PRE 14A
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c60998pre14a.txt
PRELIMINARY PROXY STATEMENT
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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 [ ]
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[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-12
SHEFFIELD PHARMACEUTICALS, INC.
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(Name of Registrant as Specified in Its Charter)
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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.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
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SHEFFIELD PHARMACEUTICALS, INC.
425 SOUTH WOODSMILL ROAD, SUITE 270
ST. LOUIS, MISSOURI 63017
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2001
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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 Hotel Intercontinental, 111 East 48th Street, New York, New York
10017, on Tuesday, May 8, 2001 at 10:00 a.m., local time, for the following
purposes:
1. To elect six members of the Board of Directors;
2. To amend the Company's Certificate of Incorporation to increase the
number of shares of Common Stock that the Company is authorized to
issue from 60,000,000 shares to 100,000,000 shares;
3. 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 March 26, 2001 are
entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Scott A. Hoffmann
Secretary
Dated: April 4, 2001
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.
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SHEFFIELD PHARMACEUTICALS, INC.
425 SOUTH WOODSMILL ROAD, SUITE 270
ST. LOUIS, MO 63017
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PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2001
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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 Hotel Intercontinental, 111
East 48th Street, New York, New York 10017, on May 8, 2001, 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 April 4, 2001.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on March 26, 2001
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 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 Certificate of Incorporation to
increase the number of shares of Common Stock authorized to be issued by the
Company from 60,000,000 to 100,000,000 shares, and (iii) 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, facsimile 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 $3,000, 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.
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SECURITY OWNERSHIP
The voting securities of the Company outstanding on March 26, 2001
consisted of __________ shares of Common Stock. The following table sets forth
information concerning ownership of the Company's Common Stock, as of March 26,
2001 (except as indicated below) 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.
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER(1) OWNED(2) COMMON STOCK(2)
------------------ -------------- ---------------
Elan International Services, Ltd. 16,648,829(3) ___%
Inpharzam International S.A. 2,646,153(4) ___%
Thomas M. Fitzgerald 671,597(5) ___%
Loren G. Peterson 636,000(6) ___%
David A. Byron 530,500(7) ___%
Carl F. Siekmann 532,000(8) ___%
Scott A. Hoffmann 181,700(9) *
John M. Bailey 70,000(10) *
Digby W. Barrios 75,000(11) *
Todd C. Davis 16,703,829(12) ___%
Roberto Rettani 2,646,153 (13) ___%
All Directors and Executive Officers
as a Group (nine persons) 22,046,779(14) ___%
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* 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, warrants and convertible securities
held by each director, director nominee and executive officer and
exercisable or convertible within 60 days after March 26, 2001 have been
exercised or converted.
(3) Based solely upon information in Amendment No. 1 to the Schedule 13D of
Elan International Services, Ltd. dated as of November 4, 1999 and filed
with the Securities and Exchange Commission on November 8, 1999. Includes
11,104,450 shares of Common Stock issuable upon exercise of warrants,
conversion of Series C Preferred Stock and a Convertible Promissory Note.
The address of Elan International Services, Ltd. set forth in such amended
Schedule 13D is 102 St. James Court, Flatts, Smiths Parish FL04, Bermuda.
(4) Based solely upon information in the Schedule 13D of Inpharzam
International S.A., an affiliate of Zambon Group, SPA, dated June 15, 1998
and filed with the Securities and Exchange Commission on June 25, 1998. The
address of Inpharzam International S.A. set forth in such Schedule 13D is
Via Industria 1, 7814 Cadempino, Switzerland.
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(5) Includes 655,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
(6) Includes 415,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001. 9,000 of these shares are
held by Mr. Peterson as custodian for the benefit of his children. Mr.
Peterson disclaims beneficial ownership of such shares.
(7) Includes 325,000 shares of Common Stock issuable upon exercise of option
exercisable within 60 days after March 26, 2001.
(8) Includes 325,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
(9) Includes 175,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
(10) Includes 70,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
(11) Includes 70,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
(12) Based solely upon information in a Form 4 filed by Mr. Davis with the
Securities and Exchange Commission on November 18, 1999. Includes 55,000
shares of Common Stock issuable upon exercise of options exercisable within
60 days after March 26, 2001. Also includes 4,571,428 shares held by Elan
International Services, Ltd., 11,104,450 shares of Common Stock issuable
upon exercise of warrants, conversion of Series C Preferred Stock and a
Convertible Promissory Note. Mr. Davis, an employee of Elan Corporation,
plc., an affiliate of Elan International Services Ltd., a Bermuda company,
disclaims any beneficial ownership interest in such shares. Mr. Davis'
address is c/o Elan Corporation, plc., Lincoln House, Lincoln Place, Dublin
2, Ireland .
(13) Includes 2,646,153 shares held by Inpharzam International S.A. Mr. Rettani,
an officer of Zambon Group SpA, an affiliate of Inpharzam International
S.A., disclaims any beneficial ownership interest in such shares. Mr.
Rettani's address is c/o Zambon Goup SpA, 20091 Bresso, Via Lillo del Duca,
10, Milan, Italy.
(14) Includes 2,090,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days after March 26, 2001.
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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 Thomas M. Fitzgerald, Loren G. Peterson, John M. Bailey,
Digby W. Barrios, Todd C. Davis, and Roberto Rettani, the six 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
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their positions
with the Company are set forth below.
Name Age Director Since Position
---- --- -------------- --------
Thomas M. Fitzgerald 50 September 1996 Chairman and Director
Loren G. Peterson 44 April 1997 President, Chief Executive Officer, and
Director
John M. Bailey 53 April 1997 Director
Digby W. Barrios 63 April 1997 Director
Todd C. Davis 39 September 1998 Director
Roberto Rettani 48 March 2000 Director
David A. Byron 52 - Executive Vice President - Scientific Affairs
Carl F. Siekmann 57 - Executive Vice President - Corporate
Development
Scott A. Hoffmann 36 - Vice President - Finance and Administration,
Treasurer and Secretary, Chief Financial
Officer
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, LLC, 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.
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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 consulting firm 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 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 also a member of the Board of
Directors of Sepracor Inc.
TODD C. DAVIS. Mr. Davis has been a Director of the Company since
September 1998. Since February 1999 Mr. Davis has served as Director, Strategic
Planning of Elan Corporation, plc, an Irish pharmaceutical company. From May
1997 to January 1999, Mr. Davis served as Director of Investments and Corporate
Development of Elan Pharmaceutical Research Corporation, an affiliate of Elan
Corporation plc. From September 1995 to May 1997, Mr. Davis was on educational
leave from Abbott Laboratories, a pharmaceutical company, while receiving a
Masters in Business Administration from Harvard University. From October 1993 to
September 1995, Mr. Davis served as diagnostic systems product manager, and from
October 1992 to September 1993 as product specialist of laboratory information
systems of Abbott Laboratories. Mr. Davis serves as a director of the Company
pursuant to an agreement with Elan International Services Ltd. that permits Elan
International Services Ltd. to designate one nominee to the Company's Board.
ROBERTO RETTANI. Mr. Rettani has been a director of the Company since
March 2000. Since August 1999, Mr. Rettani has served as Managing Director and
Chief Executive Officer of Zambon Group SpA, a private Italian pharmaceutical
company and an affiliate of Inpharzam International S.A. From September 1995 to
July 1999, Mr. Rettani was Managing Director and Chief Executive Officer of
Antibioticos, a member of the Montedison Group, a pharmaceutical company. From
September 1993 to August 1995, Mr. Rettani served as Group Director of Planning
and Strategy at Montedison Group. Mr. Rettani serves as a director of the
Company pursuant to an agreement with Zambon Group SpA that permits Zambon Group
SpA to designate one nominee to the Company's Board.
DAVID A. BYRON. Mr. Byron has been Executive Vice President -
Scientific Affairs of the Company since April 1997. From January 1997 to April
1997, Mr. Byron was a principal of Camelot Pharmacal, LLC, 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, LLC, 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.
SCOTT A. HOFFMANN. Mr. Hoffmann has been Chief Financial Officer and
Vice President - Finance and Administration, Treasurer and Secretary of the
Company since November 1998. From March 1995 to November 1998, Mr. Hoffmann was
Assistant Controller of Zeigler Coal Holding Company, a coal mining company.
From 1992 to 1995, Mr. Hoffmann was Vice President - Finance and Secretary of
Zam's, Inc., a publicly traded retailer.
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MEETINGS AND COMMITTEES
The Board of Directors of the Company held four meetings during the
fiscal year ended December 31, 2000. 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 Company does not
have a standing nominating committee or a committee that serves nominating
functions. These functions are performed by the Board of Directors of the
Company as a whole. Each person who served as a Director in 2000 attended at
least 75% of the aggregate number of meetings in 2000 of the Board of Directors
and the committees on which he served, with the exception of Roberto Rettani,
who attended 25% of the Board of Directors meetings.
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 two meetings in 2000.
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
1996 Directors Stock Option Plan). The current members of the Compensation
Committee (appointed in June 1997) are Digby W. Barrios and John M. Bailey. The
Compensation Committee held one meeting in 2000, and approved certain actions by
written consent.
The Company has an Audit Committee composed of independent directors,
in accordance with the American Stock Exchange listing standards, for which
information regarding the functions performed by the Committee is set forth in
the "Report of the Audit Committee," included in this Proxy Statement. The Audit
Committee is governed by a written charter approved by the Board of Directors. A
copy of this charter is included in Appendix A. The current independent
directors of the Audit Committee are Digby W. Barrios, John M. Bailey, (both
appointed in June 1997) and Todd C. Davis (appointed May 2000). The Audit
Committee held four meetings in 2000.
BOARD OF DIRECTORS COMPENSATION
The Company does not currently compensate directors who are also
executive officers of the Company or directors who are employees of the
Company's strategic alliance partners, Elan Corporation and Zambon Group, SpA,
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. Directors
are reimbursed for their expenses incurred in attending meetings of the Board of
Directors. 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.
REPORT OF THE AUDIT COMMITTEE
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board, include providing oversight to the
Company's financial reporting process through periodic meetings with the
Company's independent auditors and management to review accounting, auditing,
internal controls and financial reporting matters. The management of the Company
is responsible for the preparation and integrity of the financial reporting
information and related systems of internal controls. The Audit Committee, in
carrying out its role, relies on the Company's senior management, including
senior financial management, and its independent auditors.
We have reviewed and discussed with senior management the Company's
audited financial statements included in the 2000 Annual Report to Stockholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of management
and, (ii) have been prepared in conformity with generally accepted accounting
principles.
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We have discussed with Ernst & Young LLP, the Company's independent
auditors, the matters required to be discussed by SAS 61 (Communications with
Audit Committee). SAS 61, as amended, requires the independent auditors to
provide us with additional information regarding the scope and results of their
audit of the Company's financial statements, including with respect to (i) their
responsibility under generally accepted auditing standards, (ii) significant
accounting policies, (iii) management judgments and estimates, (iv) any
significant audit adjustments, (v) any disagreements with management, and (vi)
any difficulties encountered in performing the audit.
We have received from Ernst & Young LLP a letter providing the
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) with respect to any
relationships between Ernst & Young LLP and the Company that in their
professional judgment may reasonably be thought to bear on independence. Ernst &
Young LLP has discussed its independence with us, and has confirmed in such
letter that, in its professional judgment, it is independent of the Company
within the meaning of the federal securities laws. The Audit Committee has
considered whether the non-audit services rendered by the Company's independent
auditors during the Company's most recent fiscal year are compatible with
maintaining the independence of such auditors and believes them to be so.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2000 Annual
Report to Stockholders, we have recommended to the Board that such financial
statements be included in the Company's Annual Report on Form 10-K.
As specified in the Audit Committee Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with generally
accepted accounting principles. That is the responsibility of management and the
Company's independent auditors. In giving our recommendation to the Board, we
have relied on (i) management's representation that such financial statements
have been prepared with integrity and objectivity and in conformity with
generally accepted accounting principles, and (ii) the report of the Company's
independent auditors with respect to such financial statements.
AUDIT COMMITTEE
John M. Bailey
Digby W. Barrios
Todd C. Davis
February 28, 2001
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP has been selected by the Board of Directors to be
independent auditors to audit the consolidated financial statements of the
Company for fiscal year 2001. This firm and its predecessors have been employed
by the Company in that capacity continuously since 1994. Representatives of
Ernst & Young LLP will be present at the annual meeting of stockholders, will be
given an opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions relating to the audit of the
Company's 2000 consolidated financial statements.
AUDIT FEES
The Company estimates that the aggregate fees billed by its independent
auditors for professional services rendered in connection with (i) the audit of
the Company's annual financial statements set forth in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, and (ii) the review of
the Company's quarterly financial statements set forth in the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000, June 30,
2000 and September 30, 2000, were approximately $42,500.
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FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed to the Company by its independent auditors
for the Company's most recent fiscal year for professional services rendered in
connection with (i) operating or supervising the operation of the Company's
information system or managing the Company's local area network and (ii)
designing or implementing a hardware or software system that aggregates source
data underlying the financial statements or generates information that is
significant to the Company's financial statements taken as a whole.
ALL OTHER FEES
The Company estimates that the aggregate fees for all other services
rendered by its independent auditors for the Company's most recent fiscal year
equal approximately $33,450. These fees include work performed by the
independent auditors with respect to preparation of the Company's tax returns
and various accounting consultations.
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, 2000 and whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------------
Annual Compensation Securities
Name and ---------------------- Underlying All Other
Principal Position Year Salary($) Bonus($) Options(#) Compensation ($)(2)
------------------ ---- --------- --------- ---------- -------------------
2000 $196,151 $ 13,000 150,000 $5,250
Thomas M.Fitzgerald, 1999 185,000 - - -
Chairman........................... 1998 175,000 40,000 255,000 -
2000 $196,081 $ 13,000 150,000 $5,250
Loren G. Peterson, President, 1999 185,000 - - -
Chief Executive Officer.......... 1998 175,000 - 155,000 -
2000 $171,106 $ 10,500 90,000 $4,931
David A. Byron, Executive Vice 1999 165,000 - - -
President, Scientific Affairs.... 1998 160,000 - 105,000 -
2000 $170,906 $ 10,500 90,000 $4,964
Carl F. Siekmann, Executive Vice 1999 165,000 - - -
President, Corporate Development 1998 160,000 - 105,000 -
Scott A. Hoffmann, Vice President, 2000 $130,837 $ 9,000 135,000 $3,925
Finance & Administration, 1999 120,000 - - -
Chief Financial Officer(1)....... 1998 5,000 - 120,000 -
---------------------
(1) Mr. Hoffmann began employment with the Company in November 1998.
(2) Consists of matching contributions for the Company's 401(k) Plan.
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The following table sets forth certain information regarding stock
option grants made to Messrs. Fitzgerald, Peterson, Byron, Siekmann, and
Hoffmann during the fiscal year ended December 31, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Base Grant Date
Name Granted #(1) Fiscal Year Price ($/sh)(1) Expiration Date Present Value $ (2)
---- ------------ ----------- --------------- --------------- -------------------
50,000 4.8% $4.75 March 1, 2010 $180,500
Thomas M. Fitzgerald, 50,000 4.8% $5.3125 March 1, 2010 $177,000
Chairman...................... 50,000 4.8% $6.3125 March 1, 2010 $172,000
Loren G. Peterson, 50,000 4.8% $4.75 March 1, 2010 $180,500
President and Chief 50,000 4.8% $5.3125 March 1, 2010 $177,000
Executive Officer........... 50,000 4.8% $6.3125 March 1, 2010 $172,000
David A. Byron, 30,000 2.9% $4.75 March 1, 2010 $108,300
Executive Vice President, 30,000 2.9% $5.3125 March 1, 2010 $106,200
Scientific Affairs.......... 30,000 2.9% $6.3125 March 1, 2010 $103,200
Carl F. Siekmann, 30,000 2.9% $4.75 March 1, 2010 $108,300
Executive Vice President, 30,000 2.9% $5.3125 March 1, 2010 $106,200
Corporate Development...... 30,000 2.9% $6.3125 March 1, 2010 $103,200
Scott A. Hoffmann,
Vice President, Finance & 45,000 4.3% $4.75 March 1, 2010 $162,450
Administration, 45,000 4.3% $5.3125 March 1, 2010 $159,300
Chief Financial Officer..... 45,000 4.3% $6.3125 March 1, 2010 $154,800
(1) These options were granted under a single option grant.
(3) The present value of options at date of grant was estimated using the
Black-Scholes model with the following assumptions: 1) expected life of
10 years; 2) risk-free interest rate of 6.39%; 3) volatility of 65.3%;
and 4) dividend yield of 0%.
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The following table sets forth certain information regarding stock
options held by Messrs. Fitzgerald, Peterson, Byron, Siekmann, and Hoffmann as
of December 31, 2000.
FISCAL 2000 YEAR-END OPTION VALUES
Number of Securities Value (1) of
Underlying Unexercised in-
Unexercised the-Money
Options at FY- Options at FY-
End (#) End($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- --------------------- ------------------
Thomas M. Fitzgerald,
Chairman.......................................... 555,000/150,000 $ 1,179,500/$ -
Loren G. Peterson,
President and Chief Executive Officer........... 275,000/430,000 $628,500/$542,500
David A. Byron,
Executive Vice President,
Scientific Affairs.............................. 225,000/370,000 $497,625/$542,500
Carl F. Siekmann,
Executive Vice President,
Corporate Development........................... 225,000/370,000 $497,625/$542,500
Scott A. Hoffmann,
Vice President, Finance &
Administration, Chief Financial Officer......... 85,000/170,000 $ 219,958/$34,983
-------------------
(1) Represents the total gain that would be realized if all in-the-money options
held at December 31, 2000 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 consolidated sale price of Common Stock of
$4.6875 per share reported by the American Stock Exchange for December 31, 2000.
An option is in-the-money if the fair market value of the underlying shares
exceeds the exercise price of the option.
LONG-TERM INCENTIVE AND PENSION PLANS
During the year ended December 31, 1996, the Company adopted a defined
contribution 401(k) plan in accordance with the Internal Revenue Code. Employees
are eligible to participate in the 401(k) plan upon completion of three months
of service provided they are over 21 years of age. Participants may defer up to
15% of eligible compensation. The Company provides matching contributions of 50%
of the first 6% of eligible compensation contributed by each employee.
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 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.
Fitzgerald to devote his full business and professional time in furtherance of
the business of the Company. In June 2000, the agreement automatically renewed
for a one-year term. If Mr. Fitzgerald's employment is terminated other than for
cause, he is entitled to receive a severance payment of $97,500, payable in six
equal monthly installments. The employment agreement contains confidentiality
and non-compete provisions. Mr. Fitzgerald's annual base salary under the
agreement is currently $195,000.
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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 the Company. If Mr. Peterson's employment is terminated other than
for cause, he is entitled to receive a severance payment of $146,250, 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 $195,000.
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 $127,500, payable in nine equal monthly installments. The employment
agreement includes confidentiality and non-compete provisions. Mr. Byron's
annual base salary under the employment agreement is currently $170,000.
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 $127,500, 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 $170,000.
In November 1998, the Company entered into a three-year employment
agreement with Scott A. Hoffmann pursuant to which Mr. Hoffmann agreed to serve
as Vice President - Finance and Administration, and Chief Financial 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 90 days prior to the end of the then
current term. The employment agreement requires Mr. Hoffmann to devote his full
business and professional time in furtherance of the business of the Company. If
Mr. Hoffmann's employment is terminated other than for cause, he is entitled to
receive a severance payment of $65,000, payable in six equal monthly
installments. The employment agreement includes confidentiality and non-compete
provisions. Mr. Hoffmann's annual base salary under the employment agreement is
currently $130,000.
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 and Bailey are the members of both the Compensation
Committee and the Stock Option Committee. Messrs. Barrios and Bailey are
"non-employee directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. The Compensation Committee met on one occasion
during the fiscal year ended December 31, 2000. The Stock Option Committee met
on two occasions in 2000. The Compensation Committee and the Stock Option
Committee have reviewed and are in accordance with the compensation paid to
executive officers for the fiscal year ended December 31, 2000.
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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.
Annually, individual goals and objectives are agreed upon for each
executive officer. 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.
For 2000 the Compensation Committee approved an incentive compensation program
for bonus payments of up to 15% of base salary for the executive officers of the
Company. Such bonus payments were to be made at the discretion of the
Compensation Committee at the end of the year based upon achievement of
agreed-upon goals and objectives for the Company as a whole and for each
individual. Two-thirds of any award was to be based upon the achievement of
overall Company goals with the remaining one-third based upon the achievement of
individual goals. Based upon the assessment of the Compensation Committee as to
the degree to which the Company and individual goals were achieved in 2000, the
executive officers were awarded the bonuses set forth in the summary
Compensation Table.
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 Compensation Committee reviews the outstanding
unvested options of the key executives from time to time and may grant
additional options to encourage the retention of key executives. Options for
615,000 shares were granted to executive officers in 2000 by the Stock Option
Committee to reward the executive officers for their performance in 2000 and
prior years and to establish appropriate incentives for these key executives.
Chief Executive Officer
The Chief Executive Officer's compensation generally is based on the
same policies and criteria as the other executive officers. Mr. Peterson's base
salary that was in effect for 2000 was increased by approximately 11.4% in July
1999 from his prior salary based upon the extent to which the Company had
achieved its goals up to that date and the Compensation Committee's view of Mr.
Peterson's role in that achievement. Mr. Peterson's bonus for 2000 was equal to
6.6% of his base salary based upon his individual performance with respect to
his objectives. 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.
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Deductibility of Executive Compensation under the Internal Revenue Code
Section 162(m) of the Internal Revenue Code, enacted in 1993, disallows
a tax deduction to public companies for compensation over $1 million paid to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers, subject to a number of exceptions. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Both the Company's 1993 Stock Option Plan, as
amended, and the Company's 1993 Restricted Stock Plan, are intended to comply
with Section 162(m) and meet deductibility requirements. The Company has not and
does not currently anticipate in the foreseeable future paying non-performance
based compensation in excess of $1 million per annum to any employee.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Digby W. Barrios Digby W. Barrios
John M. Bailey John M. Bailey
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. This performance comparison assumes $100 was
invested on December 31, 1995 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.
[TOTAL SHAREHOLDER RETURNS GRAPH]
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
S&P Midcap 400 Index 119.20 157.65 187.77 215.41 253.12
Sheffield Pharmaceuticals, Inc. 107.14 39.29 67.86 142.86 133.93
S&P Midcap Biotechnology Index 88.41 87.07 156.61 281.32 423.86
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998, the Company entered into a sublicense and development
agreement with Inpharzam International, S.A., an affiliate of Zambon Group SpA,
for the testing and development of the Company's rights in its Metered Solution
Inhaler technology in respect of therapies for respiratory diseases. The
agreement provides, among other things and subject to the satisfaction of
certain conditions, for the making of loans and the payment of royalties to the
Company. Roberto Rettani, who is a director of the Company, is Managing Director
and Chief Executive Officer of Zambon Group SpA.
In June 1998, the Company consummated a license and financing
transaction with Elan International Services Ltd, an affiliate of Elan
Corporation, plc. In connection with this transaction, the Company formed
Systemic Pulmonary Delivery, Ltd. ("SPD"), a wholly owned subsidiary, and
entered into several agreements with Elan International Services Ltd., including
a Securities Purchase Agreement and a Joint Development and Operating Agreement.
In addition, Elan International Services Ltd. and the Company have licensed
certain of their intellectual property rights relating to pulmonary drug
delivery systems to SPD. In October 1999, the Company consummated a separate
license and financing transaction with Elan International Services Ltd. In
connection with this transaction, the Company formed Respiratory Steroid
Delivery, Ltd. ("RSD"), an 80.1 % owned subsidiary, 19.9% is owned by Elan
International Services, Ltd., and entered into several agreements with Elan
International Services Ltd., including a Securities Purchase Agreement and a
Joint Development and Operating Agreement. In addition, Elan International
Services Ltd. and the Company have licensed certain of their intellectual
property rights relating to pulmonary drug delivery systems to RSD. Todd C.
Davis, who is a director of the Company, is Director of Strategic Planning of
Elan Corporation plc.
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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 sixty million (60,000,000) shares to one hundred million
(100,000,000) 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 the authority to issue is (i) one hundred million (100,000,000)
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 60,000,000 shares of
Common Stock. As of March 26, 2001, the record date of 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, warrants and convertible securities, and
for options that may be granted in the future under the 1993 Stock Option Plan,
as amended, and the 1996 Directors Plan, as amended.
The Board of Directors of the Company believes that it is advisable and
in the best interest 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 corporation 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 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. If the proposal is approved by the stockholders, the amendment to
the Certificate of Incorporation would become effective upon the filing of the
amendment of the Certificate of Incorporation with the Secretary of State of
Delaware, which would occur as soon as practicable following the approval of the
proposal by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
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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 December 4, 2001. In addition,
all proposals for inclusion in the proxy statement must comply with all of the
requirements of SEC Rule 14a-8 under the Securities Exchange Act of 1934. No
proposal may be presented at the 2002 Annual Meeting unless the Company receives
notice of the proposal by no later than February 18, 2002. Proposals should be
addressed to the Secretary of the Company, at the Company's address set forth on
the first page of this proxy statement.
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.
FINANCIAL INFORMATION INCORPORATED BY REFERENCE
The following financial information, which has been filed with the SEC,
is incorporated herein by reference:
(a) The Company's audited consolidated financial statements, including the
notes thereto and together with auditor's report thereon, appearing on
pages 6 to 17 of Exhibit 13 of the Company's Annual Report on Form 10-K
(the "Form 10-K") for the year ended December 31, 2000;
(b) Selected Quarterly Financial Data appearing on page 23 of the Form
10-K; and
(c) Management's Discussion and Analysis of Financial Condition and Results
of Operations appearing on pages 1 to 5 of Exhibit 13 of the Form 10-K.
ANNUAL REPORT
All stockholders of record as of the Record Date have been sent, or are
concurrently herewith being sent, a copy of the Company's 2000 Annual Report for
the year ended December 31, 2000, which contains audited financial statements of
the Company for the year ended December 31, 2000.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000
(WITHOUT EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY
WRITING TO SCOTT HOFFMANN, CHIEF FINANCIAL OFFICER AND SECRETARY AT SHEFFIELD
PHARMACEUTICALS, INC., 425 SOUTH WOODSMILL ROAD, SUITE 270, ST. LOUIS, MISSOURI
63017.
By Order of the Board of Directors
Scott A. Hoffmann
Secretary
Dated: April 4, 2001
St. Louis, Missouri
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APPENDIX A
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of Sheffield Pharmaceutical, Inc.'s Audit
Committee ("Committee"). The Committee shall review and reassess the charter at
least annually and obtain the approval of the Board of Directors ("Board"). The
Committee shall be appointed by the Board and shall comprise at least three
directors, each of whom are independent if they have no relationship that may
interfere with the exercise of their independence from management and Sheffield
Pharmaceuticals, Inc. ("Company"). All Committee members shall be financially
literate, and at least one member shall have accounting or related financial
management expertise.
Statement of Policy
The Committee shall provide assistance to the Board in fullfilling its oversight
responsibility to the shareholders, potential shareholders, the investment
community, and others relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, the annual independent audit of the Company's financial statements,
and the legal compliance and ethics programs as established by management and
the Board. In so doing, it is the responsibility of the Committee to maintain
free and open communication among the Committee, independent auditors and
management of the Company. In discharging its oversight role, the Committee is
empowered to investigate any matter brought to its attention with full access to
all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The Committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
o The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board and the Committee, as representatives of the
Company's shareholders. The Committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, replace the independent
auditors. The Committee shall discuss with the auditors their independence
from management and the Company and the matters included in the written
disclosures required by the Independence Standards Board. Annually, the
Committee shall review and recommend to the Board the selection of the
Company's independent auditors, subject to shareholders' approval.
o The Committee shall discuss with the independent auditors the overall scope
and plans for their respective audits including the adequacy of staffing
and compensation. Also, the Committee shall discuss with management, and
the independent auditors, the adequacy and effectiveness of the accounting
and financial controls, including the Company's system to monitor and
manage business risk, and legal and ethical compliance programs. Further,
the Committee shall meet separately with the independent auditors, with and
without management present, to discuss the results of their examinations.
o The Committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q. Also, the Committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards. The chair of the Committee may represent the entire Committee
for the purposes of this review.
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o The Committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing on Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the Committee shall discuss the results of the annual audit and any
other matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing standards.
The Committee shall also undertake such additional activities within the scope
of its primary function as the Committee may from time to time determine.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SHEFFIELD PHARMACEUTICALS, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2001
The undersigned, a stockholder of Sheffield Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), does hereby appoint Thomas M. Fitzgerald
and Loren G. Peterson, 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 Hotel
Intercontinental, 111 East 48th Street, New York, New York 10017, on May 8,
2001, 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: Thomas M.
Fitzgerald, Loren G. Peterson, John M. Bailey, Digby W. Barrios,
Todd C. Davis and Roberto Rettani.
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 CERTIFICATE OF INCORPORATION:
To amend the Company's Certificate of Incorporation to increase the
number of shares of Common Stock that the Company is authorized to
issue from 60,000,000 shares to 100,000,000 shares.
FOR ______ AGAINST ______ ABSTAIN ______
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3. 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 DIRECTORS 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 AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION, AND (iii)
IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY
OTHER BUSINESS TRANSACTED AT THE ANNUAL MEETING.
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 April 4, 2001.
Dated _________________________, 2001
_______________________________ (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.