SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
Neose Technologies, Inc.
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(Name of Registrant as Specified in its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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<PAGE>
NEOSE TECHNOLOGIES, INC.
[NEOSE LOGO]
102 Witmer Road
Horsham, Pennsylvania 19044
Notice of Annual Meeting of Stockholders
June 11, 1998
The Annual Meeting of Stockholders (the "Annual Meeting") of Neose
Technologies, Inc. (the "Company") will be held at the Company's headquarters at
102 Witmer Road, Horsham, Pennsylvania on June 11, 1998 at 1:00 p.m.
(Eastern Daylight Time) for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Stockholders or until their respective successors shall have been duly elected
and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting thereof.
Only stockholders of record at the close of business on April 13, 1998
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the meeting will be available for inspection at
the meeting and for a period of ten days prior to the meeting during regular
business hours at the corporate headquarters at the address specified above.
Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada.
By Order of the Board of Directors
/s/ Stephen A. Roth
------------------------------------
Stephen A. Roth
Chairman and Chief Executive Officer
April 30, 1998
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
- --------------------------------------------------------------------------------
<PAGE>
NEOSE TECHNOLOGIES, INC.
PROXY STATEMENT
April 30, 1998
This Proxy Statement is furnished to stockholders of record of Neose
Technologies, Inc. (the "Company") as of April 13, 1998 in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors" or "Board") for use at the Annual Meeting of Stockholders to be held
at 1:00 p.m. (Eastern Daylight Time) on June 11, 1998 at the Company's office at
102 Witmer Road, Horsham, Pennsylvania, unless postponed (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at the
Annual Meeting in accordance with instructions thereon. If no instructions are
given, shares will be voted "FOR" the election of the named nominees as
directors of the Company, and will be voted in accordance with the best judgment
of the persons appointed as proxies with respect to other matters that properly
come before the Annual Meeting. Any person giving a proxy may revoke it by
written notice to the Company at any time prior to exercise of the proxy. In
addition, although mere attendance at the Annual Meeting will not revoke the
proxy, a stockholder who attends the meeting may withdraw his or her proxy and
vote in person. Abstentions, broker non-votes, and, with respect to the election
of directors, votes that are withheld, will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted in tabulations of shares
present and entitled to vote on each of the proposals presented, whereas broker
non-votes will not be counted in tabulations of shares present and entitled to
vote on each of the proposals presented. Because directors are to be elected by
a plurality of the votes cast, broker non-votes and votes withheld will have no
effect on the election of directors. Because other matters properly brought
before the meeting will generally require an affirmative vote of the majority of
the shares represented in person or proxy and entitled to vote (except as
otherwise required by law, the Company's Second Amended and Restated Certificate
of Incorporation, or the Company's Amended and Restated By-Laws), abstentions on
such matters will have the effect of a negative vote.
The mailing address of the Company is 102 Witmer Road, Horsham,
Pennsylvania 19044. This Proxy Statement and the accompanying form of proxy are
being mailed to the stockholders of the Company on or about April 30, 1998.
Execution and return of the enclosed Proxy Card are being solicited by and on
behalf of the Board of Directors of the Company for the purposes set forth in
the foregoing notice of meeting. The costs incidental to the solicitation and
obtaining of proxies, including the cost of reimbursing banks and brokers for
forwarding proxy materials to their principals, will be borne by the Company.
Proxies may be solicited, without extra compensation, by officers and employees
of the Company by mail, telephone, telefax, personal interviews, and other
methods of communication.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
common stock, par value $0.01 per share (the "Common Stock"). At the Annual
Meeting, each stockholder of record at the close of business on April 13, 1998
will be entitled to one vote for each share of Common Stock owned on that date
as to each matter presented at the Annual Meeting. On April 13, 1998, 9,536,203
shares of Common Stock were outstanding. A list of stockholders eligible to vote
at the Annual Meeting will be available for inspection at the Annual Meeting and
for a period of ten days prior to the Annual Meeting during regular business
hours at the office of the Company at the address specified above.
1
<PAGE>
ELECTION OF DIRECTORS
The accompanying form of proxy provides spaces for a stockholder to
vote for or withhold authority to vote for the nominees for director. Unless
otherwise directed, the persons appointed in the accompanying form of proxy
intend to vote at the Annual Meeting for the election of the seven nominees
named below as directors of the Company to serve until the next Annual Meeting
or until their successors are duly elected and qualified. If any nominee is
unable to be a candidate when the election takes place, the shares represented
by valid proxies will be voted in favor of the remaining nominees and may be
voted for a substitute nominee to be designated by the Board of Directors, or
the Board of Directors may reduce the number of directors. The Board of
Directors does not currently anticipate that any nominee will be unable to be a
candidate for election.
The Board of Directors currently has seven members, all of whom are
nominees for re-election.
The affirmative vote of a plurality of the Company's outstanding Common
Stock represented and voting is required to elect the directors.
The Board of Directors recommends a vote FOR the election of each of
the nominees for director.
Information Regarding Nominees for Election as Directors
The Board of Directors currently has seven members. The following
information with respect to the principal occupation or employment, other
affiliations, and business experience of each nominee during the last five years
has been furnished to the Company by such nominee. Except as indicated, each of
the nominees has had the same principal occupation for the last five years.
Stephen A. Roth, 55, has served as a director of the Company since 1989
and as its Chairman and Chief Executive Officer since August 1994. Dr. Roth
co-founded the Company, and from 1992 until August 1994, he served as Senior
Vice President, Research and Development and Chief Scientific Officer of the
Company. Prior to joining the Company, he was a consultant to the Company. Dr.
Roth was on the faculty of the University of Pennsylvania from 1980 to 1994 and
was Chairman of Biology from 1982 to 1987. Dr. Roth serves on the Editorial
Board of Current Research in Developmental Biology, The Quarterly Review of
Biology, and The Journal of Molecular Recognition. Dr. Roth received his A.B. in
biology from The Johns Hopkins University, his Ph.D. in developmental biology
from the Case Western Reserve University and completed his post-doctorate
training in carbohydrate chemistry at The Johns Hopkins University.
P. Sherrill Neff, 46, has served as President, Chief Financial Officer,
and a director of the Company since December 1994. From 1993 to December 1994,
Mr. Neff was Senior Vice President, Corporate Development at U.S. Healthcare,
Inc., a managed healthcare company. From 1984 to 1993, Mr. Neff worked at Alex.
Brown & Sons Incorporated, an investment banking firm, where he held a variety
of positions, including Managing Director and Co-Head of the Financial Services
Group. Mr. Neff received his B.A. in religion from Wesleyan University and his
J.D. from the University of Michigan Law School. Mr. Neff is a director of
JeffBanks, Inc., a publicly held bank holding company, and Prima Facie, Inc., a
privately held technology company, and is president-elect and director of the
Pennsylvania Biotechnology Association, an industry trade organization.
William F. Hamilton, 59, has served as a director of the Company since
1991. Dr. Hamilton has served on the University of Pennsylvania faculty since
1967 and is the Landau Professor of Management and Technology and Director of
the Jerome Fisher Program in Management and Technology at The Wharton School and
the School of Engineering and Applied Science at the University of Pennsylvania.
Dr. Hamilton serves as a director of the following publicly held companies:
Centocor, Inc., a biopharmaceutical company; Digital Lightwave, Inc., a
manufacturer of telecommunications test equipment; Hunt Manufacturing Co., a
manufacturer of art and office supplies; and Marlton Technologies, Inc., a trade
show supply company. Dr. Hamilton received his B.S. and his M.S. in chemical
engineering and his M.B.A. from the University of Pennsylvania, and his Ph.D. in
applied economics from the London School of Economics.
2
<PAGE>
Douglas J. MacMaster, Jr., 67, has served as a director of the Company
since May 1993. Mr. MacMaster served as Senior Vice President of Merck & Co.,
Inc. ("Merck") from 1988 to 1992, where he was responsible for worldwide
chemical and pharmaceutical manufacturing, the Agvet Division, and the Specialty
Chemicals Group. From 1985 to 1988, Mr. MacMaster was President of the Merck
Sharp Dohme Division of Merck, with responsibility for the U.S. human healthcare
business. Mr. MacMaster was an employee of Merck for 30 years. Mr. MacMaster
serves as a director of the following publicly held companies: American
Precision Industries, Inc., a heat transfer and precision equipment
manufacturing company; Flamel Technologies, S.A., a polymer chemistry and drug
delivery company; Martek Biosciences Corp., a biological products manufacturing
company; Oravax, Inc., a biopharmaceutical company; and U.S. Bioscience, Inc., a
biotechnology company; and is also a director of Stratton Mutual Funds, a family
of mutual funds. In addition, Mr. MacMaster is on the Board of Trustees of
Thomas Jefferson University and Martha's Vineyard Hospital Foundation. Mr.
MacMaster received his B.A. from St. Francis Xavier University and his J.D. from
Boston College Law School.
Lindsay A. Rosenwald, 43, has served as a director of the Company since
1989, and served as its Chairman until August 1994. Dr. Rosenwald is a founder
of several biopharmaceutical companies, including Neose and Interneuron
Pharmaceuticals, Inc. In 1991, Dr. Rosenwald founded Paramount Capital
Investments, LLC, a New York-based venture capital and merchant banking firm,
and in 1992, he founded Paramount Capital, Inc., an investment bank specializing
in the biopharmaceutical industry. In June 1994, Dr. Rosenwald founded Paramount
Capital Asset Management, Inc., a money management firm specializing in the
health sciences industry. Dr. Rosenwald is also Chairman of the Board of
Directors of Interneuron Pharmaceuticals, Inc., and is a director of the
following publicly held biotechnology companies: Avigen, Inc.; BioCryst
Pharmaceuticals, Inc.; Sparta Pharmaceuticals, Inc.; Titan Pharmaceuticals,
Inc.; and VIMRx Pharmaceuticals, Inc. In addition, Dr. Rosenwald is a director
of the following privately held biotechnology companies: Enzymed, Inc. and
Nephros, Inc. Dr. Rosenwald received his B.S. in finance from Pennsylvania State
University and his M.D. from Temple University School of Medicine.
Lowell E. Sears, 47, has served as a director of the Company since
September 1994. Mr. Sears has been a private investor involved in portfolio
management and life sciences venture capital since April 1994. From 1988 until
April 1994, Mr. Sears was Chief Financial Officer of Amgen Inc., a
pharmaceutical company, and from 1992 until 1994, Mr. Sears also served as
Senior Vice President responsible for the Asia-Pacific region. From 1986 until
1988, Mr. Sears was Treasurer and Director of Planning for Amgen Inc. From 1976
to 1986, Mr. Sears held senior financial and planning positions at Atlantic
Richfield Co. Mr. Sears is Chairman of the Board of Directors of CoCensys, Inc.,
a publicly held neuropharmaceuticals company, and is a director of Techne Corp.,
a publicly held biological products manufacturing company; Integrated
Biosystems, Inc., a privately held process equipment manufacturer; and Dendreon
Corporation, a privately held cell processing company. Mr. Sears received his
B.A. in economics from Claremont McKenna College and his M.B.A. from Stanford
University.
Jerry A. Weisbach, 64, has served as a director of the Company since
May 1993. From 1988 to July 1994, Dr. Weisbach served as Director of Technology
Transfer and Adjunct Professor at The Rockefeller University where he was
responsible for licensing technology. Dr. Weisbach served as Vice President of
Warner-Lambert Company from 1981 to 1987 and President, Pharmaceutical Research
Division from 1979 to 1987, where he was responsible for all pharmaceutical
research and development activities. Prior to joining Warner-Lambert, Dr.
Weisbach served at SmithKline and French Laboratories from 1960 to 1979, where
he was Vice President, Research from 1977 to 1979. Dr. Weisbach serves as a
director of the following publicly held companies: CIMA Laboratories, Inc., a
drug delivery company; Foodex, a food technology company; and Inkine. Dr.
Weisbach is also a director of the following privately held companies: Encore;
Exponential Biotherapies, Inc.; and Synthon Corporation. Dr. Weisbach received
his B.S. in chemistry from Brooklyn College and his M.A. and his Ph.D. in
chemistry from Harvard University.
Committees of the Board
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee consists of Dr. Hamilton and Mr. Sears, and its
functions include reviewing with the Company's auditors the plan and results of
their audit and the adequacy of the Company's systems of internal accounting
controls and management information systems. In addition, the Audit Committee
reviews the independence of the auditors and their fees for services rendered to
the Company. The Compensation Committee consists of Dr. Hamilton, Mr. MacMaster,
and Dr. Rosenwald. The
3
<PAGE>
Compensation Committee advises the Chief Executive Officer and the Board of
Directors on compensation matters generally, determines the compensation of the
Chief Executive Officer and the President, reviews and takes action on the
recommendation of the Chief Executive Officer as to the appropriate compensation
of other officers, and approves the grants of bonuses to officers. The
Compensation Committee, subject in certain circumstances to action by the Board
of Directors, and to actions of a committee, the sole member of which is the
Chief Executive Officer (which may grant options to employees who are not
executive officers), also is responsible for the administration of the Company's
Amended and Restated 1995 Stock Option/Stock Issuance Plan (the "Plan") under
which option grants and direct stock issuances may be made to executive
officers.
Nominations for persons to be elected to the Board of Directors may be
made by any stockholder of record at the time of giving the notice described
below. Subject to certain limited exceptions described in the Company's Amended
and Restated By-Laws, for nominations to be brought before an annual meeting by
a stockholder, the stockholder must have given timely notice to the Secretary of
the Company as described below under the heading "Stockholder Proposals For The
1999 Annual Meeting." The notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities and Exchange Act of
1934, as amended (the "Exchange Act") (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected) and (b) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (i) the name
and address of such stockholder, as they appear on the Company's books, and of
such beneficial owner and (ii) the class and number of shares of capital stock
of the Company that are owned beneficially and held of record by such
stockholder and such beneficial owner
Attendance at Board and Committee Meetings
During 1997, the Board of Directors held six meetings (including two by
conference telephone), and the Audit Committee and the Compensation Committee
each held one meeting. During 1997, each director attended at least 75% of the
aggregate of the meetings of the Board of Directors and of the committee or
committees on which he served.
Compensation of Directors
Cash Compensation. Non-employee members of the Board of Directors
receive an annual retainer of $14,000 and are reimbursed for reasonable travel
expenses incurred in connection with their attendance at meetings of the Board
of Directors. Non-employee directors may also receive consulting fees of $2,000
per day of additional service. Under the Director Fee Option Grant Program of
the Plan, the non-employee directors may elect to apply all, or part, of their
annual retainer fees towards the acquisition of options to purchase shares of
Common Stock.
Stock Option Grant. Under the Automatic Option Grant Program of the
Plan, each non-employee director first elected or appointed to the Board of
Directors will automatically be granted an option for 16,666 shares of Common
Stock on the date of his or her election or appointment to the Board of
Directors, provided such individual has not been previously employed by the
Company. In addition, at each annual stockholders meeting, each individual with
at least six months of Board service who is to continue to serve as a
non-employee director following the meeting will automatically be granted an
option for 3,333 shares of Common Stock. On the date of the Annual Meeting, each
non-employee Director will, if re-elected, receive an option grant for 3,333
shares.
Each automatic grant will have a term of ten years, subject to earlier
termination, following the optionee's cessation of service on the Board of
Directors. Each automatic option will be immediately exercisable; but, any
shares purchased upon exercise of the option will be subject to repurchase
should the optionee's service as a non-employee director cease prior to vesting
of the shares. The initial 16,666 share grant will vest in successive equal,
annual installments over the optionee's initial four-year period of Board
service. Each annual 3,333 share grant will vest upon the optionee's completion
of one year of service on the Board of Directors, as measured from the grant
date. However, each outstanding option will immediately vest upon certain
changes in the ownership or control of the Company.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 31, 1998 by (i)
each director (all of whom are nominees for director), (ii) each of the
Company's Chief Executive Officer and the Company's three other most highly
compensated officers in 1997 (together, the "Named Executive Officers"), (iii)
each person known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, and (iv) all directors and executive officers as a
group. Except as otherwise noted below, the information listed on the table
below has been provided by the persons listed in the table below as of March 31,
1998.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock Percentage of
Beneficially Shares
Name Owned(1) Outstanding(1)
- ---- ----------------- --------------
<S> <C> <C> <C>
The TCW Group, Inc.
865 South Figueroa Street
Los Angeles, CA 90017(2).................................. 728,400 7.6%
Lindsay A. Rosenwald, M.D.(3)
c/o Paramount Capital, Inc.
787 7th Avenue
New York, NY 10019......................................... 607,265 6.4%
Stephen A. Roth, Ph.D.(4)........................................ 283,142 2.9
P. Sherrill Neff(5).............................................. 154,637 1.6
Edward J. McGuire, Ph.D(6)....................................... 125,369 1.3
William F. Hamilton, Ph.D.(7).................................... 46,043 *
Douglas J. MacMaster, Jr.(8)..................................... 43,294 *
David A. Zopf, M.D.(9)........................................... 42,532 *
Lowell E. Sears(10).............................................. 36,952 *
Jerry A. Weisbach, Ph.D.(11)..................................... 29,544 *
All current directors and executive officers as a group
(9 persons)(12)............................................. 1,368,778 13.7
</TABLE>
- ---------------
* Less than one percent.
(1) Gives effect to the shares of Common Stock issuable within 60 days of March
31, 1998 upon the exercise of all options and other rights beneficially
owned by the indicated stockholders on that date. Unless otherwise
indicated, the persons named in the table have sole voting and sole
investment control with respect to all shares beneficially owned.
Beneficial ownership is determined in accordance with the rules of the
Commission and includes voting and investment power with respect to shares.
(2) As reflected in Schedule 13G dated February 12, 1998. According to TCW
Group, Inc. ("TCW"), it is a parent holding company which holds such shares
indirectly through the following subsidiaries: (i) Trust Company of the
West, a California corporation and a bank as defined in Section 3(a)(6) of
the Exchange Act, (ii) TCW Asset Management Company, a California
corporation and an Investment Adviser registered under Section 203 of the
Investment Advisers Act of 1940 and (iii) TCW Funds Management, Inc., a
California corporation and an Investment Adviser registered under Section
203 of the Investment Advisers Act of 1940. According to TCW, it has sole
voting and investment power with respect to such shares; however, Robert
Day, an individual, may be deemed to control TCW and may be deemed to
control the following entities: (i) Oakmont Corporation, a California
corporation and an Investment Adviser registered under Section 203 of the
Investment Advisers Act of 1940 and (ii) Cypress International Partners
Limited, a British Virgin Islands corporation and an Investment Adviser
registered under Section 203 of the Investment Advisers Act of 1940. Mr.
Day's address is 200 Park Avenue, Suite 2200, New York, New York 10166.
(3) Includes (i) 75,624 shares of Common Stock owned by Dr. Rosenwald's wife,
(ii) 30,250 shares of Common Stock held by Dr. Rosenwald's wife as
custodian for Dr. Rosenwald's children, (iii) 474 shares of Common Stock
issuable upon exercise of stock options, and (iv) 32,000 shares
5
<PAGE>
of Common Stock held by Rosenwald Foundation, Inc., as to which Dr.
Rosenwald disclaims beneficial ownership. Dr. Rosenwald may be deemed to
share voting and investment power with respect to such shares.
(4) Includes (i) 100,000 shares of Common Stock owned by Dr. Roth's wife, (ii)
15,758 shares of Common Stock owned by Dr. Roth's daughter, and (iii)
79,067 shares of Common Stock issuable upon exercise of stock options.
(5) Includes 147,500 shares of Common Stock issuable upon exercise of stock
options.
(6) Includes 46,750 shares of Common Stock issuable upon exercise of stock
options.
(7) Includes 42,459 shares of Common Stock issuable upon exercise of stock
options.
(8) Includes 27,460 shares of Common Stock issuable upon exercise of stock
options.
(9) Includes 37,449 shares of Common Stock issuable upon exercise of stock
options.
(10) Includes 19,028 shares of Common Stock issuable upon exercise of stock
options. Also includes 17,924 shares of Common Stock owned by the Sears
Family Living Trust, of which Mr. Sears is the trustee.
(11) Includes 27,460 shares of Common Stock issuable upon exercise of stock
options.
(12) See notes (3) through (11).
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C>
Stephen A. Roth, Ph.D...............55 Chairman, Chief Executive Officer, and Director
P. Sherrill Neff....................46 President, Chief Financial Officer, and Director
Edward J. McGuire, Ph.D.............60 Vice President, Research and Development
David A. Zopf, M.D..................55 Vice President, Drug Development
</TABLE>
Information Concerning Executive Officers Who Are Not Directors
Dr. McGuire has served as Vice President, Research and Development of
the Company since April 1990. He is responsible for leading the oligosaccharide
synthesis team. Dr. McGuire was on the faculty of the University of Pennsylvania
from 1985 to April 1990. From 1984 to 1985, Dr. McGuire served as a Senior
Researcher at Genetic Engineering, Inc., a biotechnology company, and from 1972
to 1984 he was a Research Biochemist at the National Jewish Hospital. Dr.
McGuire received his B.A. in biology from Blackburn College, his Ph.D. in
biochemistry/chemistry from the University of Illinois Medical School, and held
National Institutes of Health ("NIH") post-doctoral fellowships at the
University of Michigan and The Johns Hopkins University.
Dr. Zopf has served as Vice President, Drug Development of the Company
since April 1992. From August 1991 to March 1992, Dr. Zopf was a consultant to
the Company on the biomedical applications of complex carbohydrates. From April
1988 to July 1991, Dr. Zopf served as Vice President and Chief Operating Officer
of BioCarb, Inc., a biotechnology company and the U.S. subsidiary of BioCarb AB,
where he managed the research and development programs of novel
carbohydrate-based diagnostics and therapeutics. Dr. Zopf worked at the NIH from
1971 to 1988, most recently as Chief, Section on Biochemical Pathology at the
National Cancer Institute. Dr. Zopf currently serves on the editorial board of
Archives of Biochemistry and Biophysics. Dr. Zopf received his A.B. in zoology
from Washington University and his M.D. from Washington University School of
Medicine.
6
<PAGE>
Summary Compensation Table
The following table sets forth all compensation earned in 1997, 1996,
and 1995 by the Named Executive Officers.
<TABLE>
<CAPTION>
Long-term
Compensation
------------
Annual Compensation Securities
------------------- Underlying All Other
Name and Principal Position Year Salary Bonus Options (#) Compensation
- --------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Roth....................... 1997 $241,500 $72,450 90,000 $5,182(1)(2)
Chief Executive Officer 1996 230,000 52,500 90,000 5,172(1)(2)
1995 200,000 50,000 90,000 5,172(1)(2)
P. Sherrill Neff...................... 1997 236,250 70,875 90,000 5,182(1)(3)
President and Chief Financial 1996 225,000 52,500 90,000 5,235(1)(3)
Officer 1995 225,000 50,000 90,000 5,172(1)(3)
Edward J. McGuire.................... 1997 136,080 45,000 15,000 3,890(1)(4)
Vice President, Research and 1996 129,600 40,000 15,000 3,855(1)(4)
Development 1995 120,000 35,000 10,000 3,745(1)(4)
David A. Zopf......................... 1997 158,760 40,000 15,000 4,434(1)(5)
Vice President, Drug Development 1996 151,200 40,000 15,000 4,372(1)(5)
1995 144,000 30,000 6,666 5,046(1)(5)
</TABLE>
- ------------
(1) Includes $432, $552, and $552 in 1997, 1996, and 1995, respectively, in
premiums paid for group term life insurance.
(2) Includes $4,750, $4,620, and $4,620 of matching contributions in 1997, 1996,
and 1995, respectively, to the Company's tax-qualified employee savings and
retirement plan (the "401(k) Plan").
(3) Includes $4,750, $4,683, and $4,620 of matching contributions in 1997, 1996,
and 1995, respectively, to the 401(k) Plan.
(4) Includes $3,458, $3,303, and $3,193 of matching contributions in 1997, 1996,
and 1995, respectively, to the 401(k) Plan.
(5) Includes $4,002, $3,820, and $4,494 of matching contributions in 1997, 1996,
and 1995, respectively to the 401(k) Plan.
7
<PAGE>
Option Grants in 1997
The following table sets forth certain information concerning grants of
stock options made during 1997 to each of the Named Executive Officers. No stock
appreciation rights were granted to any Named Executive Officer during fiscal
year 1997.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------ Potential Realizable Value
Number of at Assumed Annual Rates of
Securities Percentage of Stock Price Appreciation for
Underlying Total Options Option Term (4)
Options Options Exercise Expiration ----------------------------
Name Granted (1) Granted (2) Price (3) Date 5% 10%
- ---- ----------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Roth....... 90,000 24.4% $18.000 12/03/07 $1,018,809 $2,581,863
P. Sherrill Neff...... 90,000 24.4 18.000 12/03/07 1,018,809 2,581,863
Edward J. McGuire..... 15,000 4.1 13.625 12/19/07 128,530 325,721
David A. Zopf......... 15,000 4.1 13.625 12/19/07 128,530 325,721
</TABLE>
(1) These options are exercisable in four annual installments commencing on the
first anniversary of the date of grant.
(2) Based on an aggregate of 369,000 options granted to employees in 1997,
including options granted to the Named Executive Officers.
(3) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date, or through a
cashless exercise procedure involving a same-day sale of the purchased
shares. The Company may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased shares
and the federal and state income or employment tax liability incurred by the
optionee in connection with such exercise. The optionee may be permitted,
subject to the approval of the plan administrator, to apply a portion of the
shares purchased under the option (or to deliver existing shares of Common
Stock) in satisfaction of such tax liability.
(4) Potential realizable value is based on the assumption that the price per
share of Common Stock appreciates at the assumed annual rate of stock
appreciation for the option term. The assumed 5% and 10% annual rates of
appreciation (compounded annually) over the term of the option are set forth
in accordance with the rules and regulations adopted by the Commission and
do not represent the Company's estimate of stock price appreciation.
8
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth certain information concerning the
number and value of unexercised options held by each of the Named Executive
Officers on December 31, 1997. No stock appreciation rights were outstanding on
December 31, 1997, and no stock appreciation rights were exercised during the
fiscal year ended December 31, 1997 by any of the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Securities
Number of Underlying Unexercised Values of Unexercised
Shares Options (#) In-The-Money Options ($)
Acquired On Value -------------------------- ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen A. Roth..... -- -- 76,984 204,583 $260,196 159,185
P. Sherrill Neff.... -- -- 147,500 222,500 888,763 321,387
Edward J. McGuire... -- -- 46,750 31,250 537,119 57,031
David A. Zopf....... -- -- 37,449 29,582 432,160 46,606
</TABLE>
Employment Arrangements
In December 1994, the Company entered into an employment agreement for
an initial period of three years (with automatic one-year extensions) with P.
Sherrill Neff (the "Neff Agreement"), whereby Mr. Neff is employed as President
and Chief Financial Officer of the Company. Pursuant to the Neff Agreement, Mr.
Neff is to receive a minimum base salary of $225,000 per year and a performance
incentive bonus of up to 50% of base salary at the discretion of the Board of
Directors or the Compensation Committee thereof. In connection with the Neff
Agreement, the Company granted to Mr. Neff options to purchase 100,000 shares of
Common Stock at an exercise price of $5.70 per share, 20,000 of which vested
immediately with the remainder vesting ratably over four years. Pursuant to the
terms of the Neff Agreement, Mr. Neff has entered into a standard noncompetition
and confidentiality agreement with the Company. In addition, if Mr. Neff is
involuntarily terminated without "cause" (as defined in the Neff Agreement) or
terminated voluntarily or involuntarily following certain changes of control of
the Company or a sale of all or substantially all of the Company's assets in a
complete liquidation or dissolution, the Company is required to continue to pay
Mr. Neff for 12 months after termination or, if shorter, the amount of time
remaining in his employment term.
In April 1992, the Company entered into a one-year employment agreement
extendable in one-year increments, with David A. Zopf (the "Zopf Agreement"),
whereby Dr. Zopf is employed as Vice President, Drug Development. The agreement
has been extended through March 1999. The Zopf Agreement currently provides for
an annual base salary of $166,700 and a bonus of up to 25% of base salary at the
discretion of the Chief Executive Officer. In connection with the Zopf
Agreement, the Company granted to Dr. Zopf options to purchase 26,666 shares of
Common Stock at fair market value, which options are now fully vested. The Zopf
Agreement contains certain restrictive covenants, including provisions relating
to noncompetition, nonsolicitation, and the nondisclosure of proprietary
information during his employment with the Company and for specified periods
thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Dr. Hamilton, Mr.
MacMaster, and Dr. Rosenwald. No member of the Compensation Committee was at any
time during 1997 or at any other time an officer or employee of the Company. No
executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
Notwithstanding anything to the contrary, the following Compensation
Committee Report and the Performance Graph on page 12 shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such acts.
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on compensation matters generally,
determines the compensation of the Chief Executive Officer and the President,
reviews and takes action on the recommendation of the Chief Executive Officer as
to the appropriate compensation of other officers, and approves the grants of
bonuses to officers. The Compensation Committee, subject in certain
circumstances to action by the Board of Directors, and to actions of a
committee, the sole member of which is the Chief Executive Officer (which may
grant options to employees who are not executive officers), also is responsible
for the administration of the Company's Amended and Restated 1995 Stock
Option/Stock Issuance Plan under which option grants and direct stock issuances
may be made to executive officers.
General Compensation Policy For Executive Officers. The fundamental
policy of the Compensation Committee is to provide the Company's executive
officers with competitive compensation opportunities based upon their
contribution to the development and financial success of the Company. It is the
Compensation Committee's objective to have a significant portion of each
executive officer's compensation contingent upon the Company's performance, as
well as upon such executive officer's own level of performance. Accordingly, the
compensation package for each executive officer is comprised of three elements:
(i) base salary, which reflects individual responsibilities and performance and
is designed primarily to be competitive with salary levels in the industry, (ii)
cash bonuses, which reflect the achievement of corporate and individual
performance objectives, and (iii) long-term stock-based incentive awards, which
strengthen the mutuality of interests between the executive officers and the
Company's other stockholders.
Factors. The principal factors which the Compensation Committee
considered with respect to each executive officer's compensation for 1997 are
summarized below. The Compensation Committee may, however, in its discretion
apply entirely different factors with respect to executive compensation for
future years.
o Base Salary. The base salary for each executive officer was
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within and
outside the industry, and internal base salary comparability considerations. The
weight given to each of these factors differed from individual to individual, as
the Compensation Committee deemed appropriate. The Compensation Committee made
its decisions as to the appropriate market level of base salary for each
executive officer on the basis of (i) results obtained from certain compensation
surveys and (ii) its understanding of the salary levels in effect for similar
positions at those companies with which the Company competes for executive
talent. Base salaries are generally reviewed on an annual basis, with
adjustments made in accordance with the factors indicated above. The base
salaries for the executive officers in 1997 increased an aggregate of 5% over
1996.
o Bonus. The incentive compensation of executive officers was closely
related to corporate and individual performance. A large portion of the
incentive compensation of executive officers consisted of contingent
compensation. Bonus awards are based on, among other things, corporate and
individual performance objectives that are tailored to the responsibilities and
functions of key executives.
o Long-Term Incentive Compensation. Long-term incentives were provided
through grants of stock options. The grants were designed to align the interests
of each executive officer with those of the Company's other stockholders and
provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the Company. Each option
grant allowed the individual to acquire shares of the Company's Common Stock at
a fixed price per share (generally, the market price on the grant date) over a
specified period of time (up to ten years). Each option becomes exercisable in
installments over a four-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant will
provide a return to the executive
10
<PAGE>
officer only if the executive officer remains employed by the Company during the
vesting period, and then only if the market price of the underlying shares
appreciates.
The number of shares subject to each option grant was set at a level
intended to create meaningful opportunity for appreciation based on the
executive officer's current position with the Company, the base salary
associated with that position, the size of comparable awards made to individuals
in similar positions within the industry, and the individual's personal
performance in recent periods. The Compensation Committee also considered the
number of unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Compensation Committee did not adhere to any specific guidelines as to the
relative option holdings of the Company's executive officers. Options to acquire
an aggregate of 210,000 shares were granted to executive officers in 1997.
Through the Company's Employee Stock Purchase Plan, the Company offers
additional opportunities for equity ownership to executive officers by allowing
them to purchase shares of Common Stock semi-annually through periodic payroll
deductions.
CEO Compensation. In determining the compensation payable to the
Company's Chief Executive Officer, the Compensation Committee focused on two
objectives: (i) establishing a level of base salary competitive with those paid
by biotechnology companies similar in size and market capitalization when
compared with the Company, and competitive with those paid by companies outside
of the industry with which the Company competes for executive talent, and (ii)
making a significant percentage of the total compensation package contingent
upon corporate and individual performance.
The base salary established for Dr. Roth on the basis of the foregoing
criteria was intended to provide a level of stability and certainty each year.
Accordingly, this element of compensation was not affected to any significant
degree by Company performance factors. Dr. Roth's incentive cash compensation
for 1997 was based on the Committee's assessment of his individual performance
and his contribution to the Company's performance.
The long-term incentive component of Dr. Roth's compensation for 1997
consisted of a stock option grant for the purchase of 90,000 shares. This grant
was designed to provide him with a continuing incentive to remain with the
Company and contribute to the Company's financial success. The option will have
value only to the extent Dr. Roth continues in the Company's employ, and then
only if the market price of the option shares appreciates over the option term.
Compliance with Internal Revenue Code Section 162(m). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, the Company
will not be allowed a federal income tax deduction for compensation paid to
certain executive officers, to the extent that compensation exceeds $1 million
per officer in any one year. This limitation will apply to all compensation paid
to the covered executive officers which is not considered to be
performance-based. Compensation which does qualify as performance-based
compensation will not have to be taken into account for purposes of this
limitation. The Amended and Restated 1995 Stock Option/Stock Issuance Plan is
intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation.
Because it is unlikely that the cash compensation payable to any of the
Company's executive officers in the foreseeable future will approach the $1
million limit, the Committee has decided at this time not to take any other
action to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Committee will reconsider this decision should
the individual compensation of any executive officer ever approach the $1
million level.
THE COMPENSATION COMMITTEE
Dr. Hamilton
Mr. MacMaster
Dr. Rosenwald
11
<PAGE>
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 - US Index (the "Nasdaq Composite"), and (ii) the Nasdaq
Stock Market Biotech Index (the "Nasdaq Biotech Index"), assuming an investment
in each of $100 on February 16, 1996. The graph commences on the date the
Company's Common Stock became publicly traded.
[GRAPHIC]
In the printed version of the document, a line graph
appears which depicts the following plot points:
<TABLE>
<CAPTION>
2/16/96 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NTEC 100 148 164 122 144 110 102 144 122
NASDAQ Composite 100 100.9801 108.64666 112.4882 118.36602 112.01144 132.21387 154.54978 143.97503
NASDAQ Biotech Index 100 93.362805 90.464788 94.04433 93.11414 90.277522 94.928471 105.01013 93.049672
</TABLE>
CERTAIN TRANSACTIONS
In connection with the purchase of its facility and its good
manufacturing practices manufacturing expansion, in March 1997, the Company
issued, through the Montgomery County (Pennsylvania) Industrial Development
Authority, $9.4 million of taxable and tax-exempt bonds. The bonds are supported
by a AA-rated letter of credit, and a reimbursement agreement between the
Company's bank, Jefferson Bank, and the letter of credit issuer. To provide
credit support for this arrangement, the Company has agreed to certain financial
covenants and has given a first mortgage on the land, building, improvements,
and certain machinery and equipment to Jefferson Bank. In addition, the Company
has agreed to pay Jefferson Bank a quarterly fee equal to 0.625% of the
outstanding letter of credit amount. Mr. Neff, the President, Chief Financial
Officer, and a director of the Company, is a director of JeffBanks, Inc., the
parent holding company of Jefferson Bank. The Company believes that the terms of
the credit support arrangement generally were no less favorable to the Company
than those that could have been obtained from other lending institutions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
12
<PAGE>
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors, and greater-than-ten percent stockholders are
required by the Commission to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such reports
received by the Company, the Company believes that during the year ended
December 31, 1997, all filing requirements applicable to its officers and
directors were satisfied, except that Douglas MacMaster, Jr., a director of the
Company, failed to report in a timely fashion the purchase of 7,500 shares of
Common Stock in June 1997.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants and auditors since 1994. Arthur Andersen LLP has been selected to
continue in such capacity for the current year. A representative of that firm is
expected to be present at the Annual Meeting with the opportunity to make a
statement if he or she desires to do so and to be available to respond to
appropriate questions.
OTHER MATTERS
Management knows of no matters that are to be presented for action at
the Annual Meeting other than those set forth above. If any other matters
properly come before the Annual Meeting, the persons named in the enclosed form
of proxy will vote the shares represented by proxies in accordance with their
best judgment on such matters.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
In accordance with regulations issued by the Commission and the
Company's Amended and Restated By-Laws, stockholder proposals intended for
presentation at the 1999 Annual Meeting of Stockholders must be received by the
Secretary of the Company by no later than December 31, 1998, and no earlier than
December 1, 1998, if such proposals are to be considered for inclusion in the
Company's Proxy Statement.
By Order of the Board of Directors
/s/ Stephen A. Roth
------------------------------------
Stephen A. Roth
Chairman and Chief Executive Officer
<PAGE>
Horsham, Pennsylvania
April 30, 1998
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
NEOSE TECHNOLOGIES, INC.
June 11, 1998
Please Detach and Mail in the Envelope Provided
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[X] Please mark your
votes as in this
example
FOR all nominees WITHHOLD
at right (except as AUTHORITY
marked to the to vote for all
contrary below) nominees at right
1. ELECTION
OF
DIRECTORS [ ] [ ] Nominees: Stephen A. Roth 2. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS
P. Sherrill Neff MAY PROPERLY COME BEFORE THE MEETING
William F. Hamilton
INSTRUCTION: To withhold authority to vote for Douglas J. MacMaster, Jr. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
an individual nominee, strike a line through that Lindsay A. Rosenwald VOTED FOR THE ELECTION OF DIRECTORS NAMED IN
nominee's name in the list at right. Lowell E. Sears PROPOSAL.
Jerry A. Weisbach
_____________________________________ Dated:_____________________ _____________________________________ Dated:____________________
Signature of Stockholder Signature if held jointly
Note: Please date and sign exactly as your name appears on the envelope in which this material was mailed. If shares are held
jointly, each stockholder should sign. Executors, administrators, trustees, etc. should use full title and, if more than one, all
should sign. If the stockholder is a corporation, please sign full corporate name by an authorized officer. If the stockholder
is a partnership, please sign full partnership name by an authorized person.
</TABLE>
<PAGE>
Neose Technologies, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 11, 1998
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of Neose Technologies, Inc. hereby appoints
Stephen A. Roth, Chairman and Chief Executive Officer and P. Sherrill Neff,
President and Chief Financial Officer and each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Annual Meeting of Stockholders of Neose
Technologies, Inc. to be held at the Company's headquarters at 102 Witmer Road,
Horsham, PA 19044, on June 11, 1998, at 1:00 P.M. (Eastern Daylight Time), or
any adjournment thereof.
