31, 1995.
The Compensation Committee makes recommendations to the Board of
Directors regarding compensation of executive officers of the Company and
administers the Company's stock option plans. The Compensation Committee
held no meetings during the fiscal year ended July 31, 1995.
The Company has no standing nominating committee and no committee
performing a similar function.
Compensation of Directors
Directors receive no cash compensation in their capacity as directors.
Directors who are not employees of the Company receive, pursuant to the
Company's Stock Option Plan for Outside Directors, (the "Directors Plan") (i)
an initial option to purchase 20,000 shares of Common Stock on the date (the
"Starting Date") of his or her initial election or appointment to the Board
of Directors and (ii) a second option to purchase 50,000 shares of Common
Stock on the first anniversary of his or her Starting Date. The exercise
price per share for the options is the fair market value of the Common Stock
on the Starting Date and the options are exercisable within ten years from
the date of grant. The initial option becomes fully vested with respect to
6,666 shares on the first anniversary of the Starting Date and with respect
to 6,667 shares on each of the next two anniversaries thereafter; the second
option becomes fully vested with respect to 10,000 shares on each of the
first five anniversaries of the Starting Date. In the event an optionholder
ceases to serve as a director of the Company, fully vested options may be
-5-
exercised within six months thereafter and all unvested options terminate
immediately.
Pursuant to the Directors Plan, Dr. Goyan and Messrs. Hutt and Pack were
each granted (i) on April 29, 1992 an option to purchase 20,000 shares of
Common Stock for $13.00 per share and (ii) on April 29, 1993 an option to
purchase 50,000 shares of Common Stock for $13.00 per share. Pursuant to the
Directors Plan, Dr. Greene was granted on October 23, 1995 an option to
purchase 70,000 shares of Common Stock for $8.625 per share.
The Board of Directors of the Company deems the election of the six
nominees listed above as directors to be in the best interest of the Company
and its stockholders and recommends a vote "FOR" their election.
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the aggregate
compensation paid by the Company for the three fiscal years ended July 31,
1995 to the Company's Chief Executive Officer and other executive officers
whose total compensation exceeded $100,000 during the last fiscal year:
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual
Fiscal Compensa- Stock Other
Name and Principal Position Year tion<F1> Option Grants <F2>
<S> <C> <C> <C> <C>
Michael M. Goldberg 1995 $227,605 16,567 shares $4,497
Chairman of the Board, President 1994 237,500 - 4,122
and Chief Executive Officer 1993 237,500 562,315 shares -
Sam J. Milstein 1995 $202,187 10,792 shares $3,850
Executive Vice President, Chief 1994 192,500 - 3,850
Scientific Officer and Secretary 1993 192,500 346,716 shares -
Robert A. Baughman, Jr. 1995 $165,641 8,131 shares $3,175
Senior Vice President, Director 1994 156,002 65,000 shares 2,910
of Operations and Development 1993 124,940 - -
<FN>
<F1> Annual compensation consists solely of base salary except that Drs.
Milstein and Baughman were also paid $14,808 and $12,308, respectively, in
lieu of earned vacations. As to each individual named, the aggregate
amounts of all perquisites and other personal benefits, securities and
property not included in the summary compensation table above or described
below do not exceed the lesser of $50,000 or 10% of the annual
compensation. During a portion of the 1995 fiscal year, the executive
officers and certain other employees of the Company agreed to forgo a
portion of cash compensation in return for an option to purchase a number
of shares of the Common Stock determined by dividing the amount of cash
compensation forgone by the fair market value of the Common Stock on the
date of grant of the option.
<F2> Other compensation consists solely of matching contributions made by the
Company under a defined contribution plan introduced during the 1994 fiscal
year for substantially all employees.
</FN>
</TABLE>
-6-
<TABLE>
The following table sets forth certain information relating to stock
option grants to the executive officers named above during the fiscal year
ended July 31, 1995:
<CAPTION>
STOCK OPTION GRANTS DURING THE FISCAL YEAR ENDED JULY 31, 1995
Number Percent Potential
of of Total Realizable
Shares Option Value at Assumed
Under- Shares Annual Rates of
lying Granted Exercise Stock Price
Options to Em- Price Expir- Appreciation
Name Granted ployees per ation for Option Term
<F1> <F2> Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg 5,080 1.9% $1.43 5/1/95 $1,282 $1,282
1,900 0.1% 3.13 8/1/95 1,048 1,048
4,948 1.8% 1.50 11/1/95 1,310 1,310
2,639 0.1% 1.65 5/15/00 2,093 5,913
1,505 0.1% 2.89 6/15/00 2,089 5,901
495 - 4.40 7/15/00 1,047 2,490
Sam J. Milstein 1,539 0.1% $3.13 8/1/95 $ 849 $ 849
5,491 2.0% 1.50 11/1/95 1,454 1,454
2,139 0.1% 1.50 5/15/05 2,017 5,113
1,222 - 2.63 6/15/05 2,017 5,112
401 - 4.00 7/15/05 1,245 3,156
Robert A. Baughman, Jr.1,673 0.1% $3.13 8/1/95 $ 923 $ 923
3,333 1.2% 1.50 11/1/95 882 882
1,778 0.1 1.50 5/15/05 1,677 4,251
1,014 - 2.63 6/15/05 1,673 4,242
333 - 4.00 7/15/05 838 2,123
<FN>
<F1> Options that expired or will expire in 1995 were all granted under the
Company's Employee Stock Purchase Plan or Non-Qualified Employee Stock
Purchase Plan at exercise prices equal to the lower of the fair market
value on the date of grant or 85% of the fair market value on the date of
exercise. Options expiring in 2000 and 2005 were all granted under the
Company's 1991 Stock Option Plan at prices equal to the fair market value
on the date of grant, except that options granted to Dr. Goldberg were all
at prices equal to 110% of the fair market value on the date of grant.
<F2> The total option shares granted during the 1995 fiscal year to employees
includes 134,023 shares subject to options under the Company's 1991 Stock
Option Plan and 78,652 shares issued or issuable pursuant to options
granted under the Company's Employee Stock Purchase Plan or Non-Qualified
Employee Stock Purchase Plan.
</FN>
</TABLE>
-7-
<TABLE>
The following table sets forth information as to the unexercised options
held by the executive officers named above as of July 31, 1995:
<CAPTION>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
Exercises During Number of Value of
the Fiscal Year Shares Underlying Unexercised In-the
Number Unexercised Options Money Options <F1>
of Shares Value Exer- Unexer- Exer- Unexer-
Name Acquired Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg 5,080 $1,286<F2> 894,345<F3> - $54,736 -
Sam J. Milstein. - - 444,787 - 53,129 -
Robert A. Baughman, Jr. - - 74,931 46,200 39,012 -
<FN>
<F1> Based on a closing price of $6.875 on July 31, 1995 on the NASDAQ
National Market System.
<F2> Based on a closing price of $1.69 on May 1, 1995, the date of exercise,
on the NASDAQ National Market System.
<F3> Includes 130,000 shares with respect to which Dr. Goldberg has
transferred options to members of his family and with respect to which Dr.
Goldberg disclaims beneficial interest.
</FN>
</TABLE>
Employment Agreements
The Company has entered into employment agreements with Michael M.
Goldberg, M.D. and Sam J. Milstein, Ph.D., expiring on July 31, 2000.
Pursuant to the agreements, Dr. Goldberg is to serve as Chairman and Chief
Executive Officer of the Company at an annual salary of $310,000 to increase
at 6% per year, Dr. Milstein is to serve as President and Chief Scientific
Officer at an annual salary of $250,000 to increase at 6% per year and both
are to be nominated to serve as members of the Board of Directors. The
agreements also provide for the grant of an option to purchase 750,000 shares
of the Common Stock with respect to Dr. Goldberg and an option to purchase
550,000 shares with respect to Dr. Milstein. The options have an exercise
price of $8.625 per share and they expire on October 5, 2005. The options
become fully exercisable on August 1, 2005 except that they become earlier
exercisable if the Company achieves certain milestones, with the rate in no
event being greater than either 25% of the shares for each milestone achieved
or 20% of the shares in any employment year. The Company milestones required
for exercisability of the options are (i) execution of a collaboration
agreement providing for the commercialization of a product utilizing the
Company's drug delivery technology and the payment of a royalty to the
Company, (ii) one or more financings by the Company that provide aggregate
net proceeds of at least $15,000,000 and (iii) any subsequent such
collaboration agreement or such financings. The options will be deemed to
have been granted under the 1995 Non-Qualified Stock Option Plan if such
Plan is approved by the Company's stockholders. See Proposal II.
The agreements provide that, upon (i) termination by the Company either
without cause or for any reason following a Change of Control (as defined in
the agreements) or (ii) termination by Dr. Goldberg or Dr. Milstein, as the
case may be, following an uncured breach or bankruptcy by the Company, the
stock options will become fully vested and the Company will make severance
payments equal to the greater of (i) the compensation payable under the
-8-
agreements from the date of termination to July 31, 2000 or (ii) one year's
compensation under the agreements.
Compensation Committee Report on Executive Compensation
The Compensation Committee's policies applicable to the compensation of
the Company's executive officers are based on the principle that total
compensation should be set to attract and retain those executives critical to
the overall success of the Company and should reward executives for their
contributions to the enhancement of shareholder value. With respect to
Michael M. Goldberg, Chairman and Chief Executive Officer, and Sam J.
Milstein, President and Chief Scientific Officer, the Compensation
Committee's policies are also based on the belief that the Company's current
drug delivery technology is so different from what existed when they started
with the Company that they should be viewed for purposes of compensation as
equivalent to founders.
The key elements of the executive compensation package are base salary,
employee benefits applicable to all employees and long-term incentive
compensation in the form of stock options. In general, the Compensation
Committee has adopted the policy that compensation for executive officers
should be competitive with that paid by leading technology companies for
corresponding senior executives. The Compensation Committee also believes
that it is important to have stock options constitute a substantial portion
of executive compensation in order to help executives align their interests
with those of the stockholders and to reflect the requirement on the part of
the Company that executive decisions should look to the long-term success of
the Company.
In determining the compensation for each executive officer, the
Compensation Committee generally considers (i) data from outside studies and
proxy materials regarding compensation of executive officers at comparable
companies, (ii) the input of other directors regarding individual performance
of each executive officer and (iii) qualitative measures of Company
performance such as progress in the development of the Company's technology,
the engagement of corporate partners for the commercial development and
marketing of products and the success of the Company in raising the funds
necessary to conduct research and development. The Compensation Committee's
consideration of such factors is subjective and informal.
The compensation of Michael M. Goldberg, the Chief Executive Officer of
the Company, for the 1995 fiscal year was as called for by his employment
agreement with the Company entered into during the 1993 fiscal year and,
except for a salary reduction in exchange for stock options implemented in
May of 1995 and applicable to all executive officers, the Compensation
Committee did not consider any amendments to the compensation thereunder.
The Compensation Committee approved by majority vote the five-year employment
agreement negotiated with Dr. Goldberg for the period ending July 31, 2000,
concluding that Dr. Goldberg's leadership contributed significantly to the
Company's achievements and progress in the past and that Dr. Goldberg will
continue to make significant contributions to the Company's performance in
the future.
Howard M. Pack
Jere E. Goyan
Peter Barton Hutt
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Comparative Stock Performance Graph
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total stockholder return of (i)
the NASDAQ Stock Market (U.S.) Index and (ii) the NASDAQ Pharmaceutical
Index, assuming an investment of $100 on July 31, 1990 in each of the
Company's Common Stock, the stocks comprising the NASDAQ Index and the stocks
comprising the Pharmaceutical Index.
Date Emisphere NASDAQ Market NASDAQ Pharm.
7/31/90 100 100 100
7/31/91 102 118 185
7/31/92 151 139 214
7/31/93 119 169 171
7/31/94 33 174 152
7/31/95 55 243 214
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely on a review of the reports and representations furnished to
the Company during the last fiscal year, the Company believes that each of
the persons required to file reports under Section 16(a) of the Exchange Act
is in compliance with all applicable filing requirements.
PROPOSAL II: APPROVAL OF THE COMPANY'S 1995 NON-QUALIFIED STOCK OPTION PLAN
The Company's Board of Directors has determined that shares of the
Common Stock should be made available for grants of stock options to the
Company's officers and other key executive employees who will be responsible
for the profitability and long-term future growth of the Company.
Accordingly, the Board has unanimously approved, subject to stockholder
approval, the Company's 1995 Non-Qualified Stock Option Plan (the "Plan")
providing for the grant of options thereunder to purchase up to 1,800,000
shares of the Common Stock. If the Plan is approved by the stockholders,
options with respect to 1,300,000 shares previously granted to Michael M.
Goldberg and Sam J. Milstein, two of the Company's officers, will be deemed
to have been granted under the Plan (See "Grant Information."). Stockholders
are accordingly being asked to approve the grant of such options in
connection with their approval of the Plan. If the Plan is not approved by
the stockholders, such options will be deemed not to have been approved by
the stockholders and the Company will consider alternative actions in order
to meet its compensation obligations to such officers under those options.
The Company will also have to reevaluate how it will provide incentives to
the Company's existing and future officers and other key executive employees.
Summary of the Plan
The following is a brief summary of the Plan.
Purpose The purpose of the Plan is to foster the Company's ability to
attract, retain and motivate those officers and other key executive employees
who will be largely responsible for the profitability and long-term future
growth of the Company.
Eligible Employees The eligible participants in the Plan are the
Company's officers and other key executive employees, as determined and
designated from time to time by the Company's Compensation Committee in its
sole discretion.
-10-
Grants Under the Plan The Plan provides for the grant of options to
purchase the Common Stock, such options not intending to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
Administration The Plan is administered by the Compensation Committee
of the Board of Directors of the Company, each member of which is a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange
Act.
Subject to the provisions of the Plan, the Compensation Committee has
the authority and discretion to grant options under the Plan, to interpret
the provisions of the Plan and option agreements made thereunder and to take
such other action as may be necessary or desirable in order to carry out the
provisions of the Plan.
Maximum Shares to be Issued The maximum number of shares that may be
issued pursuant to the grant of options under the Plan is 1,800,000 in the
aggregate (subject to antidilution adjustments). To the extent permitted
under Rule l6b-3, the shares subject to any stock option granted under the
Plan that expires or terminates prior to exercise will thereafter be
available for further option grants.
Terms of Stock Option Grants The Compensation Committee specifies the
terms and conditions of stock options granted under the Plan including
without limitation the number of shares covered by each option, the exercise
price, the option period and any vesting restrictions with respect to the
exercise of the option. No option under the Plan may have an exercise price
of less than the fair market value of the Common Stock on the date of grant
or an option exercise period of more than ten years.
Restrictions on Transfer Options under the Plan may not be transfered
by an optionee other than by will or by the laws of descent and distribution
and may be exercised during the optionee's lifetime only by the optionee.
Federal Income Tax Consequences The grant of options under the Plan
will have no federal income tax consequences to either the Company or the
optionee. Upon exercise of options, the optionee is subject to federal
income tax on the excess of the value of the stock over the exercise price
and the Company is entitled to take a corresponding federal income tax
deduction (subject to the limitation on deductibility of executive
compensation).
The foregoing is a general description of the federal income tax
consequences relating to the grant and exercise of options under the Plan.
It does not purport to cover the special rules under the Code, administrative
and judicial interpretations, possible changes in the law or state and local
income tax consequences.
Amendment The Board of Directors of the Company may at any time amend
or terminate the Plan, provided that no such amendment shall be made without
the approval of the stockholders of the Company to the extent approval is
required by applicable laws, rules or regulations and provided further that
no amendment or termination may adversely affect the rights of an optionee
with respect to an outstanding option.
Grant Information
In connection with employment agreements the Company has entered into
with Michael M. Goldberg, M.D. and Sam J. Milstein, Ph.D., the Company has
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granted Dr. Goldberg an option to purchase 750,000 shares of the Common Stock
and has granted Dr. Milstein an option to purchase 550,000 shares of the
Common Stock. The options both have exercise prices of $8.625 per share and
they expire on October 5, 2005. They become fully exercisable on August 1,
2005 except that they become earlier exercisable if the Company achieves
certain milestones, with the rate in no event being greater than either 25%
of the shares for each milestone achieved or 20% of the shares in any
employment year. The Company milestones required for exercisability of the
options are (i) execution of a collaboration agreement providing for the
commercialization of a product utilizing the Company's drug delivery
technology and the payment of a royalty to the Company, (ii) one or more
financings by the Company that provide aggregate net proceeds of at least
$15,000,000 and (iii) any subsequent such collaboration agreement or such
financings. If the Plan is approved by the stockholders, these options will
be deemed to have been granted under the Plan.
It is not possible to determine the stock option grants that will be
made pursuant to the Plan in the future. The table below sets forth
information regarding the option grants under the Plan to date, including the
options granted to Dr. Goldberg and to Dr. Milstein.
Number of
Dollar Shares Under-
Name and Position Value (1) lying Options
Michael M. Goldberg................. - 750,000
Chairman of the Board and Chief
Executive Officer
Sam J. Milstein..................... - 550,000
President, Chief Scientific Officer
and Secretary
Robert A. Baughman, Jr.............. - -
Senior Vice President, Director of
Operations and Development
All current executive officers
as a group......................... - 1,300,000
All current directors who are not
executive officers as a group (2).. - -
All employees, including all current
officers who are not executive
officers, as a group............... - -
_______________
(1) Based upon the excess of the fair market value of the Common Stock on
the date of grant over the exercise price.
(2) Directors of the Company who are not also either employees of or
consultants to the Company are not eligible to participate in the Plan.
Voting
The Plan must be approved by the affirmative vote of the holders of a
majority of the shares of the Common Stock present, or represented, and
entitled to vote at the meeting. Abstentions from voting on this proposal
will have the effect of a "no" vote. Broker non-votes are not considered
shares present, are not entitled to vote and therefore will not affect the
outcome of the vote on this proposal.
The Board of Directors of the Company deems the approval of the 1995
Non-Qualified Stock Option Plan to be in the best interest of the Company and
its stockholders and recommends that holders of the Common Stock vote FOR
Proposal II.
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PROPOSAL III: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. to serve as
independent accountants for the fiscal year ending July 31, 1996. Coopers &
Lybrand L.L.P. has served as the Company's independent accountants since
November 1991.
A representative of Coopers & Lybrand L.L.P. is expected to be present
at the meeting with the opportunity to make a statement if he desires to do
so and is expected to be available to respond to appropriate questions.
Although it is not required to do so, the Board of Directors is submitting
the selection of independent accountants for ratification at the meeting. If
this selection is not ratified, the Board of Directors will reconsider its
choice.
A majority of the votes cast (excluding abstentions and broker non-
votes) at the meeting in person or by proxy is necessary for ratification of
the selection of Coopers & Lybrand L.L.P. as independent accountants of the
Company.
The Board of Directors of the Company deems the ratification of the
selection of Coopers & Lybrand L.L.P. as independent accountants of the
Company to be in the best interest of the Company and its stockholders and
recommends that holders of the Common Stock vote FOR Proposal III.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the
Annual Meeting of Stockholders of the Company contemplated to be held in
December 1996 must be received by the Company no later than July 31, 1996,
for inclusion in the Board of Directors' proxy statement and form of proxy
relating to the meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at
the meeting. However, if any other business properly comes before the
meeting, it is the intention of the persons named in the enclosed proxy to
vote on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the meeting, please sign the proxy and return it in the enclosed envelope.
By order of the Board of Directors
SAM J. MILSTEIN, PH.D.
Secretary
Hawthorne, New York
January 5, 1996
-13-
Appendix A
EMISPHERE TECHNOLOGIES, INC.
1995 NON-QUALIFIED STOCK OPTION PLAN
1,800,000 Shares
1. Purpose
The purpose of the 1995 Non-Qualified Stock Option Plan (the "Plan") of
Emisphere Technologies, Inc. (the "Company") is to attract, compensate and
retain well qualified officers and other key executive employees by providing
them with an equity interest in the Company and a stake in its success.
2. Shares Subject to the Plan
The Company may issue a total of 1,800,000 shares of its Common Stock,
par value $.01 per share (the "Common Stock"), pursuant to the Plan. Such
shares may include shares that have been subject to unexercised options,
whether terminated or expired by their terms, by cancellation or otherwise.
3. Option Grants under the Plan
Option grants under the Plan may be made to present and future officers
and other key executive employees of the Company. Directors of the Company
who are not also employees of the Company or a subsidiary shall not be
eligible for an option grant under the Plan. Each option shall be to
purchase a number of shares of the Common Stock pursuant to an option
agreement setting forth the option exercise price, option termination date,
vesting period and other terms and conditions as may be determined by the
Committee (as defined below) at the time of the grant. In no event may any
option be granted at an exercise price per share lower than the fair market
value per share on the date of grant or with an option exercise period of
more than ten years.
4. Administration
The Plan shall be administered by a committee (the "Committee")
designated by the Board of Directors of the Company and consisting of two or
more nonemployee directors. The Committee shall have the power and authority
as may be necessary to carry out the provisions of the Plan, including the
interpretation and construction of the Plan and the grants made under the
Plan, the adoption of such rules and regulations as it may deem advisable and
the termination of further grants under the Plan. The Committee shall also
have the total discretion to determine the individuals to whom grants are to
be made under the Plan, the form of each grant, the number of shares of the
Common Stock subject thereto, the terms and conditions thereof and the form
of agreement reflecting the terms and conditions of the grant. For purposes
of option grants under the Plan, the fair market value of the Common Stock on
the date of grant shall be (i) the closing price per share thereof on such
date if traded on a national securities exchange or the National Market
System of NASDAQ, (ii) the average of the bid and asked price thereof at the
close of trading on such date if traded on the over-the-counter market or
(iii) as determined in good faith by the Committee if not so traded.
5. Rights as a Stockholder
Until such time as an option granted under the Plan has been exercised
and the shares acquired thereby have been issued and delivered pursuant to
such exercise, the optionee shall have no rights as a shareholder with
respect to the shares subject to the option.
6. Nontransferability
Options granted under the Plan may not be assigned or transferred except
by will or by the laws of descent and distribution and are exercisable during
the lifetime of the optionee only by the optionee.
7. Compliance with Securities Laws
If any shares to be issued under the Plan have not been registered under
any applicable securities laws, the Company's obligation to issue such shares
shall be conditioned upon receipt of a representation in writing that the
optionee is acquiring such shares for his or her own account and not with a
view to the distribution thereof and the certificate representing such shares
shall bear a legend in such form as the Company's counsel deems necessary or
desirable. In no event shall the Company be obligated to issue any shares
under the Plan if, in the opinion of the Company's counsel, such issuance
would result in a violation of any applicable securities laws.
8. Stock Adjustments
(a) In the event of a stock dividend, stock split, recapitalization,
merger in which the Company is the surviving corporation or other capital
adjustment affecting the Common Stock, an appropriate adjustment shall be
made, as determined by the Board of Directors of the Company, to the number
of shares subject to the Plan and the number of shares and the exercise price
per share with respect to any option outstanding under the Plan.
(b) In the event of the complete liquidation of the Company or of a
reorganization, consolidation or merger in which the Company is not the
surviving corporation, any option outstanding under the Plan shall become
fully and immediately exercisable unless either (i) the Board of Directors of
the Company otherwise modifies such option or (ii) the surviving corporation
issues or assumes a stock option providing for equitable adjustment of the
terms and conditions of the option outstanding under the Plan.
9. Effectiveness of the Plan
The Plan was approved on January 5, 1996 by resolution of the Board of
Directors of the Company and shall become effective upon the approval by the
affirmative votes of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the State of Delaware.
10. Amendment of the Plan
The Board may at any time alter, amend, suspend or terminate the Plan in
whole or in part, provided, however, that (i) no alteration, amendment,
suspension or termination shall adversely affect the rights of an optionee
with respect to any outstanding option granted under the Plan, (ii) the
provisions of the Plan governing the terms of each option grant shall not be
amended more than once every six months, other than to comport with changes
in applicable law or the rules thereunder and (iii) any material amendment to
the Plan shall become effective only upon approval of stockholders of the
Company.
A-2
EMISPHERE TECHNOLOGIES, INC.
15 Skyline Drive
Hawthorne, New York 10532
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael M. Goldberg, M.D. and Sam J.
Milstein, Ph.D., and each of them, as Proxies each with the power to appoint
his substitute and hereby authorizes them to represent and to vote, as
designated below, all of the shares of Common Stock of Emsiphere
Technologies, Inc. held of record by the undersigned on December 12, 1995 at
the Annual Meeting of Stockholders to be held on February 6, 1996 or any
adjournments or postponements thereof.
1. ELECTION OF DIRECTORS
Nominees: STOCKHOLDERS MAY WITHHOLD AUTHORITY TO VOTE FOR
ANY NOMINEE BY DRAWING A LINE THROUGH OR
Michael M. Goldberg, M.D. OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE.
Jere E. Goyan, Ph.D ANY PROXY EXECUTED IN SUCH MANNER AS NOT TO
Peter Barton Hutt WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF
Sam J. Milstein, Ph.D. ANY NOMINEE SHALL BE DEEMED TO GRANT SUCH
Howard M. Pack AUTHORITY.
Mark I. Greene, M.D., Ph.D.
GRANT authority to vote for the six nominees as a group
WITHOLD authority to vote for the six nominees as a group
2. Approval and adoption of the Company's 1995 Non-Qualified Stock
Option Plan providing for the issuance of up to 1,800,000 shares
of the Common Stock
FOR AGAINST ABSTAIN
3. Ratification of the Board of Directors' selection of Coopers & Lybrand
L.L.P. to serve as the Company's independent accountants for the fiscal
year ending July 31, 1996
FOR AGAINST ABSTAIN
4. Authority to vote in their discretion on such other business as may
properly come before the meeting
FOR AGAINST ABSTAIN
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted for each of the proposals named above.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Dated , 1996
(Signature)
(Signature if held jointly)
Please sign exactly as name appears hereon.
When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a corpo-
ration, please sign in full corporate name
by president or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
