SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
SHEFFIELD MEDICAL TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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)(1) 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 maximum 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
<PAGE>
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>
SHEFFIELD MEDICAL TECHNOLOGIES INC.
30 ROCKEFELLER PLAZA, SUITE 4515
NEW YORK, NEW YORK 10112
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE [26], 1997
----------------------
To the Stockholders of SHEFFIELD MEDICAL TECHNOLOGIES INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
SHEFFIELD MEDICAL TECHNOLOGIES INC., a Delaware corporation (the "Company"),
will be held at Swissotel New York, The Drake, 440 Park Avenue, New York, New
York 10022, on [Thursday], June [26], 1997 at 10:00 a.m., local time, for the
following purposes:
1. To elect five members of the Board of Directors;
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
the Company's Common Stock;
3. To approve an amendment to the Company's Certificate of
Incorporation to change the name of the Company from
"Sheffield Medical Technologies Inc." to "Sheffield
Pharmaceuticals, Inc."
4. To approve certain amendments to the Company's 1993 Stock
Option Plan.
5. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December
31, 1997; and
6. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on May 13, 1997
are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
GEORGE LOMBARDI
SECRETARY
Dated: New York, New York
May ___, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL
MEETING YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
SHEFFIELD MEDICAL TECHNOLOGIES INC.
30 ROCKEFELLER PLAZA, SUITE 4515
NEW YORK, NEW YORK 10112
-------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE [26], 1997
-------------------------
INTRODUCTION
This Proxy Statement is furnished to the stockholders of SHEFFIELD
MEDICAL TECHNOLOGIES INC., a Delaware corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company of Proxies for
the Annual Meeting of Stockholders to be held at Swissotel New York, The Drake,
440 Park Avenue, New York, New York 10022, on [Thursday], June [26], 1997 at
10:00 a.m., local time, or at any adjournments thereof. The approximate date on
which this Proxy Statement and the accompanying Proxy will be first sent or
given to stockholders is May [ ], 1997.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on May 13, 1997
consisted of ____________ shares of Common Stock, $.01 par value (the "Common
Stock"), entitling the holders thereof to one vote per share. Only stockholders
of record as at that date are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. A majority of the outstanding shares of
Common Stock present in person or by proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies, in the accompanying form
of Proxy, which are properly executed, duly returned and not revoked, will be
voted in accordance with the instructions contained therein. If no specification
is indicated on the Proxy, the shares represented thereby will be voted (i) for
the election as directors of the persons who have been nominated by the Board of
Directors, (ii) to approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
thirty million (30,000,000) shares to fifty million (50,000,000) shares, (iii)
to approve an amendment to the Company's Certificate of Incorporation to change
the name of the Company from "Sheffield Medical Technologies Inc." to "Sheffield
Pharmaceuticals, Inc.," (iv) to approve certain amendments to the Company's 1993
Stock Option Plan (the "1993 Stock Option Plan"), (v) to ratify the appointment
of Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending December 31, 1997 and (vi) for any other matter that may properly come
before the Annual Meeting in accordance with the judgment of the person or
persons voting the Proxy.
The execution of a Proxy will in no way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any Proxy executed and returned by
a stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Annual Meeting or by execution of a subsequent Proxy which is
presented to the Annual Meeting, or if the stockholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common Stock as
to which a stockholder abstains are included for purposes of determining the
presence or absence of a quorum at the Annual Meeting. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner. Broker "non-votes" are not included in the tabulation of the voting
results on the election of directors or issues requiring approval of the
majority of the votes present and, therefore, do not have the effect of votes in
opposition in such tabulations. An abstention from voting on a matter or a Proxy
instructing that a vote be withheld has the same effect as a vote against a
matter since it is one less vote for approval.
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<PAGE>
All expenses in connection with this solicitation will be borne by the
Company. It is expected that solicitations will be made primarily by mail, but
regular employees or representatives of the Company may also solicit Proxies by
telephone, telegraph or in person, without additional compensation. In addition,
the Company has engaged MacKenzie Partners, Inc., a proxy solicitation firm, to
assist in the solicitation of Proxies and will pay such firm a fee, estimated at
$1,500, plus reimbursement of reasonable out-of-pocket expenses. The Company
will, upon request, reimburse brokerage houses and persons holding shares in the
names of their nominees for their reasonable expenses in sending solicitation
material to their principals.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Company's Common Stock, as of May 13, 1997, by (i) each director and director
nominee, (ii) each executive officer, (iii) all directors and executive officers
as a group and (iv) each person known to the Company to be the beneficial owner
of more than five percent of the Common Stock.
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER(1) OWNED COMMON STOCK(2)
Douglas R. Eger........................... 827,456(3) 6.7%
Loren G. Peterson......................... 200,500 1.7%
Thomas M. Fitzgerald...................... 59,972(4) *
John M. Bailey............................ 50,000(5) *
Digby W. Barrios.......................... --- *
David A. Byron............................ 200,000 1.7%
Carl F. Siekmann ......................... 200,000 1.7%
George Lombardi .......................... 109,972(6) *
Michael Zeldin............................ 80,118(7) *
- --------------------
All Directors, Director nominees
and Executive Officers as a Group
(9 persons)............................... 1,728,018 13.7%
- ------------------
* Less than 1%.
(1) The persons named in the table, to the Company's knowledge, have sole
voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes hereunder.
Unless otherwise indicated, the address of each person identified in
the table is c/o Sheffield Medical Technologies Inc., 30 Rockefeller
Plaza, Suite 4515, New York, New York 10112.
(2) Calculations assume that all options and warrants held by each director
and executive officer and exercisable at or within 60 days after May
13, 1997 have been exercised.
(3) Includes 475,000 shares of Common Stock issuable upon exercise of
options and warrants exercisable within 60 days of May 13, 1997.
(4) Includes 50,000 shares of Common Stock issuable upon exercise of
options and warrants exercisable within 60 days of May 13, 1997.
-2-
<PAGE>
(5) Consists of 50,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after May 13, 1997. These options
are held by John M. Bailey Associates Limited, trading as Bailey
Associates ("Bailey Associates"), a company of which Mr. Bailey is a
principal and majority shareholder.
(6) Includes 100,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days of May 13, 1997.
(7) Includes 75,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after May 13, 1997.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors of the Company hold office until the next annual meeting of
stockholders or until their successors are elected and qualified. Directors
shall be elected by a plurality of the votes cast, in person or by proxy, at the
Annual Meeting. If no contrary instructions are indicated, Proxies will be voted
for the election of Douglas R. Eger, Loren G. Peterson, Thomas M. Fitzgerald,
John M. Bailey and Digby W. Barrios the five nominees of the Board of Directors.
All of the nominees are currently directors of the Company. The Company does not
expect that any of the nominees will be unavailable for election, but if that
should occur before the Annual Meeting, the Proxies will be voted in favor of
the remaining nominees and may also be voted for a substitute nominee or
nominees selected by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ELECTION OF EACH OF THE NOMINEES
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and paragraphs set forth information regarding each
Director, Director nominee and executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION WITH COMPANY
<S> <C> <C> <C>
Douglas R. Eger............................... 36 November 1991 Chairman and Director
Loren G. Peterson............................. 40 April 1997 Chief Executive Officer and
Director
Thomas M. Fitzgerald.......................... 47 September 1996 President, Chief Operating
Officer and Director
John M. Bailey................................ 49 April 1997 Director
Digby W. Barrios.............................. 59 April 1997 Director
David A. Byron................................ 48 --- Executive Vice President -
Scientific Affairs
Carl F. Siekmann.............................. 53 ---- Executive Vice President -
Corporate Development
George Lombardi............................... 53 --- Vice President, Chief
Financial Officer, Treasurer
and Secretary
Michael Zeldin................................ 59 --- Vice President
</TABLE>
DOUGLAS R. EGER. Mr. Eger has been a Director of the Company since
November 1991, served as President of the Company from March 1992 through June
1994 and has served as Chairman of the Company since June 1994. On February 13,
1995, Mr. Eger was elected Co-Chief Executive Officer of the Company and was
elected Chief Executive Officer in February 1996. Mr. Eger served as Chief
Executive Officer of the Company until April 1997. From 1987 to 1990, Mr. Eger
was the owner of Eger Innovation Group, a privately held company engaged in a
variety of technology development and venture capital activities. Mr. Eger was a
founder of Eger Innovation Group, Inc. and a successor company, TechSource
Development Corporation, a company founded in 1990 to assist universities in the
development and commercialization of promising scientific discoveries.
LOREN G. PETERSON. Mr. Peterson has been the Chief Executive Officer
and a Director of the Company since April 1997. From January 1997 to April 1997,
Mr. Peterson was a principal of Camelot Pharmacal, L.L.C., a privately held
pharmaceutical development company he co-founded. From 1993 to 1996, Mr.
Peterson served as Vice President - Finance and Chief Financial Officer of Bock
Pharmacal Company, a privately held pharmaceutical company. From 1989 to 1993,
Mr. Peterson was a partner of the accounting firm of Coopers & Lybrand LLP.
THOMAS M. FITZGERALD. Mr. Fitzgerald has been a Director of the Company
since September, 1996, has served as Chief Operating Officer of the Company
since June 1996 and has served as President of the Company since February 1997.
From 1989 to 1996 Mr. Fitzgerald was the Vice President and General Counsel of
Fisons Corporation, an operating unit of Fisons Group plc, a U.K.-based ethical
pharmaceutical company ("Fisons"). Mr. Fitzgerald was Assistant General Counsel
of SmithKline Beecham prior to joining Fisons.
-4-
<PAGE>
JOHN M. BAILEY. Mr. Bailey has been a Director of the Company since
April 1997. Mr. Bailey is the founder and majority shareholder of Bailey
Associates, a consultancy specializing in providing companies with strategic
advice and support through mergers, collaborations and divestments. From 1978 to
1996, Mr. Bailey was employed by Fisons, where he has held a number of senior
positions. In 1993, Mr. Bailey was appointed to the main board of Fisons and, in
1995, he was appointed Corporate Development Director of Fisons. In that role he
was directly responsible for worldwide strategic and corporate development and
for all merger, divestment, acquisition and business development activities of
Fisons Group worldwide.
DIGBY W. BARRIOS. Mr. Barrios has been a Director of the Company since
April 1997. Since 1992, Mr. Barrios has been a private consultant to the
pharmaceutical industry. Mr. Barrios served from 1985 to 1987 as Executive Vice
President, and from 1988 to 1992 as President and Chief Executive Officer, of
Boehringer Ingelheim Corporation.
DAVID A. BYRON. Mr. Byron has been Executive Vice President - Corporate
Development of the Company since April 1997. From January 1997 to April 1997,
Mr. Byron was a principal of Camelot Pharmacal, L.L.C., a privately held
pharmaceutical development company he co-founded. From 1994 to December 1996,
Mr. Byron served as Vice President of Scientific Affairs of Bock Pharmacal
Company, a privately held pharmaceutical company. From 1990 to 1994, Byron
served as Senior Director - New Product Development of Sanofi-Winthrop
Pharmaceuticals Corporation.
CARL F. SIEKMANN. Mr. Siekmann has been Executive Vice President -
Corporate Development of the Company since April 1997. From January 1997 to
April 1997, Mr. Siekmann was a principal of Camelot Pharmacal, L.L.C., a
privately held pharmaceutical development company he co-founded. From 1992 to
1996, Mr. Siekmann served as Vice President of Business Development of Bock
Pharmacal Company, a privately held pharmaceutical company.
GEORGE LOMBARDI. Mr. Lombardi has been the Vice President and Chief
Financial Officer of the Company since September 1995. From October 1994 until
September 1995, Mr. Lombardi was Vice President and Chief Financial Officer and
Director of Fidelity Medical Inc. From 1993 to 1994, Mr. Lombardi was the Senior
Financial Executive for the New Jersey and New England operations of National
Health Laboratories Inc. From 1986 until 1992, Mr. Lombardi was Vice President,
Finance and Administration for Henley Chemicals, Inc., a subsidiary of
Boehringer Engleheim Pharmaceutical Company. From 1976 until 1986, Mr. Lombardi
held various financial positions with the Revlon Healthcare Group in New York.
MICHAEL ZELDIN, PH.D. Mr. Zeldin has been a Vice President of the
Company since April 1997. Mr. Zeldin served as Chief Scientific Officer and
Director of the Company from June 1996 to April 1997. Mr. Zeldin served as Chief
Operating Officer and Executive Vice President - Corporate Development of the
Company from March 1996 to June 1996. From 1989 to March 1996, Mr. Zeldin was
President of Cambridge Biomedical Management, a management assistance firm
specializing in the biomedical and pharmaceutical industries. From 1985 to 1989,
Mr. Zeldin was President and Director of Research of Procept, Inc., a developer
of immunotherapeutic technologies and products.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held five meetings during the
fiscal year ended December 31, 1996. From time to time during such fiscal year,
the members of the Board acted by unanimous written consent. The Company has
standing Stock Option, Compensation, Audit and Scientific Review Committees. The
Stock Option Committee reviews, analyzes and approves grants of stock options
and stock to eligible persons under the Company's 1993 Stock Option Plan and the
Company's 1993 Restricted Stock Plan. The current members of the Stock Option
Committee (appointed in April 1997) are Digby W. Barios and John M. Bailey. The
Stock Option Committee did not hold any formal meetings in 1996, but approved
certain actions by written consent. The Compensation
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<PAGE>
Committee reviews, analyses and makes recommendations to the Board of Directors
regarding compensation of Company directors, employees, consultants and others,
including grants of stock options (other than stock option grants under the
Company's 1993 Stock Option Plan). The current members of the Compensation
Committee (appointed in April 1997) are Digby W. Barios, John M. Bailey and
Douglas R. Eger. The Compensation Committee did not hold any formal meeting in
1996, but approved certain actions by written consent. The Audit Committee
reviews, analyzes and makes recommendations to the Board of Directors with
respect to the Company's compensation and accounting policies, controls and
statements and coordinates with the Company's independent public accountants.
The current members of the Audit Committee (appointed in April 1997) are John M.
Bailey and Loren G. Peterson.
BOARD OF DIRECTORS COMPENSATION
The Company does not currently compensate Directors who are also
executive officers of the Company for their service on the Board of Directors.
Under current Company policy, each non-employee director of the Company receives
a fee of $750 for each Board of Directors meeting attended and $400 for each
Board of Directors committee meeting attended. Directors are reimbursed for
their expenses incurred in attending meetings of the Board of Directors and its
committees.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer of the
Company ("CEO") and the executive officers of the Company (other than the CEO)
who were executive officers of the Company during the fiscal year ended December
31, 1996 and whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1996. See "Employment Agreements" below for a summary of
the terms of the executive officers' current employment agreements with the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- -----------------
OTHER ANNUAL SECURITIES
NAME AND COMPENSATION UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)
------------------ ---- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Douglas R. Eger, Chairman............ 1996 $230,000 $25,000 0 0
1995 $172,500 0 0 80,000
1994 $ 96,000 0 0 0
0 0
Michael Zeldin, Vice President ...... 1996 $131,250 0 0 250,000
George Lombardi, Chief
Financial Officer, Treasurer 1996 $122,652 0 0 0
and Secretary........................ 1995 $32,500 0 0 100,000
</TABLE>
- ---------------------
(1) PERQUISITES AND OTHER PERSONAL BENEFITS, SECURITIES OR PROPERTY
DELIVERED TO EACH EXECUTIVE OFFICER DID NOT EXCEED THE LESSER OF
$50,000 OR 10% OF SUCH EXECUTIVE'S SALARY AND BONUS.
THE FOLLOWING TABLE SETS FORTH CERTAIN INFORMATION REGARDING STOCK
OPTION GRANTS MADE TO MESSRS. FITZGERALD AND ZELDIN DURING THE FISCAL YEAR ENDED
DECEMBER 31, 1996.
-7-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
% OF TOTAL
NO. OF SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE
<S> <C> <C> <C> <C>
Thomas M. Fitzgerald 50,000 11% $5.25 5/31/01
President and 50,000 11% $6.75 5/31/01
Chief Operating 50,000 11% $8.25 5/31/01
Officer
Michael Zeldin, Vice 75,000 16% $5.25 2/28/01
President 100,000 21% $6.75 2/28/01
75,000 16% $8.25 2/28/01
</TABLE>
The following table sets forth certain information regarding
unexercised stock options held by Messrs. Eger, Fitzgerald, Zeldin and Lombardi
as of December 31, 1996.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
No. of
Securities
Shares Value (1) of
Underlying Unexercised In-
Unexercised The-Money
Options at FY- Options at FY-
Shares End (#) End ($)
Acquired on Value Exercisable/ Exercisable/
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Douglas R. Eger 50,000 $ 171,875 475,000/25,000 365,850/46,250
Chairman
Thomas M. Fitzgerald, President -- -- 0/150,000 --
and Chief Operating Officer
Michael Zeldin, -- -- 75,000/175,000 --
Vice President
George Lombardi, -- -- 50,000/50,000 --
Vice President, Chief Financial
Officer, Treasurer and Secretary
</TABLE>
- -----------------
(1) Represents the total gain that would be realized if all-in-the-money
options held at December 31, 1996 were exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and the closing
sale price of Common Stock of $3.75 per share reported
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<PAGE>
by AMEX for December 31, 1996. An option is in-the-money if the fair
market value of the underlying shares exceeds the exercise price of the
option.
EMPLOYMENT AGREEMENTS
In October 1995, the Company entered into a two-year employment
agreement with Douglas R. Eger, pursuant to which Mr. Eger serves as the
Company's Chairman. The term of the agreement is automatically extended for an
additional one year term from year to year unless either party notifies the
other of its intention to terminate at least 60 days prior to the end of the
then current term. Mr. Eger is required to devote such time, attention and
energy to the Company as required for performance of his duties under the
agreement. The agreement includes confidentiality and non-compete provisions.
Mr. Eger's annual base salary under the agreement is $230,000.
In September 1995, the Company entered into a two-year employment
agreement with George Lombardi pursuant to which Mr. Lombardi serves as Vice
President and Chief Financial Officer of the Company. Such agreement
automatically renews for successive one-year terms unless either party provides
written notice to the other of his or its intent to terminate at least 90 days
prior to the initial day of new term. If Mr. Lombardi's employment is terminated
other than for cause, he is entitled to receive a severance payment of $65,000
payable in six $10,833 installments. The agreement contains non-compete and
confidentiality provisions. Mr. Lombardi's annual base salary under the
agreement is currently $130,000.
In March 1996, the Company entered into a two-year employment agreement
with Michael Zeldin pursuant to which Mr. Zeldin serves as Vice President of the
Company. The agreement automatically renews for successive one year terms unless
either party provides written notice to the other of his or its intent to
terminate at least 90 days prior to the end of the current term. The agreement
contains non-compete and confidentiality provisions. Mr.
Zeldin's annual base salary under the agreement is $175,000.
In June 1996, the Company entered into a three-year employment
agreement with Thomas M. Fitzgerald pursuant to which Mr. Fitzgerald serves as
Chief Operating Officer of the Company. Such agreement automatically renews for
successive one-year terms unless either party provides written notice to the
other of his or its intent to terminate at least six months prior to the end of
the then current term. If Mr. Fitzgerald's employment is terminated other than
for cause, he is entitled to receive a severance payment of $87,500, payable in
six equal monthly installments. The agreement contains non-compete and
confidentiality provisions. Mr. Fitzgerald's annual base salary under the
agreement is currently $175,000.
In April 1997, the Company entered into a five-year employment
agreement with Loren G. Peterson pursuant to which Mr. Peterson serves as Chief
Executive Officer of the Company. Such agreement automatically renews for
successive one-year terms unless either party provides written notice to the
other of his or its intent to terminate at least six months prior to the end of
the then current term. If Mr. Peterson's employment is terminated other than for
cause, he is entitled to receive a severance payment equal to seventy-five
percent of his then current base salary, payable in nine equal monthly
installments. The agreement contains non-compete and confidentiality provisions.
Mr. Peterson's annual base salary under the agreement is $175,000.
In May 1997, the Company entered into a five-year employment agreement
with Carl F. Siekmann pursuant to which Mr. Siekmann serves as Executive Vice
President - Corporate Development of the Company. Such agreement automatically
renews for successive one-year terms unless either party provides written notice
to the other of his or its intent to terminate at least six months prior to the
end of the then current term. If Mr. Siekmann's employment is terminated other
than for cause, he is entitled to receive a severance payment equal to
seventy-five percent of his then current base salary, payable in nine equal
monthly installments. The agreement contains non-compete and confidentiality
provisions. Mr. Siekmann's annual base salary under the agreement is $160,000.
In May 1997, the Company entered into a five-year employment agreement
with David A. Byron pursuant to which Mr. Byron serves as Executive Vice
President - Scientific Affairs of the Company. Such agreement
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<PAGE>
automatically renews for successive one-year terms unless either party provides
written notice to the other of his or its intent to terminate at least six
months prior to the end of the then current term. If Mr. Byron's employment is
terminated other than for cause, he is entitled to receive a severance payment
of equal to seventy-five percent of his then current base salary, payable in
nine equal monthly installments. The agreement contains non-compete and
confidentiality provisions. Mr. Byron's annual base salary under the agreement
is $160,000.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
all Section 16(a) forms that were required to be filed during the fiscal year
ended December 31, 1996 were filed in compliance with the applicable
requirements of Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 25, 1997, Camelot Pharmacal, L.L.C., a Missouri limited
liability company ("Camelot"), merged with and into CP Pharmaceuticals, Inc., a
newly formed subsidiary of the Company. The principals of Camelot at the time of
the merger were Loren G. Peterson, Carl F. Siekmann and David A. Byron. Pursuant
to the related agreement and plan of merger, Messrs. Peterson, Siekmann and
Byron each received 200,000 shares of Common Stock. Following the consummation
of the merger, each of Messrs. Peterson, Siekmann and Byron entered into
employment agreements with Sheffield and received stock options providing each
individual the right to purchase up to 400,000 shares of Common Stock. The
Company has agreed to reimburse Messrs. Peterson, Siekmann and Byron upon the
occurrence of certain events for certain income taxes payable by them upon
exercise of their stock options in an amount of up to $250,000 per person. In
connection with the merger, Anthony B. Alphin, Jr., Bernard Laurent, Stephen
Sohn and Michael Zeldin resigned as Directors of the Company.
In connection with Arthur M. Jenke's resignation as Director and Chief
Financial Officer of the Company in September 1994, the Company entered into a
consulting agreement with Mr. Jenke. Pursuant to the consulting agreement, Mr.
Jenke agreed to provide advice to the Company in connection with various Company
matters, including periodic filings and registration statements with the
Commission. Mr. Jenke received approximately $5,300 per month for his services
under the consulting agreement and was reimbursed for his related expenses. In
addition, the consulting agreement provides that the Company shall permit Mr.
Jenke to effect a "cashless" exercise of his outstanding options and warrants.
Mr. Jenke's services to the Company as a consultant concluded in January 1995.
The Company issued Mr. Jenke 162,877 shares of Common Stock in September, 1996
in satisfaction of its obligation to effect a cashless exercise of Mr. Jenke's
outstanding options and warrants.
In October 1996, the Company entered into a consulting agreement with
Bailey Associates pursuant to which Bailey Associates agreed to provide, among
other services, evaluations of the Company's business and current and future
projects. Pursuant to such agreement, the Company agreed to grant Bailey
Associates stock options for up to 100,000 shares of Common Stock upon
satisfactory completion of certain assignments. As of the date of this Proxy
Statement, options to purchase 50,000 shares of Common Stock have been issued to
Bailey Associates under the terms of the consulting agreement. In addition, the
Company has agreed to pay Bailey Associates a fee of from two to five percent of
the net proceeds received by Sheffield for any technology out-licensing or sales
arranged by Bailey Associates of projects being developed by the Company's
subsidiary, Ion Pharmaceuticals, Inc. ("Ion"), and a fee of from two to five
percent of the sale price of Common Stock sold in a merger or sale of the
Company arranged by Bailey Associates. John M. Bailey, a Director of the
Company, is a principal and majority shareholder of Bailey Associates.
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Dr. Stephen Sohn and Bernard Laurent, former Directors of the Company,
each received fees of $16,667 and $72,000, respectively, in 1996 from the
Company in consideration of scientific consulting services rendered to the
Company by them.
In April 1997, the Company made a loan of $80,000 to Douglas R. Eger.
The loan is payable in full, together with accrued interest, on December 31,
1997 and is secured by 30,000 shares of Common Stock owned by Mr. Eger.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN
PROPOSAL NO. 2
INCREASE AUTHORIZED COMMON STOCK
The Board of Directors recommends an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from thirty million (30,000,000) shares to fifty million
(50,000,000) shares. No increase is proposed in the currently authorized number
of shares of the Company's Preferred Stock. If approved by the stockholders, the
first sentence of Article Four of the Company's Certificate of Incorporation
would be amended to provide as follows:
"Fourth: The total number of shares of stock that the Corporation shall
have authority to issue is (i) fifty million (50,000,000) shares of
Common Stock, $0.01 par value per share ("Common Stock"), and (ii)
three million (3,000,000) shares of Preferred Stock, $0.01 par value
per share ("Preferred Stock").
The Company is currently authorized to issue 30,000,000 shares of
Common Stock. As of May 13, 1997, the record date for the Annual Meeting,
____________ shares of Common Stock were issued and outstanding, and
approximately an additional ___________ shares of Common Stock were reserved for
issuance upon exercise of outstanding stock options and warrants and for options
that may be granted in the future under the 1993 Stock Option Plan and the 1996
Directors Plan (assuming the approval of the amendment to the 1993 Stock Option
Plan by stockholders described in this proxy statements).
The Board of Directors of the Company believes that it is advisable and
in the best interests of the Company to have available authorized but unissued
shares of Common Stock in an amount adequate to provide for the future needs of
the Company. The additional shares will be available for issuance from time to
time by the Company in the discretion of the Board of Directors, normally
without further stockholder action (except as may be required for a particular
transaction by applicable law, requirements of regulatory agencies or by stock
exchange rules), for any proper corporate purpose including, among other things,
future acquisitions of property or securities of other corporations, stock
dividends, stock splits, convertible debt financing and equity financings. No
stockholder of the Company would have any preemptive rights regarding future
issuance of any shares of Common Stock.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common Stock. However, the
Board of Directors believes that if an increase in the authorized number of
shares of Common Stock were to be postponed until a specific need arose, the
delay and expense incident to obtaining the approval of the Company's
stockholders at that time could significantly impair the Company's ability to
meet financing requirements or other objectives.
Issuing additional shares of Common Stock may have the effect of
diluting the stock ownership of persons seeking to obtain control of the
Company. Although the Board of Directors has no present intention of doing so,
the Company's authorized but unissued Common Stock and Preferred Stock could be
issued in one or more
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transactions that would make more difficult or costly, and less likely, a
takeover of the Company. The proposed amendment to the Company's Certificate of
Incorporation is not being recommended in response to any specific effort of
which the Company is aware to obtain control of the Company, nor is the Board of
Directors currently proposing to stockholders any anti-takeover measures.
The affirmative vote of the holders of a majority of outstanding shares
of Common Stock is required for approval of the proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
PROPOSAL NO. 3
CHANGING THE NAME OF THE CORPORATION FROM
"SHEFFIELD MEDICAL TECHNOLOGIES INC."
TO "SHEFFIELD PHARMACEUTICALS, INC."
The Board of Directors has unanimously approved for submission to a
vote of stockholders a proposal to amend the Company's Certificate of
Incorporation to change the name of the Company from "Sheffield Medical
Technologies Inc." to "Sheffield Pharmaceuticals, Inc." The purpose of this
amendment is to emphasize the Company's strategy to develop commercially
attractive pharmaceutical products. The Board of Directors has recommended the
change of the Company's name because it believes that the new name better
reflects the purposes and goals of the Company.
The affirmative vote of a majority of the outstanding shares of Common
Stock is required for approval of the proposed amendment to change the name of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
PROPOSAL NO. 4
APPROVAL OF AMENDMENTS TO 1993 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously approved for
submission to a vote of the shareholders proposals to amend the 1993 Stock
Option Plan to provide, among other things, (i) an increase in the number of
shares reserved for issuance pursuant to the exercise of options granted
thereunder from 1,000,000 shares of Common Stock to 3,000,000 shares of Common
Stock, (ii) that the 1993 Stock Option Plan be administered by a committee of
"non-employee directors" within the meaning of Rule 16b-3 and "outside
directors" within the meaning of Section 162(m) of the Code and that the 1993
Stock Option Plan otherwise complies with Rule 16b-3 and (iii) for limitations
on the number of shares subject to options granted under the 1993 Stock Option
Plan to enable (a) compensation realized upon the exercise of options granted
under the 1993 Stock Option Plan to be regarded as "performance-based" under
Section 162(m) of the Code and (b) such compensation to be deductible without
regard to the limits of Section 162(m) of the Code. Such amendments are
collectively referred to herein
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as the "Amendments." The full text of the provisions of the 1993 Stock Option
Plan that are being amended is described below.
The purposes of the 1993 Stock Option Plan are to attract and retain
the best available personnel for positions of responsibility within the Company,
to provide additional incentives to employees of the Company and to promote the
success of the Company's business through the grant of options to purchase
Common Stock. Each option granted pursuant to the 1993 Stock Option Plan shall
be designated at the time of grant as either an "incentive stock option" or as a
"non-statutory stock option."
The 1993 Stock Option Plan, as proposed to be amended, would authorize
the issuance of a maximum of 3,000,000 shares of Common Stock pursuant to the
exercise of options granted thereunder. As of the date hereof, stock options to
purchase 932,000 of the 1,000,000 shares of Common Stock currently available
under the 1993 Stock Option Plan have been granted to officers and employees of
the Company. In addition, 900,000 options have been granted to Messrs. Peterson,
Siekmann and Byron under the 1993 Stock Option Plan, subject to the
stockholders' approval of the Amendments. Options to purchase a total of 18,500
shares of Common Stock under the 1993 Stock Option Plan have been exercised
through the date hereof.
The Board of Directors believes it is in the Company's and its
shareholders' best interests to approve the Amendments because they will (i)
enable compensation attributable to stock options received under the 1993 Stock
Option Plan to qualify as "performance-based" for the purposes of Section 162(m)
of the Code, (ii) enable the 1993 Stock Option Plan to comply with Rule 16b-3
and (iii) provide the Company with greater flexibility in formulating the
specific terms of option grants. At the present time, in light of current
compensation levels of the Company's executive officers, it is not expected that
the $1 million threshold of Section 162(m) of the Code will be reached with
respect to the salary and bonus to be paid to any individuals in 1997. In
addition, in connection with adopting the Amendments, certain conforming
definitional changes have been made to the 1993 Stock Option Plan. Options
recently granted to Messrs. Peterson, Siekmann and Byron under the 1993 Stock
Option Plan for an aggregate of 1,200,000 shares of Common Stock will be
reissued as non-statutory stock options outside the 1993 Stock Option Plan if
the Amendments to the 1993 Stock Option Plan are not approved.
A COPY OF THE 1993 STOCK OPTION PLAN THAT REFLECTS THE AMENDMENTS
PROPOSED IN THIS PROXY STATEMENT IS ATTACHED HERETO AS ANNEX A.
The following are the proposed Amendments to the 1993 Stock
Option Plan:
A. The following paragraph shall be added to the end of Section 1
(Purposes of the Plan):
"The Company intends that the Plan meet the requirements of
Rule 16b-3 and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers
and directors of the Company pursuant to the Plan will be
exempt from the operation of Section 16(b) of the Exchange
Act. Further, the Plan is intended to satisfy the
performance-based compensation exception to the limitation on
the Company's tax deductions imposed by Section 162(m) of the
Code. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted
consistent with the Company's intent as stated in this Section
1."
B. Section 2(e) of the 1993 Stock Option Plan shall be amended in
its entirety to read as follows:
"(e) "COMMITTEE" shall mean the Stock Option
Committee composed of two or more directors who are
Non-Employee Directors and Outside Directors and who shall be
elected by, and shall serve at the pleasure of, the Board, and
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<PAGE>
shall be responsible for administering the Plan in accordance
with paragraph (a) of Section 4 of the Plan."
C. Section 2(f) of the 1993 Stock Option Plan shall be amended in
its entirety to read as follows:
"(f) "EMPLOYEE" shall mean key employees, including
salaried officers and directors and other key individuals
employed by or performing services for the Company. The
payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company."
D. Paragraphs (j) and (o) of Section 2 shall be amended in their
entirety to read as follows:
"(j) "NON-EMPLOYEE DIRECTOR" shall mean a
non-employee director as defined in Rule 16b- 3."
"(o) "OUTSIDE DIRECTOR" shall mean an outside
director as defined in Section 162(m) of the Code or the rules
and regulations promulgated thereunder."
E. The first sentence of Section 3 of the 1993 Stock Option Plan
(Common Stock Subject to the Plan) shall be amended to read as
follows:
"Subject to the provisions of Section 11 of the Plan, the
maximum aggregate number of shares which may be optioned and
sold under the Plan is Three Million (3,000,000) Shares of
Common Stock."
F. The following sentence shall be added to the end of Section 3
(Common Stock Subject to the Plan):
"The maximum number of Shares that may be subject to options
granted under the Plan to any individual in any calendar year
shall not exceed 500,000 Shares and the method of counting
such Shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the
Code or the rules and regulations promulgated thereunder."
G. Clause (vii) of Section 4(b) (Powers of the Board) shall be
amended to read as follows:
"(vii) to determine the terms and provisions of each Option
granted including, without limitation, the terms of exercise
(including the period of exercisability) or forfeiture of
Options granted hereunder upon termination of the employment
of an Employee;"
H. The following paragraph shall be added to the end of Section 4
(Administration of the Plan) as a new paragraph (d):
"(d) In the event that for any reason the Committee
is unable to act or if the Committee at the time of any grant,
award or other acquisition under the Plan of options or Shares
does not consist of two or more Non-Employee Directors, then
any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d)
of Rule 16b-3."
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<PAGE>
I. The first sentence of Section 5(b) (Eligibility) shall be amended
to read as follows:
"Unless otherwise provided in the applicable Stock Option
Agreement, all Options granted to Employees of the Company
under the Plan will be subject to forfeiture until such time
as the Optionee has been continuously employed by the Company
for one year after the date of the grant of the Options, and
may not be exercised prior to such time."
J. The following sentence shall be added to the end of Section 7
(Terms of Option):
"If an option granted to the Company's chief executive officer
or to any of the Company's other four most highly compensated
officers is intended to qualify as "performance-based"
compensation under Section 162(m) of the Code, the exercise
price of such option shall not be less than 100% of the Fair
Market Value of a Share on the date such option is granted."
K. The first two sentences of Section 9(b) (Termination of Status as
an Employee) shall be amended in their entirety to read as
follows:
"Unless otherwise provided in the applicable Stock Option
Agreement, if an Employee's employment by the Company is
terminated for cause, then any Option held by the Employee
shall be immediately canceled upon termination of employment
and the Employee shall have no further rights with respect to
such Option. Unless otherwise provided in the Stock Option
Agreement, if an Employee's employment by the Company is
terminated for reasons other than cause, and does not occur
due to death or disability, then the Employee may, with the
consent of the Board, for ninety (90) days after the date he
ceases to be an Employee of the Company, exercise his Option
to the extent that he was entitled to exercise it at the date
of such termination.
L. Section 9(c) (Disability) shall be amended in its entirety to
read as follows:
"Unless otherwise provided in the applicable Stock Option
Agreement, notwithstanding the provisions of Section 9(b)
above, in the event an Employee is unable to continue his
employment with the Company as a result of his permanent and
total disability (as defined in Section 22(e)(3) of the Code),
he may, but only within twelve (12) months from the date of
termination, exercise his Option to the extent he was entitled
to exercise it at the date of such termination. To the extent
that he was not entitled to exercise the Option at the date of
termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein or
in the applicable Stock Option Agreement, the Option shall
terminate."
M. Section 9(d) shall be amended in its entirety to read as follows:
"(d) DEATH. Unless otherwise provided in the Stock Option
Agreement, if an Employee dies during the term of the Option
and is at the time of his death an Employee of the Company who
shall have been in continuous status as an Employee since the
date of grant of the Option, the Option may be exercised at
any time within twelve (12) months following the date of death
(or such other period of time as is determined by the Board)
by the Employee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to
the extent that
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<PAGE>
an Employee was entitled to exercise the Option on the date of
death. To the extent the Employee was not entitled to exercise
the Option on the date of death, or if the Employee's estate,
or person who acquired the right to exercise the Option by
bequest or inheritance, does not exercise such Option (which
he was entitled to exercise) within the time specified herein
or in the applicable Stock Option Agreement, the Option shall
terminate."
ADMINISTRATION OF THE PLAN
The 1993 Stock Option Plan is administered by the Stock Option
Committee of the Board of Directors, which determines to whom, among those
eligible, and the time or times at which options, will be granted, the number of
shares to be subject to options the duration of options, any conditions to the
exercise of options, and the manner in a price at which options may be
exercised. In making such determinations, the Stock Option Committee may take
into account the nature and period of service of eligible employees, their level
of compensation, their past, present and potential contributions to the Company
and such other factors as the Stock Option Committee in its discretion deems
relevant.
The Stock Option Committee is authorized to amend, suspend or terminate
the 1993 Stock Option Plan, except that it is not authorized without stockholder
approval (except with regard to adjustments resulting from changes in
capitalization) to (i) materially increase the number of shares that may be
issued pursuant to the exercise of options granted under the 1993 Stock Option
Plan; (ii) permit the grant of an incentive stock option under the 1993 Stock
Option Plan with an option price less than 100% of the fair market value of the
shares at the time such option is granted; or (iii) materially change the
eligibility requirements for participation in the 1993 Stock Option Plan.
Unless the 1993 Stock Option Plan is terminated by the Stock Option
Committee, it will terminate on August 30, 2003. No additional options shall be
granted under the 1993 Stock Option Plan after such date, but options issued
under the 1993 Stock Option Plan on or after such date shall remain in full
force and effect.
OPTION PRICE
The exercise price of each option is determined by the Stock Option
Committee, but may not be less than 100% of the fair market value of the shares
of Common Stock covered by the option on the date the option is granted, in the
case of an incentive stock option, nor less than 85% of the fair market value of
the shares of Common Stock covered by the option on the date the option is
granted, in the case of a non-qualified stock option. If an incentive stock
option is to be granted to an employee who owns over 10% of the total combined
voting power of all classes of Company's stock, then the exercise price may not
be less than 110% of the fair market value of the Common Stock covered by the
option on the date the option is granted.
TERMS OF OPTIONS
Unless otherwise provided in the Stock Option Agreement, the term of
each option shall be five (5) years from the date of grant, provided that the
maximum term of each option shall be 10 years. Options granted to an employee
who owns over 10% of the total combined voting power of all classes of stock of
the Company shall expire not more than five years after the date of grant. The
1993 Stock Option Plan provides for the earlier expiration of options of a
participant in the event of certain terminations of employment.
REGISTRATION OF SHARES
The Company has filed a registration statement under the Securities Act
with respect to 1,000,000 shares of Common Stock issuable pursuant to the 1993
Stock Option Plan. The Company intends to file an additional registration
statement under the Securities Act with respect to additional shares of Common
Stock issuable pursuant to the Amendment subsequent to the Amendment's approval
by the Company's stockholders.
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<PAGE>
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Common Stock present, in person or by proxy, is required by approval of the
Amendments to the 1993 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ADOPTION OF THE PROPOSED AMENDMENTS TO THE 1993
STOCK OPTION PLAN.
PROPOSAL NO. 5
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Ernst & Young LLP to be the
independent auditors of the Company for the fiscal year ending December 31,
1997. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Ernst & Young LLP be
submitted to stockholders for ratification. If stockholders do not ratify the
appointment of Ernst & Young LLP, the Board of Directors will consider the
appointment of other certified public accountants. A representative of Ernst &
Young LLP is expected to be available at the Annual Meeting to make a statement
if such representative desires to do so and to respond to appropriate questions.
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, is required for ratification of the appointment
of Ernst & Young LLP as independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.
RESIGNATION OF INDEPENDENT PUBLIC ACCOUNTANTS
On January 10, 1995, KPMG Peat Marwick LLP ("KPMG") resigned as
independent accountants to the Company. KPMG's accountant's report on the
financial statements of the Company for the past two years did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope, or accounting principles, except that KPMG's report
dated February 11, 1994 on the consolidated balance sheet as of December 31,
1993, and the consolidated statements of operations, stockholders' equity and
cash flows for the years ended December 31, 1993 and 1992 and the period from
October 17, 1986 (inception) to December 31, 1993 contained a separate paragraph
stating that the Company's "recurring losses and net deficit position raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in Note 8. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty." There were no disagreements on any matter of accounting
principles or practices, 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 of the
disagreements in connection with its reports.
On March 2, 1995, Ernst & Young LLP was engaged as the new independent
accountants to the Company. This change in accountants was approved by the Board
of Directors of the Company.
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STOCKHOLDER PROPOSALS
To the extent required by law, any stockholder proposal intended for
presentation at next year's annual stockholders' meeting must be received at the
Company's principal executive offices prior to February 28, 1997.
OTHER MATTERS
So far as it is known, there is no business other than that described
above to be presented for action by the stockholders at the forthcoming Annual
Meeting, but it is intended that Proxies will be voted upon any other matters
and proposals that may legally come before the Annual Meeting, or any
adjustments thereof, in accordance with the discretion of the persons named
therein.
The Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996, including financial statements, has been mailed to stockholders with this
Proxy Statement. If, for any reason, you did not receive your copy of the Annual
Report, please advise the Company and a copy will be sent to you.
By Order of the Board of Directors
GEORGE LOMBARDI
SECRETARY
Dated: New York, New York
May [ ], 1997
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Annex A
SHEFFIELD MEDICAL TECHNOLOGIES INC.
1993 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1993 Stock Option Plan
are to attract and retain the best available personnel for positions of
responsibility within the Company, to provide additional incentive to Employees
of the Company, and to promote the success of the Company's business through the
grant of options to purchase shares of the Company's Common Stock. Options
granted hereunder may be either Incentive Stock or Non-Statutory Stock Options,
at the discretion of the Board. The type of options granted shall be reflected
in the terms of written Stock Option agreements. The Company intends that the
Plan meet the requirements of Rule 16b-3 and that transactions of the type
specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and
directors of the Company pursuant to the Plan will be exempt from the operation
of Section 16(b) of the Exchange Act. Further, the Plan is intended to satisfy
the performance-based compensation exception to the limitation on the Company's
tax deductions imposed by Section 162(m) of the Code. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company
or, when appropriate, the Committee administering the Plan, if one has
been appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
(c) "COMMON STOCK" shall mean the common stock of the Company
described in the Company's Certificate of Incorporation, as amended.
(d) "COMPANY" shall mean SHEFFIELD MEDICAL TECHNOLOGIES INC.,
a Delaware corporation, and shall include any parent or subsidiary
corporation of the Company as defined in Sections 425(e) and (f),
respectively, of the Code.
(e) "COMMITTEE" shall mean the Stock Option Committee composed
of two or more directors who are Non-Employee Directors and Outside
Directors and who shall be elected by and shall serve at the pleasure
of the Board and shall be responsible for administering the Plan in
accordance with paragraph (a) of Section 4 of the Plan.
(f) "EMPLOYEE" shall mean key employees, including salaried
officers and directors and other key individuals employed by the
Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(g) "EXCHANGE ACT" shall mean the Securities and Exchange Act
of 1934, as amended.
(h) "FAIR MARKET VALUE" shall mean, with respect to the date a
given Option is granted or exercised, the value of the Common Stock
determined by the Board in such manner as it may deem equitable for
Plan purposes but, in the case of an Incentive Stock Option, no less
than is required by applicable laws or regulations; provided, however,
that where there is a public market for the Common Stock, the Fair
Market Value per Share shall be the mean of the bid and asked prices of
the Common Stock
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on the date of grant, as reported in the WALL STREET JOURNAL (or, if
not so reported, as otherwise reported in the National Association of
Securities Dealers Automated Quotation System) or, in the event the
Common Stock is listed on the New York Stock Exchange or the NASDAQ
Stock Market, the American Stock Exchange, the NASDAQ/National Market
System, the Fair Market Value per Share shall be the closing price on
such exchange on the date of grant of the Option, as reported in the
WALL STREET JOURNAL.
(i) "INCENTIVE STOCK OPTION" shall mean an Option which is
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code.
(j) "NON-EMPLOYEE DIRECTOR" shall mean a non-employee director
as defined in Rule 16b-3.
(k) "NON-STATUTORY STOCK OPTION" shall mean an Option which is
not an Incentive Stock Option.
(l) "OPTION" shall mean a stock option granted under the Plan.
(m) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(n) "OPTIONEE" shall mean an Employee of the Company who has
been granted one or more Options.
(o) "OUTSIDE DIRECTOR" shall mean an outside director as
defined in Section 162(m) of the Code or the rules and regulations
promulgated thereunder.
(p) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(q) "PLAN" shall mean this 1993 Stock Option Plan.
(r) "SHARE" shall mean a share of the Common Stock, as
adjusted in accordance with Section ----- 11 of the Plan.
(s) "STOCK OPTION AGREEMENT" shall mean the written agreement
between the Company and the Optionee relating to the grant of an
Option.
(t) "SUBSIDIARY" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 425(f) of the
Code.
(u) "TAX DATE" shall mean the date an Optionee is required to
pay the Company an amount with respect to tax withholding obligations
in connection with the exercise of an option.
3. COMMON STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares which may be
optioned and sold under the Plan is Three Million (3,000,000) Shares of Common
Stock. The Shares may be authorized, but unissued, or previously issued Shares
acquired by the Company and held in treasury.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares covered by
such Option shall, unless the Plan shall have been terminated, be available for
future grants of Options. The maximum number of Shares that may be subject to
options granted under the Plan to any individual in any calendar year shall not
exceed 500,000 Shares and the method of counting such Shares shall conform to
any requirements applicable to performance-based compensation under Section
162(m) of the Code or the rules and regulations promulgated thereunder.
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4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) The Plan shall be administered by the Board in
accordance with Rule 16b-3 under the Exchange Act ("Rule
16b-3"); provided, however, that the Board may appoint a
Committee to administer the Plan at any time or from time to
time, and, provided further, that if the Board is not
"disinterested" within the meaning of Rule 16b-3, the Plan
shall be administered by a Committee in accordance with Rule
16b-3.
(ii) Once appointed, the Committee shall continue to
serve until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without
cause), appoint new members in substitution therefor, and fill
vacancies however caused: provided, however, that at no time
may any person serve on the Committee if that person's
membership would cause the Committee not to satisfy the
"disinterested administration" requirements of Rule 16b-3.
(b) POWERS OF THE BOARD. Subject to the provisions of the
Plan, the Board shall have the authority, in its discretion:
(i) to grant Incentive Stock Options and Nonstatutory Stock
Options; (ii) to determine, upon review of relevant
information and in accordance with Section 2 of the Plan, the
Fair Market Value of the Common Stock; (iii) to determine the
exercise price per Share of Options to be granted, which
exercise price shall be determined in accordance with Section
8(a) of the Plan; (iv) to determine the Employees to whom, and
the time or times at which, Options shall be granted and the
number of Shares to be represented by each Option; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules
and regulations relating to the Plan; (vii) to determine the
terms and provisions of each Option granted including, without
limitation, the terms of exercise (including the period of
exercisability) or forfeiture of Options granted hereunder
upon termination of the employment of an Employee; (viii) to
accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to
execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by the
Board; (x) to accept or reject the election made by an
Optionee pursuant to Section 17 of the Plan; and (xi) to make
all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations
and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted
under the Plan.
(d) INABILITY OF COMMITTEE TO ACT. In the event that for any
reason the Committee is unable to act or if the Committee at
the time of any grant, award or other acquisition under the
Plan of options or Shares does not consist of two or more
Non-Employee Directors, then any such grant, award or other
acquisition may be approved or ratified in any other manner
contemplated by subparagraph (d) of Rule 16b-3.
5. ELIGIBILITY.
(a) Consistent with the Plan's purposes, Options may be
granted only to Employees of the Company as determined by the Board. An Employee
who has been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options. Incentive Stock Options may be granted only to
those Employees who meet the requirements applicable under Section 422 of the
Code.
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(b) Unless otherwise provided in the applicable Stock Option
Agreement, all Options granted to Employees of the Company under the Plan will
be subject to forfeiture until such time as the Optionee has been continuously
employed by the Company for one year after the date of the grant of the Options,
and may not be exercised prior to such time. At such time as the Optionee has
been continuously employed by the Company for one year, the foregoing
restriction shall lapse and the Optionee may exercise the Options at any time
otherwise consistent with the Plan.
(c) With respect to Incentive Stock Options, the aggregate
Fair Market Value (determined at the time the Incentive Stock Option is granted)
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by the employee during any calendar year (under
all employee benefit plans of the Company) shall not exceed One Hundred Thousand
Dollars ($100,000).
6. STOCKHOLDER APPROVAL AND EFFECTIVE DATES. The Plan became effective
upon approval by the Board. No Option may be granted under the Plan after August
30, 2003 (ten years from the effective date of the Plan); provided, however that
the Plan and all outstanding Options shall remain in effect until such Options
have expired or until such Options are canceled.
7. TERM OF OPTION. Unless otherwise provided in the Stock Option
Agreement, the term of each Option shall be five (5) years from the date of
grant thereof. In no case shall the term of any Option exceed ten (10) years
from the date of grant thereof. Notwithstanding the above, in the case of an
Incentive Stock Option granted to an Employee who, at the time the Incentive
Stock Option is granted, owns ten percent (10%) or more of the Common Stock as
such amount is calculated under Section 422(b)(6) of the Code ("Ten Percent
Stockholder"), the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter time as may be provided in the
Stock Option Agreement. If an option granted to the Company's chief executive
officer or to any of the Company's other four most highly compensated officers
is intended to qualify as "performance-based" compensation under Section 162(m)
of the Code, the exercise price of such option shall not be less than 100% of
the Fair Market Value of a Share on the date such option is granted.
8. EXERCISE PRICE AND PAYMENT.
(a) EXERCISE PRICE. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be
determined by the Board, but in the case of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market
Value per share on the date of grant, and in the case of a Nonstatutory
Stock Option shall be no less than eighty-five percent (85%) of the
Fair Market Value per share on the date of grant. Notwithstanding the
foregoing, in the case of an Incentive Stock Option granted to an
Employee who, at the time of the grant of such Incentive Stock Option,
is a Ten Percent Stockholder, the per Share exercise price shall be no
less than one hundred ten percent (110%) of the Fair Market Value per
Share on the date of grant.
(b) PAYMENT. The price of an exercised Option and the
Employee's portion of any taxes attributable to the delivery of Common
Stock under the Plan, or portion thereof, shall be paid:
(i) In United States dollars in cash or by check,
bank draft or money order payable to the order of the Company;
or
(ii) At the discretion of the Board, through the
delivery of shares of Common Stock with an aggregate Fair
Market Value equal to the option price and withholding taxes,
if any; or
(iii) At the election of the Optionee pursuant to
Section 17 and with the consent of the Board pursuant to
Section 4(b)(x), by the Company's retention of such number of
shares of Common Stock subject to the exercised Option which
have an aggregate Fair Market Value on the exercise date equal
to the Employee's portion of the Company's aggregate federal,
state, local and
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foreign tax withholding and FICA and FUTA obligations with
respect to income generated by the exercise of the Option by
Optionee;
(iv) By a combination of (i), (ii) and (iii) above;
or
(v) In the manner provided in subsection (c) below.
The Board shall determine acceptable methods for tendering
Common Stock as payment upon exercise of an Option and may impose such
limitations and prohibitions on the use of Common Stock to exercise an Option as
it deems appropriate.
(c) FINANCIAL ASSISTANCE TO OPTIONEES. The Board may assist
Optionees in paying the exercise price of Options granted under this
Plan in the following manner:
(i) The extension of a loan to the Optionee by the
Company; or
(ii) Payment by the Optionee of the exercise price in
installments; or
(iii) A guaranty by the Company of a loan obtained by
the Optionee from a third party.
The terms of any loans, installment payments or guarantees,
including the interest rate and terms of repayment, and collateral requirements,
if any, shall be determined by the Board, in its sole discretion. Subject to
applicable margin requirements, any loans, installment payments or guarantees
authorized by the Board pursuant to the Plan may be granted without security,
but the maximum credit available shall not exceed the exercise price for the
Shares for which the Option is to be exercised, plus any federal and state
income tax liability incurred in connection with the exercise of the Option.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan. Unless otherwise determined by the Board at the time of
grant, an Option may be exercised in whole or in part. An Option may not be
exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE. Unless otherwise
provided in the applicable Stock Option Agreement, if an Employee's employment
by the Company is terminated for cause, then any Option held by the Employee
shall be immediately canceled upon termination of employment and the Employee
shall have no further
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rights with respect to such Option. Unless otherwise provided in the Stock
Option Agreement, if an Employee's employment by the Company is terminated for
reasons other than cause, and does not occur due to death or disability, then
the Employee may, with the consent of the Board, for ninety (90) days after the
date he ceases to be an Employee of the Company, exercise his Option to the
extent that he was entitled to exercise it at the date of such termination. To
the extent that he was not entitled to exercise the Option at the date of such
termination, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein or in the applicable Stock Option
Agreement, the Option shall terminate.
(c) DISABILITY. Unless otherwise provided in the applicable
Stock Option Agreement, notwithstanding the provisions of Section 9(b) above, in
the event an Employee is unable to continue his employment with the Company as a
result of his permanent and total disability (as defined in Section 22(e)(3) of
the Code), he may, but only within twelve (12) months from the date of
termination, exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that he was not entitled to exercise
the Option at the date of termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein or in the
applicable Stock Option Agreement, the Option shall terminate.
(d) DEATH. Unless otherwise provided in the Stock Option
Agreement, if an Employee dies during the term of the Option and is at the time
of his death an Employee of the Company who shall have been in continuous status
as an Employee since the date of grant of the Option, the Option may be
exercised at any time within twelve (12) months following the date of death (or
such other period of time as is determined by the Board) by the Employee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that an Employee was entitled to exercise
the Option on the date of death. To the extent the Employee was not entitled to
exercise the Option on the date of death, or if the Employee's estate, or person
who acquired the right to exercise the Option by bequest or inheritance, does
not exercise such Option (which he was entitled to exercise) within the time
specified herein or in the applicable Stock Option Agreement, the Option shall
terminate.
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution, or pursuant to a "qualified
domestic relations order" under the Code and ERISA, and may be exercised, during
the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect and no adjustment by reason thereof, shall be made with respect to
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
of a proposed sale of all
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or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the Optionee shall have the right to exercise the option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger of`sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of sixty (60) days from the date of such notice (but not later than the
expiration of the term of the Option under the Option Agreement), and the Option
will terminate upon the expiration of such period.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee to whom
an Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan from time to time in such respects as the Board may
deem advisable; provided, however, that the following revisions or
amendments shall require approval of the Stockholders of the Company,
to the extent required by law, rule or regulation:
(i) Any material increase in the number of Shares
subject to the Plan, other than in connection with an
adjustment under Section 11 of the Plan;
(ii) Any material change in the designation of the
Employees eligible to be granted Options; or
(iii) Any material increase in the benefits accruing
to participants under the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had
not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
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In the case of an Incentive Stock Option, any Optionee who
disposes of Shares of Common Stock acquired upon the exercise of an Option by
sale or exchange (a) either within two (2) years after the date of the grant of
the Option under which the Common Stock was acquired or (b) within one (1) year
after the acquisition of such Shares of Common Stock shall notify the Company of
such disposition and of the amount realized upon such disposition.
15. RESERVATION OF SHARES. The Company will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
16. OPTION AGREEMENT. Options shall be evidenced by Stock Option
Agreements in such form as the Board shall approve.
17. WITHHOLDING TAXES. Subject to Section 4(b)(x) of the Plan and prior
to the Tax Date, the Optionee may make an irrevocable election to have the
Company withhold from those Shares that would otherwise be received upon the
exercise of any Option, a number of Shares having a Fair Market Value equal to
the minimum amount necessary to satisfy the Company's federal, state, local and
foreign tax withholding obligations and FICA and FUTA obligations with respect
to the exercise of such Option by the Optionee.
An Optionee who is also an officer of the Company must make
the above described election:
(a) at least six months after the date of grant of the Option
(except in the event of death or disability); and
(b) either:
(i) six months prior to the Tax Date, or
(ii) prior to the Tax Date and during the period
beginning on the third business day following the date the
Company releases its quarterly or annual statement of sales
and earnings and ending on the twelfth business day following
such date.
18. MISCELLANEOUS PROVISIONS.
(a) PLAN EXPENSE. Any expense of administering this Plan shall
be borne by the Company.
(b) USE OF EXERCISE PROCEEDS. The payment received from
Optionees from the exercise of Options shall be used for the general
corporate purposes of the Company.
(c) CONSTRUCTION OF PLAN. The place of administration of the
Plan shall be in the State of Wyoming, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules
and regulations, and rights relating to the Plan, shall be determined
in accordance with the laws of the State of Wyoming without regard to
conflict of law principles and, where applicable, in accordance with
the Code.
(d) TAXES. The Company shall be entitled if necessary or
desirable to pay or withhold the amount of any tax attributable to the
delivery of Common Stock under the Plan from other amounts payable to
the Employee after giving the person entitled to receive such Common
Stock notice as far in advance as practical, and the Company may defer
making delivery of such Common Stock if any such tax may be pending
unless and until indemnified to its satisfaction.
(e) INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board, the members
of the Board shall be indemnified by the Company against all costs
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and expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be party by reason
of any action taken or failure to act under or in connection with the
Plan or any Option, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suite or proceeding, except a judgment
based upon a finding of bad faith; provided that upon the institution
of any such action, suit or proceeding a Board member shall, in
writing, give the Company notice thereof and an opportunity, at its own
expense, to handle and defend the same before such Board member
undertakes to handle and defend it on her or his own behalf.
(f) GENDER. For purposes of this Plan, words used in the
masculine gender shall include the feminine and neuter, and the
singular shall include the plural and vice versa, as appropriate.
(g) NO EMPLOYMENT AGREEMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment with
the Company, nor shall it interfere in any way with his right or the
Company's right to terminate his employment at any time.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SHEFFIELD MEDICAL TECHNOLOGIES INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
JUNE [26], 1997
The undersigned, a stockholder of Sheffield Medical
Technologies Inc., a Delaware corporation (the "Company"), does hereby appoint
Douglas R. Eger and George Lombardi, and each of them, the true and lawful
attorneys and proxies with full power of substitution, for and in the name,
place and stead of the undersigned, to vote all of the shares of Common Stock of
the Company which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held at
Swissotel New York, 440 Park Avenue, New York, New York 10022, on Thursday, June
[26], 1997, at 10:00 a.m., local time, or at any adjournment or adjournments
thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
To vote for the election of the following directors:
Douglas R. Eger, Loren G. Peterson, Thomas M. Fitzgerald,
John M. Bailey, and Digby W. Barrios.
TO WITHHOLD
AUTHORITY TO WITHHOLD AUTHORITY
TO VOTE TO VOTE FOR ANY INDIVIDUAL
FOR ALL NOMINEE(S), PRINT NAME(S)
FOR ____ NOMINEES ____ BELOW
-------------------------
-------------------------
-------------------------
-------------------------
2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION:
To vote for approval of the amendment to the Company's
Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock.
FOR ____ AGAINST ____ ABSTAIN ____
<PAGE>
3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION:
To vote for approval of the amendment of the Company's
Certificate of Incorporation to change the name of the Company
from "Sheffield Medical Technologies Inc." to "Sheffield
Pharmaceuticals, Inc."
FOR ____ AGAINST ____ ABSTAIN ____
4. AMENDMENTS TO THE COMPANY'S 1993 STOCK OPTION PLAN:
To vote for approval of the Amendments to the Company's 1993
Stock Option Plan.
FOR ____ AGAINST ____ ABSTAIN ____
5. RATIFICATION OF APPOINTMENT OF AUDITORS:
To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1997.
FOR ____ AGAINST ____ ABSTAIN ____
6. DISCRETIONARY AUTHORITY:
To vote with discretionary authority with respect to all other
matters which may come before the Meeting.
FOR ____ AGAINST ____ ABSTAIN ____
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED (I) FOR THE ELECTION
AS DIRECTORS OF THE PERSONS WHO HAVE BEEN NOMINATED BY THE BOARD OF DIRECTORS,
(II) FOR THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION (INCREASE IN AUTHORIZED SHARES), (III) FOR APPROVAL OF AN
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION (CHANGE OF COMPANY
NAME), (IV) FOR APPROVAL OF AMENDMENTS TO THE COMPANY'S 1993 STOCK OPTION PLAN,
(V) TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997 AND (VI) IN ACCORDANCE
WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY OTHER BUSINESS
TRANSACTED AT THE ANNUAL MEETING.
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The undersigned hereby revokes any proxy or proxies heretofore given
and ratifies and confirms that all the proxies appointed hereby, or any of them,
or their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated May __, 1997.
Dated _______________________, 1997
_____________________________ (L.S.)
_____________________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. WHEN SIGNING ON BEHALF OF A CORPORATION, YOU SHOULD BE
AN AUTHORIZED OFFICER OF SUCH CORPORATION, AND PLEASE GIVE YOUR TITLE AS SUCH.
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