SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[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)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
EMISPHERE TECHNOLOGIES, INC.
15 Skyline Drive
Hawthorne, New York 10532
November 28, 1997
Dear Stockholder:
You are cordially invited to attend the Company's Annual
Meeting of Stockholders to be held on Thursday, January 15, 1998 at
10:00 a.m. local time at the Westchester Marriott Hotel, 670 White
Plains Road, Tarrytown, New York.
At this meeting, you will be asked to consider and vote
upon the election of directors of the Company, to approve and adopt
amendments to the Company's 1991 Stock Option Plan and 1995 Non-
Qualified Stock Option Plan, to approve the Directors' Deferred
Compensation Stock 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, 1998.
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
November 28, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of EMISPHERE TECHNOLOGIES, INC. (the "Company"), a
Delaware corporation, will be held at the Westchester Marriott Hotel,
670 White Plains Road, Tarrytown, New York on Thursday, January 15,
1998 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 seven directors to serve until the next annual
meeting of stockholders and until their respective successors are
elected and qualified;
2. To approve and adopt an amendment to the Company's 1991
Stock Option Plan increasing the maximum number of shares of the
Company's Common Stock available for issuance thereunder by
300,000;
3. To approve and adopt an amendment to the Company's 1995
Non-Qualified Stock Option Plan increasing the maximum number of
shares of the Company's Common Stock available for issuance
thereunder by 200,000;
4. To approve the Directors' Deferred Stock Compensation
Plan providing for the issuance of up to 25,000 shares of the
Company's Common Stock thereunder;
5. 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, 1998; and
6. 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 November 26, 1997 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. 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 the 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, New
York on Thursday, January 15, 1998, 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 December 4, 1997.
Shares of the 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
seven nominees named herein, FOR the approval of the amendments to the
1991 Stock Option Plan and the 1995 Non-Qualified Stock Option Plan,
FOR the approval of the Directors' Deferred Compensation Stock 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, 1998.
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 of the amendments to the to
the 1991 Stock Option Plan and the 1995 Non-Qualified Stock Option
Plan, the approval of the Directors' Deferred Compensation Stock 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
November 26, 1997 will be entitled to vote at the meeting or any and
all adjournments thereof. As of November 26, 1997 the Company had
outstanding 10,707,672 shares of the 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 the Common
Stock registered in his or her name on the record date. A majority of
all shares of the Common Stock outstanding constitutes a quorum and is
required to be present in person or by proxy to conduct business at
the meeting.
-2-
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of
November 10, 1997, 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.
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner (1) Ownership (2) Class
Amerindo Investment Advisors Inc.
and affiliates (3)................. 1,107,300 10.3%
One Embarcardero Center, Suite 2300
San Francisco, California 94111-3162
Elan International Services Ltd..... 850,000 7.8%
102 St James Court
Flatts Smiths FL04
Bermuda
INVESCO PLC and affiliates (4)...... 1,243,800 11.6%
11 Devonshire Square
London EC2M 4YR
England
Michael M. Goldberg, M.D............ 1,096,058 (5) 9.3%
Sam J. Milstein, Ph.D............... 668,206 5.9%
Howard M. Pack...................... 163,383 (6) 1.5%
Jere E. Goyan, Ph.D................. 70,000 *
Peter Barton Hutt, Esq.............. 70,000 *
Mark I. Greene, M.D., Ph.D.......... 50,333 *
Joseph R. Robinson, Ph.D............ 2,000 *
Robert A. Baughman, Jr., Pharm.D., Ph.D. 139,801 1.3%
Lewis H. Bender..................... 44,831 *
All directors and executive officers
as a group......................... 2,304,612 (5)(6) 17.9%
_______________________________
* Less than 1%
(1) Unless otherwise specified, the address of each beneficial owner
is c/o the Company, 15 Skyline Drive, Hawthorne, New York 10532.
(2) The number of shares set forth for Elan International Services
Ltd. and 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 or warrants
issued by the Company:
Number of Shares
Elan International Services Ltd... 250,000
Dr. Goldberg...................... 1,059,095
Dr. Milstein...................... 659,204
Mr. Pack.......................... 70,000
Dr. Goyan......................... 70,000
Mr. Hutt.......................... 70,000
Dr. Greene........................ 50,333
Dr. Robinson...................... 2,000
Dr. Baughman...................... 136,258
Mr. Bender........................ 40,814
All directors and executive
officers as a group 2,157,704
-3-
(3) Based on a Schedule 13G filed April 4, 1997, Amerindo Investment
Advisors Inc., a California corporation, Amerindo Investment
Advisors, Inc., a Panama corporation, Alberto W. Vilar and Gary A.
Tanaka share voting and dispositive power with respect to 1,107,300
shares.
(4) Based on a Schedule 13G filed February 14, 1997, INVESCO PLC, an
English corporation, INVESCO North American Group, Ltd., an English
corporation, INVESCO, Inc., a Delaware corporation, INVESCO North
American Holdings, Inc., a Delaware corporation, and INVESCO Funds
Group, Inc., a Delaware corporation, share voting and dispositive
power with respect to 1,243,800 shares.
(5) 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.
(6) Does not include 331,519 shares beneficially owned by various
members of Mr. Pack's family, with respect to which Mr. Pack
disclaims beneficial ownership.
PROPOSAL I: ELECTION OF DIRECTORS
At the meeting, seven 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 seven 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. 38 1990 Chairman of the Board of
Directors and Chief
Executive Officer
Jere E. Goyan, Ph.D...... 67 1992 Director
Mark I. Greene, M.D., Ph.D. 49 1995 Director
Peter Barton Hutt, Esq... 63 1992 Director
Sam J. Milstein, Ph.D.... 48 1991 Director, President,
Chief Scientific Officer
and Secretary
Howard M. Pack........... 79 1985 Director
Joseph R. Robinson, Ph.D. 59 1997 Director
Michael M. Goldberg, M.D. has served as Chairman of the
Board of Directors since November 1991 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.
-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.
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.
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., Interneuron Pharmaceuticals, Inc. and Sparta Pharmaceuticals,
Inc.
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.
Joseph R. Robinson, Ph.D. has been Professor of Pharmacy and
Ophthalmology at the University of Wisconsin for more than the past
five years. He currently serves as a director of Cima Laboratories,
Inc.
Meetings and Committees of the Board of Directors
During the fiscal year ended July 31, 1997, the Board of
Directors of the Company held four 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 the Audit Committee and Mr. Pack and Drs. Greene and
Robinson serve on the Compensation Committee. 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, 1997.
-5-
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 took all action by unanimous consent during the
fiscal year ended July 31, 1997 and held no meetings.
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"), options to purchase shares of the Common Stock.
Messrs. Hutt and Pack and Drs. Goyan and Greene have each received an
initial option to purchase 70,000 shares under the Directors Plan in
effect prior to January 29, 1997. Under the Directors Plan as
currently in effect, Dr. Robinson has received an initial option to
purchase 35,000 shares and Messrs. Hutt and Pack and Dr. Goyan have
each received an additional option to purchase 21,000 shares. The
exercise prices are $13.00 per share for the initial options granted
to Dr. Goyan and Messrs. Hutt and Pack, $8.625 for the initial option
granted to Dr. Greene, $23.50 for the initial option granted to Dr.
Robinson and $13.75 for the additional options granted to Messrs. Hutt
and Pack and Dr. Goyan. In the event the holder of an option ceases
to serve as a director of the Company, the option may be exercised
with respect to the fully vested shares within six months thereafter
and will terminate immediately with respect to all unvested shares.
In addition, directors will receive, pursuant to the
Directors Deferred Compensation Stock Plan, a number of shares of the
Common Stock for each meeting of the Board or a committee thereof
attended. See Proposal IV.
Voting
Those nominees receiving a plurality of the votes cast will
be elected directors. Abstentions and broker non-votes will not
affect the outcome of the election.
The Board of Directors of the Company deems the election of
the seven nominees listed above as directors to be in the best
interest of the Company and its stockholders and recommends a vote
"FOR" their election.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the
aggregate compensation paid by the Company for the three fiscal years
ended July 31, 1997 to the Company's Chief Executive Officer and other
executive officers whose total compensation exceeded $100,000 during
the last fiscal year:
-6-
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Fiscal Compensation Stock Other
Name and Principal Position Year <F1> Option Grants <F2>
<S> <C> <C> <C> <C>
Michael M. Goldberg..... 1997 $359,880 4,985 shares<F3> $4,750
Chairman of the Board and 1996 335,349 756,749 shares 4,620
Chief Executive Officer 1995 227,605 16,507 shares 4,497
Sam J. Milstein......... 1997 $312,904 4,253 shares<F3> $4,750
President, Chief Scientific 1996 287,683 555,903 shares 3,850
Officer and Secretary 1995 202,187 10,792 shares 3,850
Robert A. Baughman, Jr.. 1997 $195,337 22,724 shares $4,750
Senior Vice President and 1996 180,154 3,664 shares 3,175
Director of Development 1995 165,641 8,131 shares 2,910
Lewis H. Bender......... 1997 $144,479 51,843 shares $2,748
Senior Vice President, 1996 120,125 77,396 shares 2,032
Business Development<F4>
_______________________________
<FN>
<F1> Annual compensation consists solely of base salary except that
Drs. Goldberg, Milstein and Baughman were also paid in lieu of
earned vacations $31,280, $38,231 and $22,212, respectively, during
the 1997 fiscal year, $25,349, $33,873 and $20,154, respectively,
during the 1996 fiscal year and $0, $14,808 and $12,308,
respectively, during the 1995 fiscal year. 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 available to
substantially all employees.
<F3> Does not include options with respect to 562,315 shares for Dr.
Goldberg and 346,716 shares for Dr. Milstein originally granted in
1992 in connection with each of their respective employment
agreements. By resolution of the Company's Board of Directors
adopted during the 1997 fiscal year, such options were deemed for
all purposes to have been granted under the Company's 1991 Stock
Option Plan with respect to 262,315 shares for Dr. Goldberg and
146,716 shares for Dr. Milstein and under the Company's 1995 Non-
Qualified Stock Option Plan with respect to 300,000 shares for Dr.
Goldberg and 200,000 for Dr. Milstein. The Board also extended from
July 31, 1997 to July 31, 2002 the expiration dates for such
options.
<F4> Mr. Bender became an executive officer of the Company in October
of 1995.
</FN>
</TABLE>
-7-
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, 1997:
<TABLE>
STOCK OPTION GRANTS DURING THE FISCAL YEAR ENDED JULY 31, 1997
<CAPTION>
Percent
Number of Total Potential
of Shares Option Realizable Value at
Under- Shares Assumed Annual
lying Granted Exercise Annual Rates of
Options to Price Expir- Stock Price Appreciation
Granted Employees Per ation for Option Term
Name <F1> <F2> Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg 2,388 <F3> $ 7.13 2/1/97 $ 3,005 $ 3,005
999 <F3> 13.175 5/1/97 2,323 2,323
748 <F3> 16.15 8/1/97 2,132 2,132
850 <F3> 14.50 11/1/97 2,175 2,175
Sam J. Milstein. 1,888 <F3> $ 7.13 2/1/97 $ 2,376 $ 2,376
918 <F3> 13.175 5/1/97 2,134 2,134
603 <F3> 16.15 8/1/97 1,719 1,719
844 <F3> 14.50 11/1/97 2,160 2,160
Robert A. Baughman, 1,197 <F3> $ 7.13 2/1/97 $ 1,056 $ 1,056
Jr.............. 532 <F3> 13.175 5/1/97 1,237 1,237
398 <F3> 16.15 8/1/97 1,134 1,134
592 <F3> 14.50 11/1/97 1,515 1,515
20,000 5.0% 10.00 9/3/06 125,579 318,748
Lewis H. Bender. 658 <F3> $ 7.13 2/1/97 $ 828 $ 828
407 <F3> 13.175 5/1/97 946 946
351 <F3> 16.15 8/1/97 1,000 1,000
427 <F3> 14.50 11/1/97 1,093 1,093
50,000 1.4% 16.875 3/21/07 530,630 1,344,720
_______________________________
<FN>
<F1> Options that expired in 1997 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 2006 or 2007 were all
granted under the Company's 1991 Stock Option Plan at prices equal
to the fair market value on the date of grant.
<F2> The total number of option shares granted during the 1997 fiscal
year to employees includes 52,259 shares under the Company's
Employee Stock Purchase Plan or Non-Qualified Employee Stock
Purchase Plan, 275,500 shares under the Company's 1991 Stock Option
Plan and 75,000 shares under the Company's 1995 Non-Qualified Stock
Option Plan.
<F3> Less than 1.0%
</FN>
</TABLE>
-8-
The following table sets forth information as to the exercises of
options during the fiscal year ended July 31, 1997 and the number and
value of unexercised options held by the executive officers named
above as of July 31, 1997:
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Exercises During
the Fiscal Year Number of
Number Shares Undelying Value of Unexercised
of Unexercised Options In-the-Money Options<F1>
Shares Value Exer- Unexer- Exer- Unexer-
Name Acquired Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg 1,919 $2,051<F2> 1,189,095<F6> 450,000 $10,667,937 $4,837,500
969 2,544<F3>
2,388 40,298<F4>
999 2,323<F5>
Sam J. Milstein 1,547 $1,653<F2> 659,204 330,000 $ 5,855,738 $3,547,500
781 2,050<F3>
1,888 31,860<F4>
918 2,134<F5>
Robert A. Baughman, 990 $1,058<F2> 136,258 - $ 1,043,987 -
Jr............. 500 1,313<F3>
1,197 20,199<F4>
532 1,237<F5>
Lewis H. Bender 774 $ 827<F2> 40,814 102,000 $ 463,243 $ 720,475
391 1,026<F3>
658 11,104<F4>
407 946<F5>
_______________________________
<FN>
<F1> Based on a closing price of $19.375 on July 31, 1997 on the
Nasdaq National Market.
<F2> Based on a closing price of $7.125 on August 1, 1996, the date of
exercise, on the Nasdaq National Market.
<F3> Based on a closing price of $14.625 on November 1, 1996, the date
of exercise, on the Nasdaq National Market.
<F4> Based on a closing price of $24.00 on February 3, 1997, the date
of exercise, on the Nasdaq National Market.
<F5> Based on a closing price of $19.00 on May 1, 1997, the date of
exercise, on the Nasdaq National Market.
<F6> 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,
2001. Pursuant to the agreements, Dr. Goldberg is to serve as
Chairman and Chief Executive Officer of the Company at an annual
salary of $348,316 for the 1998 fiscal year to increase at 6% per
year, Dr. Milstein is to serve as President and Chief Scientific
Officer at an annual salary of $280,900 for the 1998 fiscal year 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 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.
-9-
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 Company will make severance payments
equal to the greater of (i) the compensation payable under the
agreements from the date of termination to July 31, 2001 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.
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
biotechnology 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.
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 and the fact that the Company successfully
completed a preliminary human safety and tolerance trial. 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 1997 fiscal year was as called for by
his employment agreement with the Company entered into during the 1996
fiscal year and the Compensation Committee did not consider any
amendments to the compensation thereunder. In approving the five-year
employment agreement negotiated with Dr. Goldberg for the period
ending July 31, 2001, the Compensation Committee concluded 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
Mark I. Greene
Joseph R. Robinson
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, 1992
in each of the Company's Common Stock, the stocks comprising the
Nasdaq Market Index and the stocks comprising the Nasdaq
Pharmaceutical Index.
Nasdaq Nasdaq
Emisphere Market Pharm.
7/31/92 100 100 100
7/31/93 79 122 80
7/31/94 22 125 78
7/31/95 36 176 99
7/31/96 40 191 120
7/31/97 102 283 141
-10-
Section 16(a) Beneficial Ownership Reporting and Compliance
Based solely on a review of the reports under Section 16(a) of
the Exchange Act and representations furnished to the Company during
the last fiscal year, the Company believes that each of the persons
required to file such reports is in compliance with all applicable
filing requirements.
PROPOSALS II AND III: APPROVAL OF AMENDMENTS TO THE COMPANY'S 1991
STOCK OPTION PLAN AND 1995 NON-QUALIFIED STOCK OPTION PLAN
The Company's Board of Directors has determined that
additional shares of the Common Stock should be made available for
grants of stock options to the Company's officers and other employees
and consultants who will be responsible for the profitability and
long-term future growth of the Company. Accordingly, the Board has
approved an amendment to the Company's 1991 Stock Option Plan (as
amended, the "1991 Plan") to increase the maximum number of shares of
the Common Stock available for the grant of options thereunder from
1,400,000 shares to 1,700,000 and an amendment to the Company's 1995
Non-Qualified Stock Option Plan (as amended, the "1995 Plan" and,
collectively with the 1991 Plan, the "Plans") to increase the maximum
number of shares of the Common Stock available for the grant of
options thereunder from 1,900,000 shares to 2,100,000. As of October
31, 1997, options with respect to 1,444,470 shares were outstanding
under the 1991 Plan and options with respect to 1,875,000 shares were
outstanding under the 1995 Plan. If the amendments are not approved
by the stockholders, the Company will have to reevaluate how it will
provide incentives to the Company's existing and future officers and
other employees and consultants.
Summary of the Plans
The following is a brief summary of the Plans.
Purpose The purpose of the Plans is to foster the Company's
ability to attract, retain and motivate those individuals who will be
largely responsible for the profitability and long-term future growth
of the Company.
Eligible Employees The eligible participants in the 1991
Plan are the Company's officers and other key employees and
consultants other than directors, as determined and designated from
time to time by the Company's Compensation Committee in its sole
discretion. The eligible participants in the 1995 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.
Grants Under the Plan The 1991 Plan provides for the grant
of options to purchase shares of the Common Stock, including options
intended to qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). The 1995
Plan provides for the grant of options to purchase shares of the
Common Stock, such options not intending to qualify as such incentive
stock options.
-11-
Administration The Plans are administered by the
Compensation Committee of the Board of Directors of the Company, each
member of which is intended to be a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Exchange Act.
Subject to the provisions of the Plans, the Compensation
Committee has the authority and discretion to grant options under the
Plans, to interpret the provisions of the Plans 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 Plans.
Maximum Shares to be Issued The maximum number of shares
that may be issued pursuant to the grant of options under the Plans is
1,700,000 in the aggregate with respect to the 1991 Plan and 2,100,000
in the aggregate with respect to the 1995 Plan (subject to anti-
dilution adjustments). In the event a stock option granted under the
Plans expires or terminates prior to exercise, the shares subject
thereto 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
Plans including without limitation the number of shares covered by
each option, the exercise price, the option period, any vesting
restrictions with respect to the exercise of the option and, with
respect to the 1991 Plan, whether the option is intended to qualify as
an incentive stock option. No option under the 1991 Plan may have an
exercise price of less than the par value of the Common Stock or an
option exercise period of more than ten years. Options intending to
qualify as incentive stock options under the 1991 Plan and all options
under the 1995 Plan must have an exercise price per share of not less
than the fair market value of the Common Stock on the date of grant
and an option exercise period of not more than ten years.
Furthermore, an option intending to qualify as an incentive stock
option and granted to a person who at the time of the grant holds more
than 10% of the total combined voting power of all classes of stock of
the Company must have an exercise price per share of not less than
110% of the fair market value of the Common Stock on the date of grant
and an option exercise period of not more than five years.
Restrictions on Transfer Options under the Plans may not be
transferred 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, except that an option under the 1995
Plan may be transferred to members of the optionee's family or trusts
for their benefit.
Federal Income Tax Consequences The grant of options under
the Plans will have no federal income tax consequences to either the
Company or the option grantee. The exercise of incentive stock
options will generally have no federal tax consequences to either the
Company or the optionee, although the excess of the value of the stock
over the exercise price is potentially subject to the alternative
minimum tax under Section 55 of the Code. Upon exercise of options
other than incentive stock 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 Plans. 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.
-12-
Amendment The Board of Directors of the Company may at any
time amend or terminate the Plans, provided that no such amendment may
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
It is not possible to determine the stock option grants that
will be made pursuant to the Plans in the future. The table below
sets forth information regarding the option grants that have been made
under the Plans since their inception.
Number of Shares
Dollar Underlying Options
Name and Position Value (1) 1991 Plan 1995 Plan
Michael M. Goldberg............. - 266,954 1,050,000
Chairman of the Board and Chief
Executive Officer
Sam J. Milstein................. - 150,478 750,000
President, Chief Scientific Officer
and Secretary
Robert A. Baughman, Jr.......... - 90,268 -
Senior Vice President and
Director of Development
Lewis H. Bender................. - 141,976 -
Vice President of Business Development
All current executive officers
as a group..................... - 649,676 1,800,000
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 - 865,226 75,000
_______________________________
(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
Plans.
Voting
The amendments to the Plans must be approved by a majority
of the total votes cast on each proposal. An abstention from voting
on either proposal will have the effect of a "no" vote. Broker non-
votes are considered not cast and therefore will not affect the
outcome of the vote.
The Board of Directors of the Company deems the approval of
the amendments to the 1991 Stock Option Plan and 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 and FOR Proposal III.
-13-
PROPOSAL IV: APPROVAL OF THE DIRECTORS' DEFERRED COMPENSATION STOCK
PLAN
The Board has unanimously adopted the Directors' Deferred
Compensation Stock Plan ( the "Plan") providing for the
issuance of up to 25,000 shares of the Common Stock in connection with
the payment of deferred compensation to outside directors for
attending meetings of the Board. The Plan is set forth in its
entirety as Appendix A hereto and is summarized below. If the Plan is
not approved by the stockholders, the Company will have to reevaluate
how it will compensate outside directors for attending meetings of the
Board.
Summary of the Plan
The eligible participants in the Plan are the Company's
directors who are neither officers nor employees of the Company and who
do not own 5% or more of the shares of the Common Stock outstanding.
There are currently five directors eligible to participate in the Plan.
Pursuant to the Plan, the Company shall set up and maintain for each
eligible director an account (each a "Share Account"). For each meeting
attended by an eligible director,a number of shares of the Common Stock
will be allocated to such director's Share Account equal to (i) the
amount of compensation as determined by the Board of Directors for
attending such meeting divided by (ii) the fair market value of the
Common Stock as of the date of such meeting. With respect to cash
dividends and distributions paid by the Company, the Plan provides that
a number of shares of the Common Stock shall be allocated to each Share
Account in an amount equal to (i) the amount of the dividend that would
be paid if the shares allocated to the Share Account were issued and
outstanding shares of the Common Stock divided by (ii) the fair market
value of the Common Stock as of the date of payment of such dividend or
distribution. For purposes of the Plan, the fair market value of the
Common Stock as of any date shall be the closing price of the stock on
such date.
The shares allocated to a director's Share Account will be
issued to such director within six months of his or her retirement from
the Board or other termination as a director. It is anticipated, based
on current tax law, that the directors participation in the Plan will
not be subject to any federal income tax until the shares are issued
and delivered to the them, that the amount of the federal income tax
will be based on the value of the shares on the date of issuance and
that the Company will be then entitled to take a corresponding federal
income tax deduction.
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 shares of the
Common Stock outstanding, an appropriate adjustment shall be made, as
determined by the Board of Directors, to the aggregate number of shares
the Company may issue under the Plan and the number of shares allocated
to each Share Account. 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, the Company shall prior
thereto issue and deliver to each of the directors all of the shares
allocated to his or her Share Account.
The Board of Directors may alter, amend, suspend or terminate
the Plan in whole or in part, provided, however, that no alteration,
amendment, suspension or termination shall adversely affect the right
of a director to receive the number of shares allocated to his or her
Share Account.
Benefits under the Plan
It is not possible to determine the benefits or number of
shares that will be received by or allocated to each outside director
until the amount of each meeting fee is specified by the Board and the
fair market value of the shares is determined as of the meeting date.
In no event will a director or officer, other than a non-executive
director, be entitled to receive any benefits under the Plan.
Voting
Approval of the Plan requires a majority of the total votes
cast. An abstention from voting will have the effect of a "no" vote.
Broker non-votes are considered not cast and therefore will not affect
the outcome of the vote.
The Board of Directors of the Company deems the approval of
the Directors' Deferred Compensation Stock Plan to be in the best
interest of the Company and its stockholders and recommends that
holders of the Common Stock vote FOR Proposal IV.
-14-
PROPOSAL V: 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, 1998. 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 V.
FORM 10-K
Stockholder may obtain without charge a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended July
31, 1997 by directing written requests to Investor Relations,
Emisphere Technologies, Inc., 15 Skyline Drive, Hawthorne, New York
10532.
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 January 1999 must be received by the Company no later than
July 31, 1998, 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
November 28, 1997
-15-
Appendix A
EMISPHERE TECHNOLOGIES, INC.
DIRECTORS' DEFERRED COMPENSATION STOCK PLAN
25,000 Shares
1. Purpose
The purpose of the Directors' Deferred Compensation Stock Plan
(the "Plan") of Emisphere Technologies, Inc. (the "Company") is to
attract, compensate and retain well qualified directors by providing
them with deferred compensation for attending meetings of the Board
of Directors or a committee thereof and with an equity interest in
the Company's success.
2. Stock Subject to the Plan
The Company may issue and deliver a total of 25,000 shares of
its common stock, par value $.01 per share (the "Common Stock"),
pursuant to the Plan. Such shares may be either authorized but
unissued shares or treasury shares.
3. Administration
The Plan shall be administered by the Board of Directors of the
Company. The Board 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, the determination of the
amount of compensation for attending each meeting, the adoption of
such rules and regulations as it may deem advisable and the
termination of further share issuances under the Plan.
4. Eligibility
Eligibility to participate in the Plan shall be open to only
those directors of the Company who (i) are neither officers nor
employees of the Company or any of its subsidiaries, (ii) do not
beneficially own five percent or more of the Common Stock outstanding
and (iii) are not affiliated with any person who is such an officer,
employee or owner.
5. Share Accounts
The Company shall set up and maintain for each eligible director
an account (each a "Share Account') representing the number of shares
of the Common Stock which the Company is obligated in the future to
issue and deliver to such director, determined as follows:
(a) for each meeting attended by an eligible director, a
number of shares of the Common Stock shall be added to his or her
Share Account in an amount equal to (i) the amount determined by
the Board of Directors as compensation for attending such meeting
divided by (ii) the fair market value of the Common Stock as of
the date of such meeting;
A-1
(b) for each cash dividend or distribution paid by the
Company with respect to the Common Stock, a number of shares of
the Common Stock shall be added to each Share Account in an
amount equal to (i) the amount of the dividend that would be paid
if the shares in the Share Account were issued and outstanding
shares of the Common Stock divided by (ii) the fair market value
of the Common Stock as of the date of payment of such dividend or
distribution;
(c) As used herein, the fair market value of the Common Stock
as of any date shall be the closing price of the Common Stock on
the Nasdaq National Market on such date. In the event the Common
Stock ceases at any time to be traded on the Nasdaq National
Market, the fair market value of the Common Stock shall be
determined in such manner as may be set by the Board of Directors
of the Company; and
(d) All share calculations shall be made to the nearest one
thousandth of a share.
6. Issuance of Shares
The Company shall within six months following the date each
participant in the Plan ceases to be a director of the Company issue
and deliver to such person all of the shares in his or her Share
Account. In the event of the death of a director, such shares shall
be delivered to the director's estate or legal representative.
Nothing herein shall be deemed to confer any right to continue as a
director of the Company or to limit the right of the Company to
remove a director.
7. Rights as a Stockholder
Until such time as the shares in a director's Share Account have
been issued and delivered to the director in accordance with the
terms of the Plan, the director shall have no rights as a stockholder
with respect to the shares of the Common Stock in his or her Share
Account.
8. Nontransferability of the Share Account
The right to receive shares in a director's Share Account may
not be assigned or transferred except by will or by the laws of
descent and distribution and may be delivered during the life of the
director only to the director.
9. Compliance with Securities Laws
If the shares to be issued under the Plan have not been
registered under the Securities Act of 1933, as amended, the
Company's obligation to issue such shares shall be conditioned upon
receipt of a representation in writing that the director 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
federal or state securities laws.
10. 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 shares of the
Common Stock outstanding, an appropriate adjustment shall be made, as
determined by the Board of Directors of the Company, to the aggregate
number of shares the Company may issue under the Plan and the number
of shares in each Share Account.
(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, the Company shall prior thereto issue
and deliver to each of the directors all of the shares in his or her
Share Account.
A-2
11. Effectiveness of the Plan
The Plan was adopted on September 11, 1997 by resolution of the
Board of Directors of the Company and is effective as of such date.
The Plan shall be submitted to the Company's stockholders for
approval by the affirmative votes of the holders of a majority of the
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.
12. Amendment of the Plan
The Board may at any time and from time to 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 right of a director to receive the number of
shares of the Common Stock in his or her Share Account and (ii) any
amendment which must be approved by the stockholders of the Company
in order to ensure that all transactions under the Plan continue to
be exempt under Rule 16b-3 under the Exchange Act or any successor
provision or to comply with any rule or regulation of a governmental
authority, applicable securities exchange or Nasdaq National Market
shall not be effective unless and until such stockholder approval has
been obtained in compliance with such rule or regulation.
A-3
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
November 26, 1997 at the Annual Meeting of Stockholders to be held on
January 15, 1998 or any adjournments or postponements thereof.
1. ELECTION OF DIRECTORS
Nominees:
Michael M. Goldberg, M.D. STOCKHOLDERS MAY WITHHOLD AUTHORITY TO
Jere E. Goyan, Ph.D VOTE FOR ANY NOMINEE BY DRAWING A LINE
Mark I. Greene, M.D., Ph.D. THROUGH OR OTHERWISE STRIKING OUT THE
Peter Barton Hutt NAME OF SUCH NOMINEE. ANY PROXY
Sam J. Milstein, Ph.D. EXECUTED IN SUCH MANNER AS NOT TO
Howard M. Pack WITHHOLD AUTHORITY TO VOTE FOR THE
Joseph R. Robinson, Ph.D. ELECTION OF ANY NOMINEE SHALL BE DEEMED
TO GRANT SUCH AUTHORITY.
_ GRANT authority to vote for _ WITHOLD authority to
the seven nominees as a vote for the seven
group nominees as a group
2. Approval and adoption of the amendment to the Company's 1991
Stock Option Plan increasing the number of shares of the Common
Stock available for issuance thereunder by 300,000
_ FOR _ AGAINST _ ABSTAIN
3. Approval and adoption of the amendment to the Company's 1995 Non-
Qualified Stock Option Plan increasing the number of shares of
the Common Stock available for issuance thereunder by 200,000
_ FOR _ AGAINST _ ABSTAIN
4. Approval of the Company's Directors' Deferred Compensation Stock
Plan
_ FOR _ AGAINST _ ABSTAIN
5. 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, 1998
_ FOR _ AGAINST _ ABSTAIN
6. 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 , 1998
(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 corporation, please sign in full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
