<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
[_]Confidential, for Use of the
[_] Preliminary Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)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:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
765 Old Saw Mill River Road
Tarrytown, New York 10591
November 30, 1999
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Tuesday, January 18, 2000 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
one director of the Company, to approve and adopt amendments to the Company's
1991 Stock Option Plan and 1995 Non-Qualified Stock Option Plan and to ratify
the Board of Directors' selection of PricewaterhouseCoopers LLP to serve as
the Company's independent accountants for the fiscal year ending July 31,
2000.
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
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
765 Old Saw Mill River Road
Tarrytown, New York 10591
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
Tarrytown, New York
November 30, 1999
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
Tuesday, January 18, 2000 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 one director;
2. To approve and adopt an amendment to the Company's 1991 Stock Option
Plan providing for an increase in the maximum number of shares of the
Company's Common Stock available for issuance thereunder by 500,000;
3. To approve and adopt an amendment to the Company's 1995 Non-Qualified
Stock Option Plan providing for an increase in the maximum number of shares
of the Company's Common Stock available for issuance thereunder by 200,000;
4. To ratify the Board of Directors' selection of PricewaterhouseCoopers
LLP to serve as the Company's independent accountants for the fiscal year
ending July 31, 2000; and
5. 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 30,
1999 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, 765 Old Saw Mill River
Road, Tarrytown, New York 10591.
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
Charles H. Abdalian, Jr.
Secretary
<PAGE>
EMISPHERE TECHNOLOGIES, INC.
765 Old Saw Mill River Road
Tarrytown, New York 10591
----------------
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 Tuesday, January 18, 2000, 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 3, 1999.
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 nominee named herein, FOR the approval of the amendments
to the 1991 Stock Option Plan and the 1995 Non-Qualified Stock Option Plan and
FOR ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP to serve as the Company's independent accountants
for the fiscal year ending July 31, 2000.
If a quorum is present at the meeting, the nominee receiving a plurality of
the votes cast will be elected as a director. 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 and the ratification of the Board's selection of
PricewaterhouseCoopers LLP as the Company's independent accountants.
VOTING
Only stockholders of record at the close of business on November 30, 1999
will be entitled to vote at the meeting or any and all adjournments thereof.
As of November 30, 1999 the Company had outstanding 14,489,284 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.
1
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of November 2, 1999,
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 Common Stock outstanding, (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.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner (1) Beneficial Ownership (2) of Class
---------------------------------------- ------------------------ --------
<S> <C> <C>
SAFECO Corporation (3)....................... 1,356,935 9.4%
SAFECO Plaza
Seattle, Washington 98185
Amerindo Investment Advisors Inc. and 1,065,000 7.4%
affiliates (4)..............................
One Embarcardero Center, Suite 2300
San Francisco, California 94111-3162
Elan International Services Ltd. ............ 940,000 6.5%
102 St. James Court
Flatts Smiths FL04
Bermuda
Michael M. Goldberg, M.D. ................... 1,405,267(5) 9.0%
Howard M. Pack............................... 174,363 1.2%
Jere E. Goyan, Ph.D. ........................ 84,000 *
Peter Barton Hutt, Esq. ..................... 84,000 *
Mark I. Greene, M.D., Ph.D. ................. 77,000 *
Joseph R. Robinson, Ph.D. ................... 46,000 *
Robert J. Levenson........................... 15,000(6) *
Robert A. Baughman, Jr., Pharm.D., Ph.D. .... 164,968 1.1%
Lewis H. Bender.............................. 85,705 *
Barry B. Kanarek, M.D., Ph.D. ............... 28,150 *
Charles H. Abdalian, Jr. .................... -- --
All directors and executive officers as a
group....................................... 2,164,453(5)(6) 13.2%
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise specified, the address of each beneficial owner is c/o
the Company, 765 Old Saw Mill River Road, Tarrytown, New York 10591.
2
<PAGE>
(2) 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:
<TABLE>
<CAPTION>
Number of
Shares
---------
<S> <C>
Dr. Goldberg.................................................... 1,353,353
Mr. Pack........................................................ 84,000
Dr. Goyan....................................................... 84,000
Mr. Hutt........................................................ 84,000
Dr. Greene...................................................... 77,000
Dr. Robinson.................................................... 46,000
Mr. Levenson.................................................... 7,000
Dr. Baughman.................................................... 160,268
Mr. Bender...................................................... 80,176
Dr. Kanarek..................................................... 25,000
All directors and executive officers as a group................. 2,000,797
</TABLE>
(3) Based on a Schedule 13G filed November 10, 1999
(4) Based on a Schedule 13G/A filed February 12, 1999, 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 1,065,000 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) Includes 1,000 shares held by the Robert J. and Mira Levenson Family
Foundation, with respect to which shares Mr. Levenson disclaims beneficial
ownership
PROPOSAL I: ELECTION OF DIRECTORS
The Board of Directors consists of seven members divided into three classes
with staggered terms so that the term of one class expires at each annual
meeting of stockholders. At this meeting, one director serving the three-year
term expiring in 2003 is to be elected and Jere E. Goyan, Ph.D. has been
nominated for election. The proxies given pursuant to this solicitation will
be voted, unless authority is withheld, in favor of that nominee. Should the
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 the 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.
3
<PAGE>
Information Concerning Nominees and Continuing Directors
Information regarding the person nominated as a director of the Company and
those directors serving unexpired terms, including 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, is as follows:
<TABLE>
<CAPTION>
Year
First
Elected
Name Age Director Position with the Company
---- --- -------- --------------------------------------
<S> <C> <C> <C>
Michael M. Goldberg, M.D. 40 1990 Chairman of the Board of Directors and
(1)...................... Chief Executive Officer
Jere E. Goyan, Ph.D....... 69 1992 Director
Mark I. Greene, M.D., 51 1995 Director
Ph.D. (2)................
Peter Barton Hutt, Esq. 64 1992 Director
(2)......................
Robert J. Levenson (1).... 58 1998 Director
Howard M. Pack (2)........ 81 1985 Director
Joseph R. Robinson, Ph.D 60 1997 Director
(1)......................
</TABLE>
- --------
(1) Term as a director expires in 2002.
(2) Term as a director expires in 2001.
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.
Jere E. Goyan, Ph.D. retired in 1999 as 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 John Eckman Professor of Medical
Science, School of Medicine at the University of Pennsylvania for more than
the past five years. He currently serves as a director of Ribi ImmunoChem
Research, Inc., a biopharmaceutical company.
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 the biopharmaceutical companies Interneuron Pharmaceuticals, Inc.
and Sparta Pharmaceuticals, Inc.
Robert J. Levenson has been Executive Vice President of First Data
Corporation for more than the past five years. He previously held positions as
a director, Senior Executive Vice President, member of the Office of
4
<PAGE>
the President and Chief Operating Officer of Medco Containment Services, Inc.
and as a director and Group President of Automatic Data Processing, Inc. He
currently serves as a director of First Data Corporation, Superior Telecom
Inc. and Vestcom International, Inc.
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.
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., a pharmaceutical company.
Meetings and Committees of the Board of Directors
During the fiscal year ended July 31, 1999, the Board of Directors of the
Company held four meetings. Each of the incumbent directors except Mr. Hutt
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 two
meetings during the fiscal year ended July 31, 1999.
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, 1999 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 and Mr. Levenson have each
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,
$6.125 for the initial option granted to Mr. Levenson 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.
5
<PAGE>
In addition, for each meeting of the Board or a committee thereof attended,
directors have a right to receive, pursuant to the Directors Deferred
Compensation Stock Plan, a number of shares of the Common Stock, based on the
closing price of the Common Stock on the date of the meeting and an amount
determined by the Board as compensation for the meeting. For meetings attended
during the 1999 fiscal year, Drs. Goyan, Greene and Robinson and Messrs.
Levenson and Pack each earned the right to receive 487 shares and Mr. Hutt
earned the right to receive 343 shares.
During the 1999 fiscal year, Dr. Robinson was granted, pursuant to a
consulting agreement with the Company, an option to purchase 30,000 shares of
the Common Stock for $10.00 per share.
Voting
The nominee receiving a plurality of the votes cast will be elected a
director. 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 nominee
listed above as a director to be in the best interest of the Company and its
stockholders and recommends a vote "FOR" their election.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the aggregate
compensation paid by the Company for the three fiscal years ended July 31,
1999 to the Company's Chief Executive Officer and other executive officers
whose total compensation exceeded $100,000 during the last fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Fiscal Annual Stock
Name and Principal Position Year Compensation (1) Option Grants Other (2)
- --------------------------- ------ ---------------- -------------- ---------
<S> <C> <C> <C> <C>
Michael M. Goldberg, M.D.
.......................... 1999 $369,215 7,445 shares $10,000
Chairman of the Board and 1998 388,506 6,687 shares 9,792
Chief Executive Officer 1997 359,880 4,985 shares(3) 4,750
Robert A. Baughman, Jr.,
Pharm.D, Ph.D............. 1999 $212,260 79,022 shares $ 8,907
Senior Vice President and 1998 175,000 2,844 shares 7,000
Director of Development 1997 195,337 22,724 shares 4,750
Lewis H. Bender ........... 1999 $180,250 3,427 shares $ 7,420
Senior Vice President, 1998 180,096 3,052 shares 7,000
Business Development 1997 144,479 51,843 shares 2,748
Barry B. Kanarek, M.D.,
Ph.D. (4)................. 1999 $273,000 5,071 shares $ 1,667
Senior Vice President, 1998 65,625 126,611 shares --
Clinical
Affairs and Chief Medical
Officer(4)
Charles H. Abdalian, Jr.
(5)....................... 1999 $ 75,410 100,708 shares $ --
Vice President, Chief
Financial
Officer and Secretary
</TABLE>
- --------
(1) Annual compensation consists solely of base salary except that (i) Drs.
Goldberg and Baughman and Mr. Bender were also paid in lieu of earned
vacations $0, $15,385 and $0, respectively, during the 1999 fiscal year,
$40,190, $0 and $10,096, respectively, during the 1998 fiscal year and
$31,280, $22,212 and $0, respectively, during the 1997 fiscal year and
(ii) Dr. Kanarek was also paid $48,000 in the form of a loan made in
connection with his joining the Company in June of 1998 and forgiven
during the 1999 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.
(2) Other compensation consists solely of matching contributions made by the
Company under a defined contribution plan available to substantially all
employees.
(3) Does not include options with respect to 562,315 shares originally granted
to Dr. Goldberg in 1992 in connection with his employment agreement. 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 and under the Company's 1995 Non-Qualified Stock Option Plan with
respect to 300,000 shares. The Board also extended from July 31, 1997 to
July 31, 2002 the expiration dates for such options.
(4) Dr. Kanarek became an executive officer of the Company in June of 1998.
(5) Mr. Abdalian became an executive officer of the Company in April of 1999.
7
<PAGE>
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, 1999:
STOCK OPTION GRANTS DURING THE FISCAL YEAR ENDED JULY 31, 1998
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term
---------------------------
Number Percent
of Shares of Total Exercise
Underlying Option Shares Price
Options Granted to per Expiration
Name Granted (1) Employees (2) Share (1) Date 5% 10%
---- ----------- ------------- --------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg..... 1,429 * $ 9.69 2/1/99 $ 2,443 $ 2,443
2,342 * 7.25 5/1/99 2,997 2,997
2,136 * 6.59 8/1/99 2,443 2,443
1,538 * 9.00 11/1/99 2,443 2,443
Robert A. Baughman, 75,000 10.5% $ 9.50 12/14/08 $ 448,087 $ 1,135,542
Jr..................... 677 * 9.69 2/1/99 1,158 1,158
1,099 * 7.25 5/1/99 1,406 1,406
1,157 * 6.59 8/1/99 1,324 1,324
1,089 * 9.00 11/1/99 1,731 1,731
Lewis H. Bender......... 677 * $ 9.69 2/1/99 $ 1,158 $ 1,158
905 * 7.25 5/1/99 1,158 1,158
1,073 * 6.59 8/1/99 1,228 1,228
772 * 9.00 11/1/99 1,228 1,228
Barry B. Kanarek........ 870 * $ 9.69 2/1/99 $ 1,489 $ 1,489
1,163 * 7.25 5/1/99 1,489 1,489
1,301 * 6.59 8/1/99 1,489 1,489
1,737 * 9.00 11/1/99 2,759 2,759
Charles H. Abdalian, 100,000 13.9% $10.625 3/23/09 $ 668,201 $ 1,693,351
Jr..................... 708 * 9.00 11/1/99 1,125 1,125
</TABLE>
- --------
* Less than 1%
(1) Options that expired or will expire in 1999 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 2008 and 2009 were all granted under the
Company's 1991 Stock Option Plan at prices equal to the fair market value
on the date of grant.
(2) The total number of option shares granted during the 1999 fiscal year to
employees includes 114,248 shares under the Company's Employee Stock
Purchase Plan or Non-Qualified Employee Stock Purchase Plan and 603,375
shares under the Company's 1991 Stock Option Plan.
8
<PAGE>
The following table sets forth information as to the exercises of options
during the fiscal year ended July 31, 1999 and the number and value of
unexercised options held by the executive officers named above as of July 31,
1999:
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Exercises During
the Fiscal Year
------------------
Number of
Shares Underlying Value of Unexercised
Unexercised Options In-the-Money Options (1)
Number -------------------- ------------------------
of Shares Value Exer- Unexer- Unexer-
Name Acquired Realized cisable cisable Exer-cisable cisable
- ---- --------- -------- ----------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael M. Goldberg..... 2,161 $4,862(2) 1,483,353(7) 150,000 $ 1,535 --
2,631 2,863(3)
2,639 30,283(4)
1,505 15,404(4)
1,429 10,092(5)
2,342 4,099(6)
Robert A. Baughman,
Jr..................... 822 $1,850(2) 160,268 50,000 $ 11,635 --
1,064 1,158(3)
677 4,781(5)
1,099 1,923(6)
Lewis H. Bender......... 1,085 $2,441(2) 80,576 61,400 $ 56,342 $ 8,400
1,064 1,158(3)
677 4,781(5)
905 1,583(6)
Barry B. Kanarek........ 1,611 $1,753(3) 25,000 100,000 -- --
870 6,144(5)
1,163 2,035(6)
Charles H. Abdalian,
Jr..................... -- -- -- 100,000 -- --
</TABLE>
- --------
(1) Based on a closing price of $7.50 on July 31, 1999 on the Nasdaq National
Market.
(2) Based on a closing price of $9.69 on August 3, 1998, the date of exercise,
on the Nasdaq National Market.
(3) Based on a closing price of $7.25 on November 2, 1998, the date of
exercise, on the Nasdaq National Market.
(4) Based on a closing price of $13.125 on December 28, 1999, the date of
exercise, on the Nasdaq National Market.
(5) Based on a closing price of $16.75 on February 1, 1999, the date of
exercise, on the Nasdaq National Market.
(6) Based on a closing price of $9.00 on May 3, 1999, the date of exercise, on
the Nasdaq National Market.
(7) 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.
9
<PAGE>
Employment Agreements
The Company has entered into an employment agreement with Michael M.
Goldberg, M.D. expiring on July 31, 2000. Pursuant to the agreement, Dr.
Goldberg is to serve as Chairman and Chief Executive Officer of the Company at
an annual salary of $391,368 for the 2000 fiscal year and is to be nominated
to serve as a member of the Board of Directors. Also pursuant to the
agreement, Dr. Goldberg was granted an option to purchase 750,000 shares of
the Common Stock at an exercise price of $8.625 per share.
The agreement provide that, upon (i) termination by the Company either
without cause or for any reason following a Change of Control (as defined in
the agreement) or (ii) termination by Dr. Goldberg 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 agreement from the
date of termination to July 31, 2000 or (ii) one year's compensation under the
agreement.
Pursuant to an employment agreement with Sam J. Milstein, Ph.D., the
President, Chief Scientific Officer and Secretary of the Company until January
1999, the Company (i) paid Dr. Milstein $124,064 in connection with his
serving as an executive officer of the Company during the 1999 fiscal year and
(ii) paid or accrued for the payment of $489,309 to Dr. Milstein in connection
with the termination of his employment with the Company.
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. The Compensation Committee's policy with respect to
stock options is that their exercise prices should be equal to or above the
fair market value of the Common Stock on the date of grant, that employee
stock options should generally involve a five-year vesting period and that
options previously granted at exercise prices higher than the current fair
market value should not be repriced.
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
continues to advance its technologies in various clinical trials. The
Compensation Committee's consideration of such factors is subjective and
informal.
10
<PAGE>
The compensation of Michael M. Goldberg, the Chief Executive Officer of the
Company, for the 1999 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, 2000, 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.
Compensation Committee of the Board of Directors
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, 1994 in each of the Company's
Common Stock, the stocks comprising the Nasdaq Market Index and the stocks
comprising the Nasdaq Pharmaceutical Index.
[LINE GRAPH]
11
<PAGE>
<TABLE>
<CAPTION>
Emisphere Nasdaq Market Nasdaq Pharm.
--------- ------------- -------------
<S> <C> <C> <C>
7/31/94......... 100 100 100
7/31/95......... 167 140 140
7/31/96......... 182 153 170
7/31/97......... 470 226 199
7/31/98......... 258 266 200
7/31/99......... 182 380 309
</TABLE>
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 2,000,000
shares to 2,500,000 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 2,350,000 shares to
2,550,000. As of October 31, 1999, options with respect to 2,249,560 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, 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.
12
<PAGE>
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 2,500,000 in the aggregate
with respect to the 1991 Plan and 2,550,000 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.
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.
13
<PAGE>
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.
<TABLE>
<CAPTION>
Number of Shares
Underlying Options
Dollar -------------------
Name and Position Value* 1991 Plan 1995 Plan
----------------- ------ --------- ---------
<S> <C> <C> <C>
Michael M. Goldberg................................ -- 266,954 1,050,000
Chairman of the Board and Chief
Executive Officer
Robert A. Baughman, Jr. ........................... -- 165,268 --
Senior Vice President and
Director of Development
Lewis H. Bender.................................... -- 141,976 --
Senior Vice President, Business Development
Barry B. Kanarek................................... -- 125,000 --
Senior Vice President, Clinical Affairs and
Chief Medical Officer
Charles H. Abdalian, Jr. .......................... -- 100,000 --
Vice President, Chief Financial Officer and
Secretary
All current executive officers as a group.......... -- 799,198 1,050,000
All current directors who are not executive
officers as a group............................... -- 30,000 --
All employees, including all current officers who
are not executive officers, as a group............ -- 1,853,802 825,000
</TABLE>
- --------
* Based upon the excess of the fair market value of the Common Stock on the
date of grant over the exercise price.
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.
PROPOSAL IV: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP to serve as
independent accountants for the fiscal year ending July 31, 2000.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since November 1991.
14
<PAGE>
A representative of PricewaterhouseCoopers LLP 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.
On October 1, 1998 Emisphere Technologies, Inc. (the "Company") engaged
PricewaterhouseCoopers LLP as the independent accountants to audit the
financial statements of Ebbisham Limited ("Ebbisham"), the joint venture
company then owned equally by the Company and Elan Corporation plc. KPMG,
Ebbisham's independent chartered accountants upon whose opinion
PricewaterhouseCoopers LLP relied for the period from the commencement of its
operations on September 26, 1996 to July 31, 1997, continued as Ebbisham's
independent chartered accountants but was dismissed by the Company with
respect to an opinion upon which PricewaterhouseCoopers LLP relied for the
fiscal years ended July 31, 1998 and 1999.
Neither PricewaterhouseCoopers LLP's report on the Company's financial
statements for the 1996 and 1997 fiscal years nor KPMG's report on Ebbisham
for the period from the commencement of its operations to July 31, 1997
contained an adverse opinion or disclaimer of opinion and neither report was
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company's 1996 and 1997 fiscal years and the subsequent period
preceding the dismissal of KPMG, there were neither (i) disagreements with
KPMG on any matter of accounting principles or practice, financial statement
disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of KPMG, would have caused it to make reference
to the subject matter thereof in connection with its report nor (ii) any of
the reportable events listed in paragraphs (a)(1)(v)(A) through (D) of Item
304 of Regulation S-K promulgated under the Securities Exchange Act of 1934,
as amended.
Prior to the engagement of PricewaterhouseCoopers LLP as the independent
accountant to audit Ebbisham's financial statements, neither the Company nor
Ebbisham consulted with PricewaterhouseCoopers LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements. The Company's decision to change accountants with
respect to the audit of Ebbisham's financial statements was not recommended or
approved by the audit committee of the Company's Board of Directors.
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 PricewaterhouseCoopers LLP as independent accountants of the
Company.
The Board of Directors of the Company deems the ratification of the
selection of PricewaterhouseCoopers LLP 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 IV.
FORM 10-K
Stockholders may obtain without charge a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended July 31, 1999 by directing written
requests to Investor Relations, Emisphere Technologies, Inc., 765 Old Saw Mill
River Road, Tarrytown, New York 10591.
15
<PAGE>
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 2001
must be received by the Company no later than July 31, 2000, 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
Charles H. Abdalian, Jr.
Secretary
Tarrytown, New York
November 30, 1999
16
<PAGE>
EMISPHERE TECHNOLOGIES INC.
765 OLD SAW MILL RIVER ROAD
TARRYTOWN, NEW YORK 10591
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael M. Goldberg, M.D. and Charles H.
Abdalian, Jr., 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 Emisphere Technologies, In. held of
record by the undersigned on November 30, 1999 at the Annual Meeting of
Stockholders to be held on January 18, 2000 or any adjournments or postponements
thereof.
1. ELECTION OF DIRECTORS
Nominee: STOCKHOLDERS MAY WITHHOLD AUTHORITY TO VOTE FOR ANY
Jere E. Goyan, Ph.D NOMINEE BY DRAWING A LINE THROUGH OR OTHERWISE STRIKING
OUT THE NAME OF SUCH NOMINEE. ANY PROXY EXECUTED IN SUCH
MANNER AS NOT TO WITHHOLD AUTHORITY TO VOTE FOR THE
ELECTION OF ANY NOMINEE SHALL BE DEEMED TO GRANT SUCH
AUTHORITY.
[_] GRANT authority to vote [_] WITHHOLD authority to vote
for the nominee for the nominee
2. Approval and adoption of the amendments to the Company's 1991 Stock Option
Plan
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval and adoption of the amendments to the Company's 1995 Non-Qualified
Stock Option Plan
[_] FOR [_] AGAINST [_] ABSTAIN
4. Ratification of the Board of Directors' selection of PricewaterhouseCoopers
LLP to serve as the Company's independent accountants for the fiscal year
ending July 31, 2000
[_] FOR [_] AGAINST [_] ABSTAIN
5. Authority to vote in their discretion on such other business as may properly
come before the meeting
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
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: ______________________________________
_____________________________________________
(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.
