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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14(a)-12
SHEFFIELD PHARMACEUTICALS, 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:
-2-
<PAGE>
SHEFFIELD PHARMACEUTICALS, INC.
425 SOUTH WOODSMILL ROAD, SUITE 270
ST. LOUIS, MISSOURI 63017
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1998
----------------------
To the Stockholders of SHEFFIELD PHARMACEUTICALS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
SHEFFIELD PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), will be
held at the St. Louis Marriott West, 660 Maryville Centre Drive, St. Louis,
Missouri 63141, on Wednesday, July 15, 1998 at 10:00 a.m., local time, for the
following purposes:
1. To elect four members of the Board of Directors;
2. To amend the Company's 1993 Stock Option Plan to increase the
number of shares of Common Stock available for issuance
thereunder from 3,000,000 shares to 4,000,000 shares.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December
31, 1998; and
4. 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 June 12, 1998
are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Judy Roeske Bullock
SECRETARY
Dated: June 22, 1998
St. Louis, Missouri
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 PHARMACEUTICALS, INC.
425 SOUTH WOODSMILL ROAD, SUITE 270
ST. LOUIS, MISSOURI 63017
-------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1998
-------------------------
INTRODUCTION
This Proxy Statement is furnished to the stockholders of SHEFFIELD
PHARMACEUTICALS, 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 the St. Louis Marriott West,
660 Maryville Centre Drive, St. Louis, Missouri 63141, on July 15, 1998 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 June 22, 1998.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on June 12, 1998
consisted of 20,435,956 shares of Common Stock, $.01 par value (the "Common
Stock"), entitling the holders thereof to one vote per share. Only stockholders
of record as of 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) for amendment of the Company's 1993 Stock Option Plan to
increase the number of shares of Common Stock available for issuance thereunder
from 3,000,000 shares to 4,000,000 shares, (iii) to ratify the appointment of
Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending December 31, 1998 and (iv) 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.
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.
-2-
<PAGE>
SECURITY OWNERSHIP
The voting securities of the Company outstanding on March 31, 1998
consisted of 15,742,762 shares of Common Stock. The following table sets forth
information concerning ownership of the Company's Common Stock, as at March 31,
1998, by (i) each director, (ii) each executive officer, (iii) all directors and
executive officers as a group, and (iv) each person who, to the knowledge of
management, owned beneficially more than 5% of the Common Stock.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER(1) OWNED(2) COMMON STOCK(2)
------------------- -------- ---------------
<S> <C> <C>
Thomas M. Fitzgerald.............................. 64,097(3) *
Loren G. Peterson................................. 256,000(4) 1.6%
Douglas R. Eger................................... 752,456(5) 4.6%
John M. Bailey.................................... 65,000(6) *
Digby W. Barrios.................................. 40,000(7) *
David A. Byron.................................... 245,500(8) 1.6%
Carl F. Siekmann.................................. 247,000(9) 1.6%
Judy Roeske Bullock............................... 50,000(10) *
All Directors and Executive Officers as a Group... 1,709,853 10.4%
</TABLE>
- ---------------------
* 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.
(2) Calculations assume that all options and warrants held by each
director, director nominee and executive officer and exercisable within
60 days after March 31, 1998 have been exercised.
(3) Includes 50,000 shares of common stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr.
Fitzgerald's address is c/o Sheffield Pharmaceuticals, Inc., 425 South
Woodsmill Road, Suite 270, St. Louis, Missouri 63017.
(4) Includes 40,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr. Peterson's
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
(5) Includes 500,000 shares of Common Stock issuable upon exercise of
options and warrants exercisable within 60 days of March 31, 1998. Mr.
Eger's address is 4135 Ventura, Coconut Grove, FL 33133.
(6) Includes 65,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr. Bailey's
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
(7) Includes 25,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr. Barrios'
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
(8) Includes 40,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr. Byron's
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
(9) Includes 40,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Mr. Siekmann's
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
(10) Includes 25,000 shares of Common Stock issuable upon exercise of
options exercisable within 60 days after March 31, 1998. Ms. Bullock's
address is c/o Sheffield Pharmaceuticals, Inc., 425 South Woodsmill
Road, Suite 270, St. Louis, Missouri 63017.
-3-
<PAGE>
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 Loren G. Peterson, Thomas M. Fitzgerald, John M. Bailey and
Digby W. Barrios, the four 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
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their positions
with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION
- ---- --- -------------- --------
<S> <C> <C>
Thomas M. Fitzgerald 47 September 1996 Chairman and Director
Loren G. Peterson 41 April 1997 President, Chief Executive Officer and Director
Douglas R. Eger 36 November 1991 Director
John M. Bailey 50 April 1997 Director
Digby W. Barrios 60 April 1997 Director
David A. Byron 49 -- Executive Vice President - Scientific Affairs
Carl. F. Siekmann 54 -- Executive Vice President - Corporate Development
Judy Roeske Bullock 40 -- Chief Financial Officer, Vice President, Treasurer
and Secretary
</TABLE>
THOMAS M. FITZGERALD. Mr. Fitzgerald has been a Director of the Company
since September 1996 and has served as Chairman of the Company since December
1997. From June 1996 to December 1997, Mr. Fitzgerald served as Chief Operating
Officer of the Company and, from February 1997 to December 1997, he served as
President of the Company. 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.
LOREN G. PETERSON. Mr. Peterson has been the Chief Executive Officer
and a Director of the Company since April 1997. Mr. Peterson has served as
President of the Company since December 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.
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 served as Chairman of the Company from June 1994 to December 1997. Mr.
Eger served as Chief Executive Officer of the Company from February 1996 to
December 1997. Mr. Eger is the principal of Taconic Enterprises, Inc., a
merchant banking company providing capital and management advisory services to
high growth companies.
-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. Mr. Barrios is a member of the Board of
Directors of Sepracor Inc., Roberts Pharmaceutical Corporation and Cypros
Pharmaceutical 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 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 Pharmaceutical
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.
JUDY ROESKE BULLOCK. Ms. Bullock has been Chief Financial Officer, Vice
President, Treasurer and Secretary of the Company since November 1997. From
October 1995 to November 1997, Ms. Bullock served as Director of Executive
Compensation and Benefits of Deere & Company. From January 1994 to October 1995,
Ms. Bullock served as a senior consultant for the consulting firm of Towers
Perrin. From August 1987 to December 1993, Ms. Bullock served as a senior
manager for the accounting firm of Price Waterhouse. Ms. Bullock is a CPA
licensed in the states of Missouri and Florida.
MEETINGS AND COMMITTEES
The Board of Directors of the Company held ten meetings during the
fiscal year ended December 31, 1997. 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, and Audit 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 June 1997) are Digby W. Barrios and John M. Bailey. The Stock
Option Committee held three meetings in 1997, and approved certain actions by
written consent. The Compensation 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 and
the Company's Directors Plan). The current members of the Compensation Committee
(appointed in June 1997) are Douglas R. Eger, Digby W. Barrios and John M.
Bailey. The Compensation Committee held two meetings in 1997, and 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 June 1997) are Loren G. Peterson, Digby W. Barrios
and John M. Bailey. The Audit Committee held one formal meeting in 1997. The
Company does not have a standing nominating committee or a committee that serves
nominating functions.
-5-
<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, 1997 and whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------- -----------------
Other Annual Securities
Name and Compensation Underlying Options
Principal Position Year Salary ($) Bonus ($) ($)(1) (#)
- ------------------------------------- ------------ ------------ ------------ ------------- ------------------
<S> <C> <C> <C> <C> <C>
Thomas M. Fitzgerald,
Chairman............................... 1997 $175,000 0 0 300,000
1996 $94,792 0 0 0
Loren G. Peterson,
President and Chief Executive Officer.. 1997 $118,655 0 0 400,000
David A. Byron,
Executive Vice President............... 1997 $108,485 0 0 400,000
Carl F. Siekmann,
Executive Vice President............... 1997 $108,485 0 0 400,000
Douglas R. Eger, former Chairman
and Chief Executive Officer............ 1997 $238,730 0 0 500,000(2)
1996 $230,000 $25,000 0 0
1995 $172,500 0 0 80,000
</TABLE>
- ---------------------
(1) Perquisites and other personal benefits, securities or property
delivered to each executive officer did not exceed the lesser of
$50,000 or 10% of such executive's salary and bonus.
(2) On June 4, 1997 the Stock Option Committee approved the extension of
the expiration date of stock options to purchase 500,000 shares of the
Company's common stock then outstanding to Mr. Eger to March 31, 2002.
No other terms of such stock options were amended or modified.
The following table sets forth certain information regarding stock
option grants made to Messrs. Fitzgerald, Peterson, Byron, Siekmann and Eger
during the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
% of Total Options
Granted to Exercise or Base
Employees in Price
Name Options Granted (#) Fiscal Year ($/sh) Expiration Date
- -------------------------------------- ----------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
50,000 $2.75 June 1, 2001
150,000 $2.75 June 1, 2002
50,000 $3.50 June 1, 2001
Thomas M. Fitzgerald, 50,000 $4.50 June 1, 2001
------
Chairman............................... 300,000 12.45%
Loren G. Peterson,
President and Chief Financial Officer.. 400,000 16.60% $2.75 April 27, 2007
David A. Bryon,
Executive Vice President............... 400,000 16.60% $2.75 April 27, 2007
Carl F. Siekmann,
Executive Vice President............... 400,000 16.60% $2.75 April 27, 2007
Douglas R. Eger, former
Chairman and Chief Executive Officer... 0 0 0 0
</TABLE>
-6-
<PAGE>
The following table sets forth certain information regarding stock
options held by Messrs. Fitzgerald, Peterson, Byron, Siekmann and Eger as of
December 31, 1997.
AGGREGATED OPTION EXERCISES
DURING THE MOST RECENTLY COMPLETED
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
No. of
Securities Value (1) of
Underlying Unexercised in
Unexercised The-Money
Options at FY- Options at FY-
Shares End (#) End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Thomas M. Fitzgerald, 0 0 50,000/300,000 0
Chairman
Loren G. Petersen 0 0 0/400,000 0
President and Chief Executive
Officer
David A. Byron 0 0 0/400,000 0
Executive Vice President
Carl F. Siekmann, 0 0 0/400,000 0
Executive Vice President
Douglas R. Eger, former 0 0 500,000/0 $16,125/0
Chairman and Chief Executive
Officer
</TABLE>
- -------------------
(1) Represents the total gain that would be realized if all-in-the-money
options held at December 31, 1997 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 $1.375 per share reported on the American
Stock Exchange for December 31, 1997. An option is in-the-money if the
fair market value of the underlying shares exceeds the exercise price
of the option.
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 meeting attended and $400 for each Board committee
meeting attended. Under the terms of the 1996 Directors Stock Option Plan,
eligible Directors receive a grant of an option to purchase 25,000 shares of
common stock upon initial election, as well as additional option grants to
purchase 15,000 shares of common stock on January 1 of each year thereafter
during eligible tenure. Directors are reimbursed for their expenses incurred in
attending meetings of the Board of Directors.
EMPLOYMENT AGREEMENTS
In June 1996, the Company entered into a three-year employment
agreement with Thomas M. Fitzgerald pursuant to which Mr. Fitzgerald agreed to
serve as Chief Operating Officer of the Company. The employment agreement
requires Mr. Fitzgerald to devote his full business and professional time in
furtherance of the business of the Company. Such agreement automatically renews
for successive one-year terms unless one 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 agreed to serve
as Chief Executive Officer of the Company. The term of the agreement is
automatically extended for an additional one year term from year to year unless
one party notifies the other of its intention to terminate at least six months
prior to the end of the then current term. The employment agreement requires Mr.
Peterson to devote his full business and professional time in furtherance of the
business of
-7-
<PAGE>
the Company. If Mr. Peterson's employment is terminated other than for cause, he
is entitled to receive a severance payment of $131,250, payable in nine equal
monthly installments. The employment agreement includes confidentiality and
non-compete provisions. Mr. Peterson's annual base salary under the employment
agreement is currently $175,000.
In April 1997, the Company entered into a five-year employment
agreement with David A. Byron pursuant to which Mr. Byron agreed to serve as
Executive Vice President - Scientific Affairs of the Company. The term of the
agreement is automatically extended for an additional one year term from year to
year unless one party notifies the other of its intention to terminate at least
six months prior to the end of the then current term. The employment agreement
requires Mr. Byron to devote his full business and professional time in
furtherance of the business of the Company. If Mr. Byron's employment is
terminated other than for cause, he is entitled to receive a severance payment
of $120,000, payable in nine equal monthly installments. The employment
agreement includes confidentiality and non-compete provisions. The employment
agreement includes confidentiality and non-compete provisions. Mr. Byron's
annual base salary under the employment agreement is currently $160,000.
In April 1997, the Company entered into a five-year employment
agreement with Carl F. Siekmann pursuant to which Mr. Siekmann agreed to serve
as Executive Vice President - Corporate Development of the Company. The term of
the agreement is automatically extended for an additional one year term from
year to year unless one party notifies the other of its intention to terminate
at least six months prior to the end of the then current term. The employment
agreement requires Mr. Siekmann to devote his full business and professional
time in furtherance of the business of the Company. If Mr. Siekmann's employment
is terminated other than for cause, he is entitled to receive a severance
payment of $120,000, payable in nine equal monthly installments. The employment
agreement includes confidentiality and non-compete provisions. Mr. Siekmann's
annual base salary under the employment agreement is currently $160,000.
In October 1995, the Company entered into a two-year agreement with
Douglas R. Eger, pursuant to which Mr. Eger served as the Company's Chairman and
Chief Executive Officer. The term of the agreement was automatically extended
for an additional one year term from year to year unless one party notifies the
other of its intention to terminate at least 60 days prior to the end of the
then current term. Under such agreement, Mr. Eger was required to devote such
time, attention and energy to the Company as required for performance of his
duties under the agreement. The employment agreement includes confidentiality
and non-compete provisions. Mr. Eger served as Chief Executive Officer of the
Company until April 1997. Mr. Eger's annual base salary under the employment
agreement at the time of his resignation was $230,000. In connection with Mr.
Eger's resignation as an officer and employee of the Company in December 1997,
Mr. Eger and the Company entered into a severance agreement terminating his
employment agreement with the Company.
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,
except for one Form 4 for Thomas M. Fitzgerald and one Form 4 for Mr. Eger that
were filed late, all Section 16(a) forms that were required to be filed during
the fiscal year ended December 31, 1997 were filed in compliance with the
applicable requirements of Section 16(a).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation of the Company's senior management is determined by a
Compensation Committee, presently consisting of Douglas R. Eger, Digby W.
Barrios and John M. Bailey. All stock-based compensation is governed by the
Stock Option Committee, presently consisting of Messers Barrios and Bailey.
Except for Mr. Eger, who resigned as an officer and employee of the Company on
December 24, 1997, none of the members of the Compensation Committee are
executive officers of the Company.
-8-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers and key
employees. The Stock Option Committee is responsible for the administration and
awards under the Company's 1993 Stock Option Plan and the 1993 Restricted Stock
Plan. Messrs. Barrios, Bailey and Eger are the members of the Compensation
Committee and Messrs. Barrios and Bailey are the members of the Stock Option
Committee. Messrs. Barrios and Bailey are "non-employee directors" (within the
meaning of Rule 16b-3 under the Exchange Act of 1934, as amended). Mr. Eger,
formerly the Chairman of the Company, resigned as an officer and employee of the
Company in December 1997 and is not seeking re-election for a further term of
office as a Director of the Company after 1997. The Compensation Committee met
on two occasions in 1997 and approved certain actions by unanimous written
consent during the fiscal year ended December 31, 1997. The Compensation
Committee and the Stock Option Committee have reviewed and are in accordance
with the compensation paid to executive offices for the fiscal year ended
December 31, 1997.
COMPENSATION POLICIES
The guiding principle of the Company is to establish a compensation
program that aligns executive compensation with Company objectives and business
strategies, as well as financial performance, with the primary objective of
creating shareholder value. In keeping with this principle, the Company seeks
to:
(1) Attract and retain qualified executives who will play a significant
role in, and be committed to, the achievement of the Company's long-term goals.
(2) Reward executives for strategic management, and the creation and
long-term maximization of shareholder value.
(3) Create a performance-oriented environment that rewards performance
with respect to the financial goals of the Company.
An executive officer's performance is reviewed in such areas as
financial results, quality of performance, job and professional knowledge,
decision making and business judgment, initiative, analytical skills,
communication skills, interpersonal and organizational skills, creativity and
leadership.
Executive compensation consists of both cash and equity-based
compensation. Cash compensation is comprised of base salary and bonus. Base
salary is determined with reference to market norms. Bonus compensation is tied
to the Company's success in achieving financial and non-financial performance.
Equity-based compensation is comprised primarily of stock option grants. In
establishing equity-based compensation, the Company places particular emphasis
on the achievement of the Company's long-term performance goals. The Company
believes that equity-based compensation closely aligns the economic interest of
the Company's executive officers with the economic interests of the Company's
shareholders.
The Company's 1993 Stock Option Plan, as amended, is in compliance with
Section 162(m) of the Internal Revenue Code of 1986, as amended. The Company's
1993 Restricted Stock Plan is "grandfathered" under Section 162(m). The Company
has not and does not currently anticipate paying non-performance based
compensation in excess of $1 million per annum to any employee.
CHIEF EXECUTIVE OFFICER
In establishing Mr. Peterson's compensation, the factors described
above are taken into account. The Compensation Committee and the Stock Option
Committee believe that Mr. Peterson's compensation, including salary and stock
options, fall within the Company's compensation philosophy and are within
industry norms.
Submitted by the Compensation Committee and the Stock Option Committee:
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Digby W. Barrios Digby W. Barrios
John M. Bailey John M. Bailey
Douglas R. Eger
-9-
<PAGE>
STOCK OPTION REPRICING
The following table sets forth certain information concerning Stock
Option Repricing including (i) the name and position of each participating
executive officer or director, (ii) the date of any such repricing, (iii) the
number of securities underlying exchanged options, (iv) the per share market
price of the underlying security at the time of the repricing, (v) the original
exercise price or base price of the canceled option at the time of repricing,
(vi) the per share exercise price of the option received for the existing option
and (vii) the original option term remaining at the date of repricing. An option
for which the expiration date is extended, although all other terms and
conditions remain the same, is considered to be "repriced" for purposes of this
table.
10-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET LENGTH OF
SECURITIES PRICE OF EXERCISE ORIGINAL
UNDERLYING STOCK AT PRICE AT OPTION TERM
OPTIONS TIME OF TIME OF NEW REMAINING
REPRICED OR REPRICING OR REPRICING OR EXERCISE AT DATE OF
DATE OF AMENDED AMENDMENT AMENDMENT PRICE REPRICING OR
NAME AND POSITION REPRICING (#) ($) ($) ($) AMENDMENT
----------------- --------- ----- ----- ---- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Fitzgerald July 29, 1997 50,000 $2.375 $5.25 $2.75 4 years 10
Chairman 50,000 $6.75 $3.50 months
50,000 $8.25 $4.50 4 years 10
months
4 years 10
months
Douglas R. Eger June 4, 1997 25,000 $2.625 CAN 1.00 CAN 1.00 1 year 6 months
Director (1) 35,000 CAN 3.52 CAN 3.52 1 year 6 months
140,000 $3.50 $3.50 1 year 1 month
25,000 $3.75 $3.75 1 year 1 month
125,000 $1.90 $1.90 1 year 3 months
80,000 $4.00 $4.00 6 months
25,000 CAN 3.52 CAN 3.52 6 months
15,000 $3.50 $3.50 6 months
15,000 $4.25 $4.25 6 months
15,000 $6.00 $6.00 6 months
</TABLE>
(1) The expiration dates of certain of Mr. Eger's options had been
previously extended by the Board of Directors of the Company in prior
years. All other terms and conditions of said options remain unchanged.
-10-
<PAGE>
COMMON STOCK PERFORMANCE
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The Securities and Exchange Commission ("SEC") requires that the
Company include in this Proxy Statement a line-graph presentation comparing
cumulative, five-year shareholder returns on an indexed basis with a broad-based
market index and either a nationally recognized industry standard or an index of
peer companies selected by the Company. As the Company's Common Stock was not
publicly traded in the U.S. until 1993, this performance comparison assumes $100
was invested on April 30, 1993 in the Company's Common Stock and in each of the
indices shown and assumes reinvestment of dividends. The Company has selected
the S & P Midcap 400 Index and the S & P Midcap Biotechnology Index for the
purposes of this performance comparison.
<TABLE>
<CAPTION>
INDEXED RETURNS
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
S&P Midcap 400 Index 113 109 143 170 225
Sheffield Pharmaceuticals, Inc. 165 140 140 150 55
S&P Midcap Biotechnology 129 137 242 214 211
Index
</TABLE>
On June 12, 1998, the record date for the Annual Meeting of
Stockholders, the last reported sales price of the Company's Common Stock as
reported on the American Stock Exchange was $1.6875, which represents a 22.7%
increase over the last reported sales price of the Company's Common Stock as
reported on the American Stock Exchange on December 31, 1997, which was $1.375.
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph above.
-11-
<PAGE>
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 April 1997, the Company made a loan of $80,000 to Douglas R. Eger
(the "Eger Loan"). On December 24, 1997, the Company entered into a severance
agreement with Mr. Eger pursuant to which Mr. Eger resigned as an employee of
the Company. The severance agreement provided, among other things, for the
principal amount of the Eger Loan to be paid in six equal quarterly installments
commencing on September 30, 1998, with all remaining principal and interest
being paid in full on December 31, 1999, a severance payment of $135,000 payable
in six equal installments of $22,500 each, with $2,500 of each such installment
being applied to repay Mr. Eger's obligations under the Eger Loan, and the grant
by Mr. Eger of a security interest in 30,000 shares of the Company's common
stock to secure his obligations under the Eger Loan. The extension of the
maturity date of the Eger Loan is subject to the satisfaction of certain
conditions by Mr. Eger.
In April 1997, the Company entered into a consulting agreement with
John M. Bailey, a director of the Company, pursuant to which Mr. Bailey agreed
to provide certain business and financial consulting advise to the Company. Mr.
Bailey is paid a monthly retainer of 2,000 British Pounds Sterling under such
agreement, which monthly retainer is reduced by the amount of 500 British Pounds
Sterling for each Board of Directors or Committee meeting of the Company held in
any month.
In February 1998, the Company entered into an agreement (the
"Engagement Agreement") with an unaffiliated individual pursuant to which such
individual was retained by the Company to facilitate an alliance with Zambon
Corporation or its affiliates ("Zambon"). Pursuant to the Engagement Agreement,
the Company agreed to pay such individual a fee of between 2.5% and 4.0% of any
equity investment or other financing received from Zambon. The Company also
agreed to issue such individual warrants to purchase 150,000 shares of the
Company's common stock at 125% of market price for a financing of $7.5 million
or greater, with such warrants to be prorated proportionally on financing of a
lesser amount. The Engagement Agreement also provides that the Company shall pay
such individual a fee of 5.0% of amounts actually received by the Company from
Zambon attributable to marketing or other rights to the Company's MSI system
(net of any third party royalty obligations). Douglas R. Eger, a director of the
Company, has advised the Company that he is entitled to receive a portion of the
fees payable by the Company to the individual who is the Company's counterparty
to the Engagement Agreement. On April 15, 1998, the Company announced that it
had entered into an option agreement with Zambon (the "Option Agreement") to
form a strategic alliance with Zambon for the worldwide development and
commercialization of drugs to treat respiratory disease in the Company's Metered
Solution Inhaler (MSI) system. The Company received a $650,000 option fee from
Zambon in the form of an equity investment in connection with the signing of the
option agreement. The Option Agreement contemplates (i) an additional equity
investment in the Company by Zambon, (ii) funding by Zambon of development of
respiratory drugs and (iii) co-promotion rights to respiratory drugs developed
for the MSI system and (iv) retention by the Company of all non-respiratory
disease applications of the MSI system. The option agreement also contemplates
that Zambon shall have the right to appoint one director to the Company's Board
of Directors, which director shall be reasonably acceptable to the Company.
Following the Board's approval of, and the Company's execution of the Option
Agreement, Douglas R. Eger, a director of the Company, advised the Company that
he is entitled to receive a portion of the fees payable by the Company to the
individual who is the Company's counterparty to the Engagement Agreement.
During the period January 1, 1998 through April 30, 1998 certain
executive officers provided funds for use by the Company in excess of $60,000 in
the aggregate. These funds were comprised of short-term notes having a 7% annual
interest rate, unpaid salaries and unreimbursed expenses. The largest aggregate
amounts due to certain executives during this period are as follows: Loren G.
Peterson, $85,923; David A. Byron, $80,343; and Carl F. Siekmann, $75,474. As of
April 30, 1998 a portion of the short-term notes payable and the unreimbursed
expenses have been paid, leaving balances due to such executive officers as
follows: Loren G. Peterson, $63,825; David A. Byron, $60,075; and Carl F.
Siekmann, $60,075.
-12-
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT 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 for an increase in the number of shares reserved for
issuance pursuant to the exercise of options granted thereunder from 3,000,000
shares of Common Stock to 4,000,000 shares of Common Stock. The full text of the
provision of the 1993 Stock Option Plan that is being amended is described
below. A copy of the 1993 Stock Option Plan, as filed with the Securities and
Exchange Commission, was filed as a exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
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 4,000,000 shares of Common Stock pursuant to the
exercise of options granted thereunder. As of the date hereof, stock options to
purchase 2,090,000 of the 3,000,000 shares of Common Stock currently available
under the 1993 Stock Option Plan have been granted to officers and employees of
the Company. 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 Amendment because it will provide
sufficient shares remaining under the Plan to enable the Board to utilize stock
based incentive compensation, which rewards long term value creation in keeping
with the interests of the Company's shareholders, for both current and future
employees of the Company.
The following is the proposed Amendment to the 1993 Stock Option Plan:
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 Four Million (4,000,000) Shares of Common Stock."
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. The Stock Option Committee is comprised of non-employee directors. 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) make any material change in the designation of the employees eligible
to be granted options under the 1993 Stock Option Plan; 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.
-13-
<PAGE>
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.
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 for approval of the
Amendment to the 1993 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PROPOSED AMENDMENT TO THE 1993 STOCK OPTION PLAN.
PROPOSAL NO. 3
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,
1998. 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.
-14-
<PAGE>
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 12, 1999.
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-K for the fiscal year ended December 31,
1997, as amended, 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
Judy Roeske Bullock
SECRETARY
Dated: June 22, 1998
St. Louis, Missouri
-15-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SHEFFIELD PHARMACEUTICALS, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1998
The undersigned, a stockholder of Sheffield Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), does hereby appoint Loren G. Peterson and
Judy Roeske Bullock, 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 the St. Louis Marriott
West, 660 Maryville Centre Drive, St. Louis, Missouri 63141, on Wednesday, July
15, 1998, 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: Loren G.
Peterson, Thomas M. Fitzgerald, John M. Bailey, and Digby W.
Barrios.
TO WITHHOLD AUTHORITY
TO VOTE FOR ANY
TO WITHHOLD AUTHORITY INDIVIDUAL NOMINEE(S),
TO VOTE FOR ALL PRINT NAMES BELOW
FOR ____ NOMINEES_____
2. AMENDMENTS TO THE COMPANY'S 1993 STOCK OPTION PLAN:
To vote for approval of the amendment to the Company's 1993 Stock
Option Plan.
FOR ____ AGAINST ____ ABSTAIN ____
3. 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, 1998.
FOR ____ AGAINST ____ ABSTAIN ____
4. 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 APPROVAL OF THE PROPOSED AMENDMENTS TO THE COMPANY'S 1993 STOCK OPTION
PLAN, (iii) TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998 AND (iv) IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY OTHER
BUSINESS TRANSACTED AT THE ANNUAL MEETING.
-16-
<PAGE>
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 June __, 1998.
Dated _______________________, 1998
_____________________________ (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.
-17-
