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 Section 240.14a-11(c) or
Section 240.14a-12
BIOJECT MEDICAL TECHNOLOGIES INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
4) Proposed 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 paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_____________________________________________________________________________
3) Filing Party:
_____________________________________________________________________________
4) Date Filed:
_____________________________________________________________________________
<PAGE>
Bioject Medical Technologies Inc.
7620 SW Bridgeport Road
Portland OR 97224
August 9, 1996
Dear Shareholders:
You are cordially invited to attend the 1996 annual meeting of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC., to be held at the Oregon
Convention Center, 777 NE Martin Luther King Jr. Blvd., Room C120-122,
Portland, Oregon, on Thursday, September 19, 1996 at 9:00 a.m., Pacific
Daylight Time.
The matters to be acted upon at the meeting -- to elect the Board of
Directors; to amend the Company's 1992 Stock Incentive Plan; and to transact
such other business as may properly come before the meeting -- are described
in the attached Notice of Meeting and Proxy Statement.
We believe the annual meeting provides an excellent opportunity for
shareholders to become better acquainted with BIOJECT and its board members
and officers. Although we would like very much to have each shareholder
attend the 1996 meeting, we realize this is not possible. Whether or not you
plan to be present at the meeting, it is important that your shares be
represented. Therefore, we urge you to complete, sign and return the enclosed
proxy as soon as possible.
If you return your proxy promptly, you can help your Company avoid the
expense of follow-up mailings to ensure a quorum so that the meeting can be
held. If you decide between now and September that you can attend the meeting
in person, you may revoke your proxy at that time and vote your shares at the
meeting.
We appreciate your continued support of Bioject and look forward to
greeting you personally at the meeting or receiving your proxy.
Sincerely,
/S/ JAMES C. O'SHEA
_________________________________
James C. O'Shea
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC. (the "Company") will be
held on Thursday, September 19, 1996, at 9:00 a.m., Pacific Daylight Time, at
the Oregon Convention Center, 777 NE Martin Luther King Jr. Blvd., Room
C120-122, Portland, Oregon, for the following purposes:
1. To elect six directors for the ensuing year;
2. To amend the 1992 Stock Incentive Plan to extend the
date on which Awards may be made under the Plan;
3. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
These matters are more fully described in the proxy statement
accompanying this Notice.
Accompanying this Notice of Meeting is a proxy statement and a form of
proxy, together with the annual report of the Company containing the
consolidated financial statements of the Company for the year ended March 31,
1996, and the auditors' report on the financial statements. The Company's
first quarter report is also included. Only holders of common stock of record
at the close of business on August 2, 1996 will be entitled to vote at the
Annual Meeting of Shareholders and any adjournments thereof.
Shareholders who are unable to attend the Meeting in person are requested
to complete, sign, date and return the enclosed form of proxy directly to
American Stock Transfer and Trust Co., postage prepaid. A proxy will not be
valid unless it is received at the office of American Stock Transfer and Trust
Co., 40 Wall Street, 46th Floor, New York, New York 10005 before the time
fixed for the meeting.
DATED at Portland, Oregon, this 9th day of August, 1996.
BY ORDER OF THE BOARD
/S/ PEGGY JARVIS MILLER
_______________________________
Peggy Jarvis Miller
Vice President, Chief Financial
Officer and Secretary
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
TABLE OF CONTENTS
MANAGEMENT SOLICITATION
APPOINTMENT AND REVOCABILITY OF PROXIES
VOTING OF PROXIES
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
PROPOSAL #1: ELECTION OF DIRECTORS
Board of Directors Composition, Compensation and Committees
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
Biographical Information
Executive Compensation
Grant of Stock Options
Option Exercises and Fiscal Year End Values
Report on Repricing of Options/SAR's
Employment Contracts
Escrowed Shares
SEC Filings
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
Base Salary
Annual Incentives
Long-Term Incentives
Compensation Committee Interlocks and Insider Participation
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK PERFORMANCE CHART
PROPOSAL #2: AMENDMENT TO 1992 STOCK INCENTIVE PLAN
Awards and Eligibility
Purposes
Options
Stock Bonuses
Stock Sales
Stock Appreciation Rights
Tax Consequences to the Company and its Subsidiaries
Tax Consequences to Recipient
Changes in Capital Structure
OTHER MATTERS TO BE ACTED UPON
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
ANNUAL REPORT
INDEPENDENT ACCOUNTANTS
PROPOSALS OF SHAREHOLDERS FOR THE 1997 ANNUAL MEETING OF
SHAREHOLDERS
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
PROXY STATEMENT
as of August 9, 1996
MANAGEMENT SOLICITATION
This proxy statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
BIOJECT MEDICAL TECHNOLOGIES INC. (the "Company"), for use at the annual
general meeting (the "Meeting") of shareholders of the Company to be held on
September 19, 1996, at the time and place and for the purposes set forth in
the Notice of Meeting.
The form of proxy accompanying this information circular is solicited by
the Board of Directors of the Company. Proxies may be solicited by officers,
directors and regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their services. In
addition, the Company has retained the services of Allen Nelson & Co. to
assist in the solicitation of proxies. Proxies may be solicited personally or
by mail, telephone, telex, facsimile, telegraph or messenger. The Company
estimates it will pay Allen Nelson & Co. its customary and reasonable fees not
expected to exceed $3,000, plus reimbursement of certain out-of-pocket
expenses, for its services in soliciting proxies. The Company will also pay
persons holding shares of the common stock in their names or in the names of
nominees, but not owning such shares beneficially, such as brokerage houses,
banks and other fiduciaries, for the expense of forwarding soliciting
materials to their principals. The cost of this solicitation will be borne
directly by the Company.
The approximate mailing date of the Notice of Meeting, proxy statement
and form of proxy is August 9, 1996.
APPOINTMENT AND REVOCABILITY OF PROXIES
The persons named in the accompanying form of proxy are officers of the
Company.
In addition to revocation in any other manner permitted by law, a proxy
may be revoked by:
(i) signing another proxy bearing a later date and depositing it in
the manner set forth in the Notice of Meeting;
(ii) signing and dating a written notice of revocation (in the same
manner as a proxy is required to be executed) and either
depositing it in the manner set forth in the Notice of Meeting
at any time before the time fixed for the Meeting or an
adjournment thereof or with the chairman of the Meeting on the
day of the Meeting or an adjournment thereof; or
(iii) attending the Meeting or an adjournment thereof, and casting a
ballot in person.
Such revocation will have effect only in respect of those matters which
have not already been acted upon. Additional proxy forms may be obtained by
calling or writing to American Stock Transfer & Trust Co., Shareholder
Services, 40 Wall Street, 46th Floor, New York, NY 10005. Telephone: (718)
921-8200.
VOTING OF PROXIES
The securities represented by the proxy will be voted or withheld from
voting in accordance with the instructions of the shareholder on any ballot
that may be called for, and if the shareholder specifies a choice with respect
to any matter to be acted upon, the securities shall be voted accordingly.
The form of proxy confers authority upon the named proxyholder with respect to
matters identified in the accompanying Notice of Meeting. If a choice with
respect to such matters is not specified, it is intended that the person
designated by management in the form of proxy will vote the securities
represented by the proxy in favor of each matter identified in the proxy
statement and for election to the Board of Directors the nominees named in
this proxy statement. The proxy confers discretionary authority upon the
named proxyholder with respect to amendments to or variations in matters
identified in the accompanying Notice of Meeting and other matters which may
properly come before the Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The voting securities of the Company consist of common stock without par
value (the "Common Shares"). The Record Date has been fixed in advance by the
directors as August 2, 1996, for the purpose of determining shareholders
entitled to a notice of and to vote at the Meeting. Each share issued at the
time of the Record Date carries the right to one vote at the Meeting. As of
August 2, 1996, a total of 15,616,712 shares of the Company's common stock
were issued and outstanding.
The presence in person or by proxy of holders of record of a majority of
the outstanding Common Shares is required to constitute a quorum for the
transaction of business at the Meeting. If a quorum is present, the five
nominees for election to the Board of Directors who receive the greatest
number of votes cast at the Meeting shall be elected directors. For all other
matters to come before the Meeting, a proposal will be approved if the number
of votes cast in favor of the proposal exceed the number of votes cast against
the proposal. Abstentions and broker "non-votes" will be considered
represented at the Meeting for the purpose of calculating a quorum, but will
have no other effect on the election of directors or any other matter to come
before the Meeting.
The following tables set forth certain information concerning the
beneficial ownership of the Company's common stock at June 30, 1996, by: (i)
each person known by the Company to own beneficially more than 5 percent of
the outstanding capital stock of the Company; (ii) each of the directors; and
(iii) all directors and officers as a group. Each shareholder listed below has
sole voting and investment power with respect to the shares beneficially
owned, except as indicated:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) OWNED
__________________________________________________ ________________ ____________
<S> <C> <C>
Carl E. Wilcox (2)
851 SW Sixth, Suite 1500, Portland, Oregon 97204 1,726,500 10.9%
Hambrecht & Quist
50 Rowes Wharf, Boston, Massachusetts 02110 1,003,000 6.4
James C. O'Shea (3) 271,541 1.7
William A. Gouveia (4) 43,750 *
John Ruedy, MD (5) 103,250 *
Cecil E. Spearman (5) 68,250 *
Grace Keeney Fey (6) 9,750 *
Peggy J. Miller (7) 123,653 *
Arthur S. Przybyl (8) 112,500 *
All Directors and Executive
Officers as a Group (9 persons) (2)(9) 752,928 4.6
</TABLE>
_________________________________________
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the
indicated beneficial owner exercises voting and/or investment power. Shares of
common stock subject to options currently exercisable or exercisable within 60
days are deemed outstanding for computing the percentage ownership of the
person holding the options but not deemed outstanding for computing the
percentage of ownership of any other person. Except as indicated, and subject
to community property laws where applicable, the persons names in the table
above have sole voting and investment power with respect to all shares of
common stock as shown as beneficially owned by them.
(2) Includes 1,500,000 shares owned by WAM Partnership. WAM Partnership is an
Oregon general partnership. The partners of WAM Partnership are Mr. Wilcox, a
founder and former Chairman and C.E.O. of the Company, and Mr. J. Thomas
Morrow, a founder of the Company and former director. Mr. Wilcox, as managing
partner, votes shares of common stock owned by the Partnership. See "Executive
Compensation and Other Transactions -- Escrowed Shares." Also includes options
to purchase 200,000 shares of common stock which are presently exercisable.
(3) Includes 250,000 options which are vested and exercisable.
(4) Consists entirely of options to purchase common stock which are presently
exercisable. Does not include 8,750 option shares which become exercisable
after 60 days.
(5) Includes 61,250 options to purchase shares of common stock which are
presently exercisable. Does not include 8,750 options shares which become
exercisable after 60 days.
(6) Includes 8,750 options to purchase shares of common stock which are
presently exercisable. Does not include 8,750 option shares which become
exercisable after 60 days.
(7) Includes 115,000 options to purchase shares of common stock which are
vested but do not become exercisable until January 29, 1997. Does not include
12,500 option shares which become vested and exercisable after 60 days.
(8) Consists entirely of options to purchase shares of common stock which are
vested but do not become exercisable until January 29, 1997.
(9) Includes options to purchase an aggregate of 666,250 shares of Common
Stock, 400,000 of which are presently exercisable, 52,500 of which are vested
and become exercisable on November 3, 1996 and 213,750 of which are vested but
do not become exercisable until January 29, 1997.
All of the outstanding capital stock of Bioject Medical Systems Ltd. is
owned by the Company. All the outstanding capital stock of Bioject Inc. is
owned by the Company and Bioject Medical Systems Ltd.
PROPOSAL #1: ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide for the holders of
Common Shares to elect a Board of Directors at the 1996 Meeting.
Each director elected will hold office until the next annual general
meeting or until his successor is duly elected or appointed, unless his office
is earlier vacated in accordance with the articles of the Company or he
becomes disqualified to act as a director.
The following table sets forth the names and ages of the current
directors and director nominee of Bioject Medical Technologies Inc., each of
whom is nominated for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED BELOW.
YEAR ELECTED
NAME AGE POSITION DIRECTOR
------------------ ----- ------------------------- ------------
James C. O'Shea 51 Chairman, Chief Executive
Officer and President 1995
John Ruedy, M.D. 64 Director(a)(b) 1987
Cecil E. Spearman 64 Director(c)(d) 1987
William Gouveia 54 Director(b)(c) 1994
Grace Keeney Fey 50 Director(a)(d) 1995
Eric T. Herfindal 55 Director Nominee ----
_____________
(a) Member of Stock Option Committee
(b) Member of Compensation Committee
(c) Member of Nominating Committee
(d) Member of Audit Committee
JAMES C. O'SHEA has served as Chairman and Chief Executive Officer of the
Company since March 1995. Prior to joining Bioject, he was President and Chief
Operating Officer of Biopure Corporation, a developer of red blood cell
substitutes. Prior to 1989, Mr. O'Shea was Executive Vice President of
Marketing and Scientific Affairs at Delmed Inc., a manufacturer of peritoneal
dialysis solutions and parenteral products. Mr. O'Shea holds a bachelors
degree from Rutgers University. He is a member of the Board of Directors of
publicly-owned Photographic Sciences Corporation, serving as Chairman of the
Compensation Committee and previously serving as Chairman of the Executive
Committee.
JOHN RUEDY, M.D. has served as a director of the Company since 1987.
Since July 1992, he has served as Dean of the Faculty of Medicine at Dalhousie
University in Halifax, Nova Scotia. From 1978 through June 1992, Dr. Ruedy
served as Professor of Medicine at the University of British Columbia and Head
of the Department of Medicine at St. Paul's Hospital, Vancouver, British
Columbia. Since 1966, he has held an appointment to the Department of Medicine
and Pharmacology at McGill University and was Chairman of the Department of
Pharmacology and Therapeutics from 1975 through 1978. Dr. Ruedy is also
serving as a director for the Canadian AIDS Clinical Trials Network.
CECIL E. SPEARMAN joined the Company as a director in 1987. Since June
1981, Mr. Spearman has been Chief Executive Officer of Spearman Industries,
Inc., which owns and operates tennis and fitness clubs. Since May 1979, Mr.
Spearman has also acted as an independent consultant to marketing and
manufacturing companies in the healthcare industry. From 1989 to November
1990, he was Chief Executive Officer and Director of Safety-Ject Medical
Products Ltd., a medical device manufacturer. From May 1973 to March 1979, Mr.
Spearman was President of Bergen Brunswig Corp.'s medical supply division.
From October 1968 to May 1973, he was Vice President and General Manager for
American Hospital Supply.
WILLIAM A. GOUVEIA was elected a director of the Company in January 1994.
Mr. Gouveia serves in two capacities at Boston's New England Medical Center:
Director of Pharmacy (1972 to present) and Special Assistant for
Pharmaceutical Research and Development (1989 to present). He has the
following faculty appointments: Associate Professor of Medicine at Tufts
University School of Medicine (1995), Adjunct Clinical Professor of Pharmacy
at Massachusetts College of Pharmacy and Allied Health Professions, and
Adjunct Professor at Northeastern University Bouve College of Pharmacy and
Health Sciences. He holds an M.S. in Hospital Pharmacy from Northeastern
University (1966). He has published over 75 articles in leading healthcare
journals, as well as numerous book chapters, and has delivered presentations
in the U.S. and international health care organizations and colleges. In 1984,
he founded the Massachusetts-based Chartwell Home Therapies. He is a Fellow of
the American Society of Health-System Pharmacists (ASHP) and has served as
chair and member of various committees of the ASHP.
GRACE K. FEY, CFA, was elected a director of the Company in October
1995. Ms. Fey is Executive Vice President and Director of Frontier
Capital Management Company, a Boston-based investment management firm, Since
1988. From 1986 to 1988, she was a Senior Vice President of Investment
Management Associates, an investment management firm. From 1980 to 1986, Ms.
Fey was Vice President of Winchester Capital Management, also an investment
management firm.
ERIC T. HERFINDAL has served as Senior Vice President of Axion
Healthcare, Inc., a disease management company, since 1993 and has also served
as Senior Vice President of OnCare Inc., an oncology physician practice
management company and subsidiary of Axion, since 1993. Prior to joining
Axion, he served for over 20 years as a Professor of Clinical Pharmacy, School
of Pharmacy, at the University of California Medical Center in San Francisco,
where he is currently a Professor Emeritus. He holds a Doctorate in Pharmacy
from the University of California, San Francisco, and a Masters in Public
Health from the University of California, Berkeley. He is the author of
twenty-five articles and the editor or co-editor of ten books in the field of
pharmacy, including the TEXTBOOK OF THERAPEUTICS: DRUG AND DISEASE MANAGEMENT,
currently in its sixth edition. Dr. Herfindal has been active in various
professional organizations, serves on a number of editorial and advisory
boards, and is a frequent lecturer at national and international healthcare
meetings.
BOARD OF DIRECTORS COMPOSITION, COMPENSATION AND COMMITTEES. The Board of
Directors is currently composed of five members, one of whom is an employee of
the Company. Following the shareholder vote, the Board will be composed of six
members, one of whom is an employee of the Company.
All directors hold office for one year or until their successors
have been elected and qualified. There are no family relationships between
any of the directors, director nominee or executive officers of the Company.
The Company pays its directors no annual cash or per meeting
compensation for services. Under the terms of the 1992 Stock Incentive Plan,
each non-employee director is automatically awarded an option to purchase
17,500 shares of the Company's common stock immediately following the close of
each annual shareholders' meeting, at an exercise price equal to the fair
market value on date of the grant. Such options are vested and exercisable
with respect to one-half of the shares at six months from the date of grant
with the remaining shares vested and exercisable six months thereafter. The
options expire eight years after grant unless previously exercised or
terminated due to termination of service.
There were eight meetings of the Board of Directors during the last
fiscal year. Except for one telephonic meeting for which Ms. Fey was not
present, each of the incumbent directors being nominated for re-election
attended all meetings of the Board of Directors and committees on which they
served.
There are four standing committees of the Board of Directors -- the
Audit Committee, Stock Option Committee, Compensation Committee and the
Nominating Committee. The Audit Committee meets with the Company's
independent accountants to review the scope and findings of the annual audit
and accounting policies and procedures of the Company which are then reported
by the committee to the directors of the Company. The Stock Option Committee
administers the 1992 Stock Incentive Plan. The Compensation Committee
administers cash compensation for the executive officers. The Nominating
Committee reviews and recommends to the full Board nominees for directors of
the Company to be submitted for election at the next annual shareholders'
meeting. The Audit Committee met one time during fiscal 1996. The Stock
Option Committee met one time during fiscal 1996. The Compensation Committee
met two times during fiscal 1996 and took action by resolution six additional
times. The Nominating Committee met one time during fiscal 1996.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following individuals comprise the executive officers of the Company:
Year Elected
Name Age Position Officer
- --------------------- --- -------------------------------- ------------
James C. O'Shea 51 Chairman, Chief Executive
Officer and President 1995
Peggy J. Miller 49 Vice President, Chief Financial
Officer and Secretary/Treasurer 1993
Steven F. Peterson 47 Vice President of Product
Development of Bioject Inc. 1993
Richard R. Stout, M.D. 43 Vice President of Clinical Affairs
of Bioject Inc. 1994
J. Michael Redmond 36 Vice President, Sales and Marketing
of Bioject Inc. 1996
BIOGRAPHICAL INFORMATION.
JAMES C. O'SHEA. Please see biography information in section "ELECTION
OF DIRECTORS."
PEGGY J. MILLER joined Bioject as Chief Financial Officer, Vice President
and Secretary/Treasurer, in February 1993. From April 1991 to January 1993,
Ms. Miller was Vice President for Finance at Oregon Health Sciences
University, an academic health sciences center. From September 1987 to April
1991, she was Senior Manager at Arthur Andersen & Co., independent public
accountants. From July 1985 to September 1987, she served as Vice President
Finance of ALPKEM Corporation, a manufacturer and distributor of automated
blood analyzers and supplies to hospitals and clinics. Prior to June 1985, she
served as an Audit Manager at Price Waterhouse, independent public
accountants. Ms. Miller is a Certified Public Accountant and serves on the
Board of Directors of CHAP, the Community Health Accreditation Program, an
affiliate of the National League for Nursing.
STEVEN F. PETERSON joined the Company in May 1991 as Director of
Regulatory Affairs. He served as Director of Product Development and
Manufacturing Engineering of Bioject Inc. from April 1992 and was promoted to
Vice President of Research and Development in fiscal 1994. From June 1978 to
May 1991, he held various management positions for subsidiaries of Baxter
Healthcare Corp. specializing in medical products. From April 1973 to June
1978, Mr. Peterson was manager of quality engineering for ITT
Telecommunications, a manufacturer of electronic telephone switching
equipment.
RICHARD R. STOUT, M.D. joined the Company in April 1994 as Director of
Clinical and Regulatory Affairs. He was promoted to Vice President of Clinical
Affairs in December 1994. From 1992-1993 he was the Director of Clinical and
Regulatory Affairs at EndoVascular Instruments, Inc., a developer of surgical
devices and methods for endarterectomy and intraluminal graft placement. Dr.
Stout acted as the Manager of Tachycardia Clinical Studies at Telectronics
Pacing Systems from 1990-1992, an international medical device company
involved in manufacturing and distributing cardiac pacemakers and implantable
defibrillators. From 1987 to 1989, Dr. Stout was Director of Medical Programs
at Biotronic Inc., also a manufacturer and distributor of implantable cardiac
pacemakers.
J. MICHAEL REDMOND was appointed Vice President of Sales and Marketing
effective February 8, 1996. Mr. Redmond has twelve years of experience in
medical marketing and product sales. Prior to joining the Company he was
Director of Business Development and Director of Sales and Marketing for
Kollsman Inc. Kollsman is a private label developer and manufacturer of
medical instrumentation. He also held positions with Abbott Laboratories
in the diagnostics division and in product management.
EXECUTIVE COMPENSATION. The following table sets forth the cash compensation
paid by the Company to its Chief Executive Officer and to the other executive
officers having salary and bonus compensation greater than $100,000
(collectively the "named executive officers"), for services rendered to the
Company during the fiscal years ended March 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation All
Name and Principal Fiscal _________________________________________ Option Other
Position (1) Year Salary Bonus Other Awards(2) Compensation
________________________ ______ _________________________________________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
James C. O'Shea 1996 $ 192,737(3) - $ 4,117(4) 500,000(5) $ 146,996(6)
Chairman, Chief Executive 1995 -(3) - - - -
Officer and President 1994 - - - - -
Arthur S. Przybyl 1996 115,385(7) - 3,300(8) 112,500(9) 49,000(7)
Former President and 1995 119,091 - 4,200(8) 200,000(9) -
Chief Operating Officer 1994 18,192(10) - 600(8) - -
Peggy J. Miller 1996 105,000 - - 127,500(11) -
Vice President, Chief 1995 99,835 3,325(12) - 75,000(13) -
Financial Officer and 1994 92,693 28,037(14) - 5,000(15) -
Secretary / Treasurer
</TABLE>
________________________
(1) No other executive officers had salary and bonus compensation greater
than $100,000 in fiscal 1996.
(2) The Company has in effect one major long-term compensation plan, the
1992 Stock Incentive Plan, through which all employees, officers and
non-employee consultants of the Company may be awarded incentive and
non-statutory stock options, stock bonuses, stock appreciation rights and
restricted stock under terms and performance criteria as determined by a
committee of the Board of Directors. Non-employee directors are also awarded
options to purchase a fixed number of shares on an annual basis. The 1992
Stock Incentive Plan was approved by the Company's shareholders on November
20, 1992. Amounts listed reflect the number of options granted in the
respective fiscal years, the exercise prices for which were greater than or
equal to the fair market value of the Company's common stock on the date of
grant.
The Company also has a 401(k) Retirement Benefit Plan for its employees
including its executive officers which provides for voluntary employer matches
of employee contributions up to 6% of salary and for discretionary profit
sharing contributions to all employees. Such employer contributions may be
made in cash or common stock.
(3) Mr. O'Shea was appointed Chairman and Chief Executive Officer on March
28, 1995 and commenced his salaried employment with the Company on April 10,
1995.
(4) Represents supplemental life and disability insurance premiums paid
pursuant to an employment agreement with Mr. O'Shea. No other executive
officers are entitled to this benefit.
(5) In connection with his employment, Mr. O'Shea was granted options to
purchase 500,000 shares of common stock of which 150,000 option shares vested
immediately, 150,000 option shares vesting one-half on April 10,1996 and
one-half on April 10, 1997, and 200,000 option shares vesting one-half on
April 10, 1997 and one-half on April 10, 1998.
(6) In connection with the commencement of Mr. O'Shea's employment with
the Company, he was reimbursed his moving expenses including the costs of
selling his former residence, transportation and storage of household goods,
certain other incidental moving expenses and a gross-up for taxes incurred on
these reimbursements.
(7) Mr. Przybyl resigned from the Company effective January 26, 1996. He
was granted severance totalling $49,000.
(8) Mr. Przybyl received an automobile allowance of $300 per month.
(9) 200,000 options were granted on July 8, 1995 and with 50,000 vesting
immediately, 100,000 vesting on February 1, 1996, and 50,000 vesting on
February 1, 1997. On January 26, 1996, these 200,000 options were cancelled
and replaced with an option to purchase 112,500 shares of the Company's common
stock at $1.25 per share. The new options vested immediately, become
exercisable on January 29, 1997, and expire on July 29, 1998. Acceleration of
expiration in the event of employment termination was waived.
(10) Mr. Przybyl joined the Company on February 1, 1994.
(11) On January 26, 1996, Ms. Miller was granted 127,500 options with
101,250 vesting immediately and become exercisable on January 29, 1997, 12,500
vesting on February 1, 1996 and becoming exercisable on January 29, 1997,
1,250 vesting on July 31, 1996 and becoming exercisable on January 29, 1997
and 12,500 vesting and becoming exercisable on February 1, 1997. These options
replaced 75,000 options granted in fiscal 1995, 5,000 options granted in
fiscal 1994 and 90,000 options granted in fiscal 1993.
(12) The fiscal 1995 bonus for Ms. Miller consists of 1,000 shares of the
Company's common stock valued at fair market value at the date of grant with
the gross-up for withholding taxes.
(13) These options were granted July 8, 1994 of which 25,000 vested
immediately and the remaining 50,000 vesting at the rate of one-third on each
successive February 1.
(14) The fiscal 1994 bonus for Ms. Miller consists of 4,000 shares of the
Company's common stock valued at fair market value at the date of grant with a
gross-up for withholding taxes.
(15) These options were granted August 1, 1993 vesting one-third on each
successive anniversary of the date of grant.
GRANT OF STOCK OPTIONS. Shown below is information on grants of stock options
pursuant to the Company's 1992 Stock Incentive Plan during the fiscal year
ended March 31, 1996 to the named executive officers. No stock appreciation
rights were granted during fiscal 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
_________________________________________________ Potential Realizable
Percentage of Values at Assumed
Total Options Annual Rates of Stock
Granted to Exercise or Price Appreciation for
Options Employees in Base Price Expiration Option Term (8)
Name Granted Fiscal 1996 (per share) Date 5% 10%
_______________ _______ ______________ ___________ __________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
James C. O'Shea 150,000(1) 11% $2.69 05/24/05 $24,085 $277,357
150,000(2) 11 3.50 05/24/05 - 155,857
200,000(3) 15 4.50 05/24/05 - 7,810
Arthur S. Przybyl 112,500(4) 11 1.25 07/29/98 23,574 49,028
Peggy J. Miller 67,500(5) 5 1.25 01/17/01 23,311 51,512
3,750(6) - 1.25 07/31/00 1,153 2,519
56,250(7) 4 1.25 01/31/02 23,913 54,250
</TABLE>
_____________________
(1) These options vested immediately upon grant and became exercisable
November 25, 1995. Fair market value of the Company's common stock on the date
of grant was $1.75 per share.
(2) These options become vested and exercisable one-half on April 10, 1996
and one-half on April 10, 1997. Fair market value of the Company's common
stock on the date of grant was $1.75.
(3) These options become vested and exercisable one-half on April 10, 1997
and one-half on April 10, 1998. Fair market value of the Company's common
stock on the date of grant was $1.75.
(4) These options vested immediately and become exercisable on January 29,
1997. They replace 200,000 options shares priced at $4.00 or more per share of
which 150,000 would have been vested and exercisable on February 1, 1996.
(5) These options vested immediately and become exercisable on January 29,
1997. They replace 90,000 fully vested option shares priced at $4.25 per
share.
(6) Of this total, 2,500 options vested immediately and become exercisable
on January 29, 1997. The remaining balance become vested on August 1, 1997 and
exercisable on January 29, 1997. These options replace 5,000 option shares
priced at $5.00 per share of which two-thirds were vested and exercisable at
the date of replacement.
(7) Of this total, 43,750 options vested immediately or on February 1,
1996, and become exercisable on January 29, 1997. The remaining balance become
vested and exercisable on February 1, 1997. They replace 75,000 option shares
priced at $4.00 per share, all of which except for 16,667 options were vested
and exercisable at the date of replacement or immediately thereafter on
February 1, 1996.
(8) Potential realizable value is based on the assumption that the stock
price of the common stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the applicable option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price performance. The actual value, if any, which may be
realized by any officer will vary based on exercise date and the market price
of the related common stock when sold.
OPTION EXERCISES AND FISCAL YEAR END VALUES. Shown below is information with
respect to exercised options and unexercised options to purchase the Company's
common stock granted in fiscal 1996 and prior years to the named executive
officers and held by them at March 31, 1996. None of the named executive
officers exercised any stock options during fiscal 1996. No stock appreciation
rights were outstanding or exercised during fiscal 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
Number of Unexercised Value of Unexercised
Options held at In-the-Money Options
March 31, 1996 March 31, 1996(1)
______________________________ __________________________________
Name Exercisable Unexercisable Exercisable Unexercisable
__________________ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C>
James C. O'Shea 150,000 350,000 - -
Arthur S. Przybyl - 112,500 - 7,031
Peggy J. Miller - 127,500 - 7,969
</TABLE>
_______________
(1) Based on the difference between the exercise price and the average of
the bid and ask price on NASDAQ of the Company's common stock on that date
($1.3125). The actual value, if any, which may be realized by any officer will
vary based on exercise date and the market price of the related common stock
when sold.
REPORT ON REPRICING OF OPTIONS/SAR'S. Shown below is information with respect
to the Company's ten-year history on the repricing of stock options and stock
appreciation rights (SAR's) held by named executive officers.
<TABLE>
<CAPTION>
Ten-Year Option/SAR Repricings
Length of
Market Price Exercise Original
Number of of Stock Price Option Term
Options/SAR's at Time of at Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
___________________ ________ _____________ ____________ ____________ ________ ____________
<S> <C> <C> <C> <C> <C> <C>
Arthur S. Przybyl 01/26/96(a) 37,500(1) $1.25 $4.63 $1.25 6 years
Then President and 75,000(1) 1.25 4.00 1.25 7 years
Chief Operating
Officer
Peggy J. Miller 01/26/96(a) 67,500(2) 1.25 4.25 1.25 5 years
Vice President 01/26/96(a) 3,750(2) 1.25 5.00 1.25 4.5 years
and Chief Financial 01/26/96(a) 56,250(2) 1.25 4.00 1.25 6 years
Officer
Richard Hollis 12/23/92(b) 40,000 3.50 5.00 3.50 16 months
Then Chief
Operating Officer
</TABLE>
________________
(1) Replaces 50,000 and 100,000 options, respectively.
(2) Replaces 90,000, 5,000 and 75,000 options, respectively.
(a) These options were repriced based on the Compensation and Stock Option
Committees' belief that the difference between the current fair market value
of the Company's common stock and the option exercise prices before repricing
did not meaningfully align employees' and shareholders' interests and,
therefore, did not serve the long-term interests of the Company. In order to
be eligible for this repricing, the named executive officers were required to
forfeit 25% of option shares previously granted.
The foregoing report has been furnished by the Compensation and Stock
Option Committees consisting of Ms. Fey and Messrs. Gouveia, Ruedy, and
Spearman.
(b) This transaction resulted from the cancellation of options originally
granted to Mr. Hollis on April 28, 1992 and the issuance of a similar amount
of new options on December 23, 1992. The full report from the Board on this
transaction was contained in the proxy statement for the fiscal year ended
March 31, 1993.
EMPLOYMENT CONTRACTS. The Company entered into an employment agreement with
Mr. O'Shea to serve as Chairman and Chief Executive Officer. His salary,
currently $195,000 per annum, is subject to annual adjustment by the Board of
Directors. His agreement continues until terminated. In addition to his base
salary, Mr. O'Shea was granted a total of 500,000 incentive stock options at
prices ranging from $2.69 to $4.50 per share which vest variously over a three
year period. He will receive 100,000 shares of common stock when the Company
first achieves two consecutive quarters of positive earnings per share. He
received relocation expense reimbursements grossed-up for withholding taxes
and will receive annual payment of certain disability and life insurance
policy premiums. In the event he is terminated, he will receive his base
salary for up to two years. If he becomes disabled, he will continue at 75% of
his then current salary for not less than six months and at 50% of such salary
for the successive six months. In the event of his death, his salary will
continue for 60 days following the end of the month of his death. Under the
agreement, he is permitted to participate in any net profit sharing, deferred
compensation or other programs. In addition, he is prohibited from competing
with the Company for three years following termination of the agreement.
The Company has entered into an employment agreement with Ms. Miller to
serve as Vice President and Chief Financial Officer. In the event she is
terminated, she will receive her base salary for up to four months. Her
salary, currently $105,000 per annum, is subject to annual adjustment by the
Board of Directors. Her agreement continues until terminated. In the event she
is disabled, she will continue at 75% of her then current salary for not less
than six months and then at 50% of such salary through the end of the current
term. In the event of her death, her salary will continue for 60 days
following the end of the month of her death. Under the agreement, she is
permitted to participate in any net profit sharing, deferred compensation or
other programs. In addition, she is prohibited from competing with the Company
for three years following termination of the agreement.
The Company has entered into an employment agreement with Mr. Redmond to
serve as Vice President of Sales and Marketing. In the event he is terminated,
he will receive his base salary for up to four months. His salary, currently
$100,000 per annum, plus $500 per month car allowance, is subject to annual
adjustment by the Board of Directors. His agreement continues until
terminated. In the event he is disabled, he will continue at 75% of his then
current salary for not less than six months and then at 50% of such salary
through the end of the current term. In the event of his death, his salary
will continue for 60 days following the end of the month of his death. Under
the agreement, he is permitted to participate in any net profit sharing,
deferred compensation or other programs. In addition, he is prohibited from
competing with the Company for three years following termination of the
agreement.
ESCROWED SHARES. As a result of the Company's initial public offering on the
Vancouver Stock Exchange, 1.5 million shares of the Company were held in
escrow pursuant to an Escrow Agreement dated May 30, 1986, among the Company,
WAM Partnership and the escrow agent, Montreal Trust Company. WAM Partnership
is owned by Carl E. Wilcox, former Chairman and C.E.O., and J. Thomas Morrow,
former Director, and managed by Mr. Wilcox. Both Mr. Wilcox and Mr. Morrow are
founders of the Company. The Escrow Agreement provided that these escrowed
shares would be released from escrow based on two times the excess of
cumulative cash flow for five consecutive years (as defined in the agreement)
over 25% of the per share price in the Company's initial public offering,
multiplied by the number of shares in escrow, calculated on an annual basis.
Alternatively, the shares could be released by making application and
obtaining consent of the Superintendent of Brokers of British Columbia based
on demonstrating company value. Under the escrow agreement, any shares not
released by July 14, 1996 would be cancelled.
In connection with Mr. Wilcox's resignation as Chairman and C.E.O. of the
Company, the Board of Directors granted Mr. Wilcox a special power of attorney
to exclusively perform all acts necessary to obtain extension of the escrow
and/or release of the WAM Partnership escrow shares. In addition, the Board
agreed to pay up to $10,000 of costs associated with such extension and/or
release.
On June 3, 1996, the British Columbia Securities Commission informed the
Company that its Executive Director (formerly the Superintendent of Brokers)
consented to the release of all shares originally held in escrow. This
means that the 1.5 million shares of common stock which had been held under
this escrow arrangement are now held by the owners of the shares without
risk of cancellation and may be sold. Upon release, approximately 150,000
of these shares are considered to have been contributed back to the Company
and reissued to certain former employees in consideration for past services
rendered on behalf of the Company. The Company will record the shares as
contributed capital with a corresponding non-cash charge to compensation
expense at the fair market value of the stock on the date of issuance.
Accordingly, a non-cash charge of up to $210,938 will be recorded in the
financial statements in the first quarter of fiscal 1997 (quarter ending June
30, 1996).
SEC FILINGS. Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors and 10 percent shareholders to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and 10 percent
shareholders are required by Commission regulations to furnish the Company
with all Section 16(a) reports they file.
Based solely on the Company's review of the copies of such reports the
Company received and written representations from the Company's officers and
directors, the Company believes that all required reports were timely filed in
fiscal 1996.
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
The Company has maintained a philosophy of seeking to attract and retain
a key group of experienced executives capable of successfully completing
product development, ramping up manufacturing, launching marketing and sales,
and providing strong financial management. Mindful of conserving cash
resources, the Company has provided a combination of annual cash compensation
and stock option grants which emphasizes lower cash compensation in exchange
for potential long-term gains through stock option appreciation. The Company
believes such a strategy is in the best interests of the shareholders and
provides proper incentives to increase long-term shareholder value. The
Company's Compensation Committee is responsible for reviewing cash
compensation paid to the Company's executive officers and makes
recommendations to the Stock Option Committee for stock option and common
stock grants. The Stock Option Committee is responsible for administering all
stock option and common stock grants including awards to the Company's
executive officers.
Overall, the Company's executive compensation mix is composed as follows:
Base Salary. This is an amount of annual cash compensation which the
Company believes is the minimum necessary to attract and retain qualified
executives and is administered on behalf of the Board of Directors by the
Chief Executive Officer for all executive officers other than the C.E.O. As
can be determined from the Summary Compensation Table preceding, under this
policy only three of the Company's six executive officers have cash
compensation exceeding $100,000 per year. Until the Company achieves
significant revenues, it has been the Board's policy to hold base salaries to
at or below market, determined based on the Company's experience in recruiting
key executives, relying instead on stock option incentives to attract and
retain qualified executive officers. In fiscal 1996, the Company's Chief
Executive Officer, Mr. O'Shea, was paid an annual salary of $195,000 beginning
April 10, 1995. This salary was determined based on a review of competitive
salaries by the recruitment consultants engaged by the Board to assist it in
identifying and screening candidates for the chief executive officer position
and is considered, based on the Board's experience during the recruitment
process, as being at or below market for the position. As part of the
Company's negotiation with Mr. O'Shea regarding his compensation package, the
Board agreed to pay premiums on certain life and disability policies owned by
Mr. O'Shea. Payment of these premiums is similar to supplemental policy
premiums paid by the Company on behalf of its former chief executive officer.
In addition to his annual salary, Mr. O'Shea was granted one time
reimbursement of moving and other expenses including gross-up for taxes
necessary to relocate him from his former residence. The value of such
reimbursements totaled $146,996 and was considered, based on discussions with
the executive search firm, to be reasonable and necessary to engage an
executive with the ability and experience that the Company was seeking.
Annual Incentives. As circumstances are appropriate, the Company has
annual incentive programs for individual executives or for the executive
officer group as a whole. These programs have specific performance criteria
and awards determined based on Company business goals for the period. In
fiscal 1996, the Company did not have individual or group incentive programs
with respect to any of its executive officers because of the uncertainties
involved in the transition to the new chief executive officer.
The Company may also award cash, stock and option grants on a
discretionary basis to its executive officers where, in the opinion of the
Company's Stock Option Committee, performance merited such compensation. With
respect to fiscal 1996, Mr. O'Shea received a discretionary stock option award
which entitles him to purchase 25,000 shares of the Company's common stock at
$1.3125 per share. Such award was made to Mr. O'Shea for his leadership in
implementing improved management practices at the Company and for the progress
made on the Company's phase-in of the product cost reduction program.
Long-Term Incentives. At present the Company's primary long-term
incentive program is the 1992 Stock Incentive Plan which is available to all
employees, executive officers and non-employee consultants of the Company.
The Board of Directors' Stock Option Committee grants all options pursuant to
this plan. Generally, executive officers upon joining the Company are granted
options vesting over a three-year period at current fair market value in
amounts which, in the Stock Option Committee's opinion, are consistent with
their positions and responsibilities with the Company. In addition, based on
individual annual performance and contribution to the long-term goals of the
Company, executive officers may receive additional stock option grants. The
amount and terms of such options are discretionary and are determined
subjectively by the Stock Option Committee taking into account Company and
individual performance. Generally, such options vest over a number of years
and are intended to focus executive officers on achieving the long-term goals
of the Company and to directly reward them for corresponding increases in
shareholder value. In connection with his employment with the Company, Mr.
O'Shea was granted options to purchase 500,000 shares of the Company's common
stock as follows: 150,000 shares at $2.69 per share vesting immediately on the
date of grant; 150,000 shares at $3.50 per share vesting over two years; and
200,000 shares at $4.50 per share vesting over three years. As an additional
incentive to achieve profitability, Mr. O'Shea will receive 100,000 shares of
common stock when the Company first achieves two consecutive quarters of
positive earnings per share before any charges for such incentive
compensation. The stock and option package was determined by negotiation with
Mr. O'Shea wherein he agreed to a reduced base salary for a larger potential
equity ownership of the Company.
The Company also has a 401(k) Retirement Benefit Plan for its employees
including its executive officers which provides for voluntary employer matches
of employee contributions up to 6% of salary and for discretionary profit
sharing contributions to all employees. In fiscal 1996, Mr. O'Shea received
$675 (or 540 shares) of Company common stock under the matching provisions of
the 401(k) Plan.
Due to the availability of operating loss carryforwards, the Compensation
and Stock Option Committees determined Mr. O'Shea's compensation package
without regard to the limitations of deductibility imposed by Internal Revenue
Code Section 162(m).
The Company is engaged in a highly competitive industry. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives. The Board of Directors believes that the above
described compensation structure will help the Company to achieve these
objectives.
The foregoing report has been furnished by the following directors: for
the Compensation Committee, William A. Gouveia and Cecil F. Spearman, and for
the Stock Option Committee, Grace K. Fey and John Ruedy, M.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Effective
with the annual shareholders' meeting in October 1995, the Board adopted a
structure whereby in addition to the Stock Option Committee, executive
compensation was administered by a separate committee of the Board. Prior to
that time, executive compensation was administered by the Board as a whole.
Jim O'Shea, the Company's Chairman, President, Chief Executive Officer and a
Director, participated in deliberations concerning executive officer
compensation, but abstained from deliberations concerning his own
compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 12, 1995, the Board of Directors announced the resignation of
the Company's Chairman and Chief Executive Officer, Carl E. Wilcox. In
consideration for Mr. Wilcox's long service to the Company, the Board granted
Mr. Wilcox 100,000 shares of common stock valued at $241,000 and cash
compensation totalling $247,000. The Board also vested 200,000 previously
granted option shares at $4.00 per share and extended the expiration date to
January 14, 1998. The Board granted Mr. Wilcox a special power of attorney to
exclusively perform all acts necessary to obtain extension and/or release of
the WAM Partnership escrow shares. On June 3, 1996, the British Columbia
Securities Commission informed the Company that release of the escrow shares
had been granted. The Board also agreed to pay Mr. Wilcox $20,000 per year
for two years under a covenant not-to-compete. Mr. Wilcox continued to serve
as a Director of the Company until October 25, 1995.
STOCK PERFORMANCE CHART
The following chart compares the yearly stock market (U.S.) percentage
change in the cumulative total stockholder return on the Company's common
stock during the five fiscal years ended March 31, 1996 with the cumulative
total return on the NASDAQ Stock Market (U.S.) Index and the Hambrecht and
Quist Healthcare Index (exclusive of biotechnology companies). The comparison
assumes $100 was invested on March 31, 1991, in the Company's common stock and
in each of the foregoing indices and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BIOJECT MEDICAL TECHNOLOGIES INC., NASDAQ STOCK INDEX
AND HAMBRECHT AND QUIST HEALTH CARE FUND EXCLUDING BIOTECH INDEX
3/91 3/92 3/93 3/94 3/95 3/96
____ ____ ____ ____ ____ ____
Bioject Medical
Technologies Inc. $100 $170 $113 $103 $ 53 $ 35
NASDAQ Stock Index $100 $127 $147 $158 $176 $289
Hambrecht and Quist
Health Care Fund
Excluding Biotech Index $100 $146 $108 $ 96 $129 $196
PROPOSAL #2: AMENDMENT TO 1992 STOCK INCENTIVE PLAN
The 1992 Stock Incentive Plan (the "Plan") was initially adopted by the
Board on July 30, 1992, was approved by the shareholders of the Company at
the annual meeting held on November 20, 1992 and was amended effective
September 21, 1994. The Plan as amended authorizes the grant of options to
purchase up to 3,000,000 shares of the Company's common stock. At the time of
initial adoption of the Plan, 729,100 options had already been granted. Since
that time, the Company has expanded its sales force, created a clinical
department, built a manufacturing engineering group and recruited a new chief
executive officer, all of which required option grants to recruit and retain
qualified employees. As of July 25, 1996, a total of 570,756 options were
available to be granted to current or future employees. Management believes
that the ability to grant incentive options is crucial to its continuing
ability to attract and retain qualified employees. Shares outstanding under
the Plan which expire or are otherwise terminated or not issued pursuant to
Awards become available for grants of new Awards under the Plan. ON JULY 25,
1996, THE BOARD ADOPTED, SUBJECT TO SHAREHOLDER APPROVAL, AN AMENDMENT (THE
"AMENDMENT") TO THE PLAN EXTENDING THE LAST DATE ON WHICH AWARDS (AS DEFINED
BELOW) COULD BE MADE PURSUANT TO THE PLAN FROM JUNE 8, 1998 TO JULY 29, 2002.
NO OTHER REVISIONS OR CHANGES WERE MADE TO THE PLAN. The average of the high
and low sales prices for the Company's common stock reported on the NASDAQ
National Market on July 25, 1996 was $1.20. A summary description of certain
terms and provisions of the amended Plan follows.
AWARDS AND ELIGIBILITY. The Plan provides for stock-based awards to (i)
employees and officers of the Company and its subsidiaries, (ii) selected
non-employee agents, consultants, advisers and independent contractors of the
Company or any parent or subsidiary, and (iii) outside (non-employee)
directors of the Company. Awards which may be granted under the Plan include
stock options, stock bonuses, stock appreciation rights, and specified sales
of stock (collectively, "Awards"). The Stock Option Committee of the Board of
Directors (the "Committee") administers the Plan and determines the key
employees and non-employee advisors of the Company and its subsidiaries who
are to receive Awards under the Plan and the types, amounts, and terms of such
Awards. The Committee currently consists of Ms. Fey and Dr. Ruedy. Subject
to shareholder approval, no Awards may be granted under the Plan, as amended,
on or after July 29, 2002.
At July 25, 1996, a total of 59 persons were eligible for Awards under
the Plan, including each of the Company's 5 executive officers, 45 other
employees, 5 non-employee advisors, and each of the Company's four outside
(non-employee) directors. At that date, these persons represented the pool of
individuals considered to be eligible to participate in the Plan. Outside
directors may receive only the non-discretionary options as described under
"Election of Directors -Board of Directors Composition, Compensation and
Committees."
PURPOSES. The purpose of the Plan is to promote and advance the interests of
the Company and its shareholders by enabling the Company to attract, retain,
and reward key employees, non-employee advisors, and directors. The Plan is
also intended to strengthen the commonality of interests between the Company's
shareholders and such employees, non-employee advisors, and directors by
offering equity-based incentive Awards to promote a proprietary interest in
pursuing the long-term growth, profitability, and financial success of the
Company.
OPTIONS. Options granted under the Plan may be either incentive stock options
meeting the requirements of Section 422 of the Internal Revenue Code (the
"Code") or nonqualified options. The Committee determines the number of
shares of common stock subject to options granted, the option price, the term
of the option, the time or times at which the option may be exercised and
whether an option is an incentive or nonqualified stock option. Incentive
stock options, however, may be exercisable not more than ten years from the
date of grant. The Plan does not limit the maximum term or amount of award
for nonqualified options. The exercise price per share for options granted
under the Plan generally must be at least 100 percent (for incentive stock
options) or 75 percent (for nonqualified options) of the fair market value of
a share of common stock on the date the option is granted. The purchase price
for options may be paid in cash or, at the discretion of the Committee, in
whole or in part in shares of common stock. In the event that the employment
or service of the optionee with the Company or a parent or subsidiary
corporation of the Company terminates for any reason other than for death or
physical disability, vested options may be exercised at any time prior to the
earlier of the expiration date of the option or the expiration of 90 days
after the date of such termination. In the event of termination of
employment due to death or disability, the options may be exercised at any
time prior to the earlier of the expiration date of the option or the
expiration of one year after the date of such termination.
STOCK BONUSES. The Committee may award Shares under the Plan as stock
bonuses. Shares awarded as a stock bonus shall be subject to such terms,
conditions, and restrictions as shall be determined by the Committee, all of
which shall be evidenced in a writing signed by the recipient prior to
receiving the bonus Shares.
STOCK SALES. The Committee may issue Shares under the Plan for such
consideration (including promissory notes and services) as determined by the
Committee, provided that in no event shall the consideration be less than 75
percent of the fair market value of the Shares at the time of issuance.
Shares so issued shall be subject to the terms, conditions and restrictions
determined by the Committee. The restrictions may include restrictions
concerning transferability, repurchase by the Company and forfeiture of the
Shares issued, together with such other restrictions as may be determined by
the Committee.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation rights
("SARs") under the Plan. A recipient of SARs will receive, upon exercise, a
payment (in cash or in shares of common stock) based on the increase in the
price of a share of common stock between the date of grant and the date of
exercise. SARs may be granted in connection with options or other Awards
granted under the Plan or may be granted as independent Awards. If a SAR is
granted in connection with an option, the SAR shall be exercisable only to the
extent and on the same conditions that the related option could be exercised.
Upon exercise of a SAR, any option or portion thereof to which the SAR relates
terminates. If a SAR is granted in connection with an option, upon exercise
of the option, the SAR or portion thereof to which the option relates
terminates.
TAX CONSEQUENCES TO THE COMPANY AND ITS SUBSIDIARIES. To the extent
participants qualify for capital gains treatment with respect to the sale of
shares acquired pursuant to exercise of an incentive stock options, the
Company or its subsidiaries will not be entitled to any tax deductions in
connection with incentive stock options. In all other cases, the Company or
its subsidiaries will be entitled to receive a federal income tax deduction at
the same time and in the same amount as the amount which is taxable to
participants as ordinary income with respect to Awards.
TAX CONSEQUENCES TO RECIPIENT. Incentive Stock Options. Incentive stock
options under the Plan are intended to meet the requirements of Section 422 of
the Internal Revenue Code. No income results to a participant upon the grant
of an incentive stock option or upon the issuance of shares when the option is
exercised. The amount realized on the sale or taxable exchange of such shares
in excess of the exercise price will be considered a capital gain, except that
if such disposition occurs within one year after exercise of the option or two
years after grant of the option, the participant will recognize taxable
compensation at ordinary income tax rates measured by the amount by which the
lesser of (i) the fair market value on the date of exercise minus the exercise
price or (ii) the amount realized on the sale of the share exceeds the
exercise price. For purposes of determining alternative minimum taxable
income, an incentive stock option is treated as a nonqualified option.
Nonqualified Options. No taxable income is recognized upon the grant of
a nonqualified option. In connection with the exercise of a nonqualified
option, a participant will generally realize ordinary income measured by the
difference between the exercise price and the fair market value of the shares
acquired on the date of exercise.
Bonus Shares and Stock Sales. Bonus shares awarded under the Plan and
shares sold outright under the Plan, which are transferable or not subject to
a substantial risk of forfeiture, are taxable as ordinary income equal to the
excess of the fair market value of the shares received (determined as of the
date of settlement) over the amount, if any, paid for the shares by the
participant. In the case of shares that are not transferable and are subject
to a substantial risk of forfeiture on the date of issuance, the participant
will generally recognize ordinary income equal to the excess of the fair
market value of shares received (determined as of the date on which the shares
either become transferable or are not subject to a substantial risk of
forfeiture) over the amount, if any, paid for the shares. In this case, a
participant may elect to recognize income when the shares are received, rather
than upon the expiration of the transfer restriction or risk of forfeiture,
and, in such event, the amount of ordinary income will be determined as of the
date of issuance rather than upon expiration of the applicable restriction.
Stock Appreciation Rights. The grant of a SAR to a participant will not
cause the recognition of income by the participant. Upon exercise of a SAR,
the participant will realize ordinary income equal to the amount of cash
payable to the participant plus the fair market value of any shares of common
stock or other property delivered to the participant.
CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of common stock of
the Company are hereafter increased or decreased or are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any recapitalization,
reclassification, stock split, combination of shares or dividend payable in
shares, the Committee shall make appropriate adjustments (i) in the number and
kind of shares available for awards under the Plan; and (ii) in the number and
kind of shares as to which outstanding options and stock appreciation rights,
or portions thereof then unexercised, shall be exercisable, so that the
participant's proportionate interest before and after the occurrence of the
event is maintained.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE PLAN.
If a quorum is present at the annual meeting of shareholders, the proposal
will be adopted if it receives the affirmative votes of the holders of a
majority of the shares present, or represented, and entitled to vote upon the
proposal at the meeting. Shareholders may expressly abstain from voting upon
the proposal; such shares will have the effect of voting against the
Amendment. Shares represented by duly executed and returned proxies of brokers
or other nominees which are expressly not voted upon the proposed Amendment
("broker non-votes") will have no effect on the required vote. In the event
the Amendment is not approved by the shareholders, the last date on which
Awards can be made pursuant to the Plan will remain in effect only through
June 8, 1998.
OTHER MATTERS TO BE ACTED UPON
It is not known whether any other matters will come before the Meeting
other than as set out above and in the Notice of Meeting. However, if such
should occur, the person named in the accompanying form of proxy intends to
vote on the matters in accordance with his best judgment exercising
discretionary authority with respect to amendments or variations or matters
identified in the Notice of Meeting and other matters which may properly come
before the Meeting or an adjournment thereof.
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
Article II of the Company's Bylaws provides that advance notice of
nominations for the election of directors or proposals for an amendment to the
Company's Bylaws must be received by the Company thirty (30) days prior to the
date of the shareholder meeting at which the shareholder wishes to present
such nomination or proposal or, if less than 40 days' notice of the date of
the meeting is given to shareholders, by the close of business on the 10th day
following the date on which notice of the meeting was mailed to shareholders.
Each notice of a nomination or proposal of a Bylaw amendment must
contain, among other things, (i) the name and address of the shareholder who
intends to make the nomination or proposal; (ii) a representation that the
shareholder is a holder of record of common stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to present the nomination or proposal; (iii) certain biographical
information concerning each person to be nominated for election as a director,
the number of shares of common stock beneficially owned by such nominee, and
the consent of such person to serve as a director if so elected; (iv) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (v) the provisions of any proposed Bylaw amendment and any
financial interest of the shareholder in the proposal; and (vi) such other
information regarding each nominee or proposal as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
March 31, 1996, accompanies this proxy statement. On written request, the
Company will provide, without charge, a copy of its Annual Report on Form 10-K
for the fiscal year ended March 31, 1996, filed with the Securities and
Exchange Commission (including a list briefly describing the exhibits
thereto), to any record holder or beneficial owner of the Company's Common
Stock on August 2, 1996, the record date for the 1996 annual meeting of
shareholders, or to any person who subsequently becomes such a record holder
or beneficial owner. Requests should be directed to the attention of the
Secretary of the Company at the address of the Company set forth in the Notice
of Annual Meeting of Shareholders immediately preceding this proxy statement.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, examined the
financial statements of the Company for fiscal 1996. No change in independent
public accountants is contemplated for fiscal 1997. The Company expects
representatives of Arthur Andersen LLP to be present at the 1996 annual
meeting of shareholders and to be available to respond to appropriate
questions from shareholders. The accountants will have the opportunity to
make a statement at the meeting if they desire to do so.
PROPOSALS OF SHAREHOLDERS FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders to be presented at the Meeting to be held in
September 1997 must be received at the Company's executive offices by April 4,
1997, in order to be included in the Company's proxy statement and form of
proxy concerning that meeting.
DATED at Portland, Oregon, this 9th day of August, 1996.
BY ORDER OF THE BOARD
/S/ PEGGY JARVIS MILLER
_______________________
Peggy Jarvis Miller
Vice President, Chief Financial
Officer and Secretary
<PAGE>
NOTICE OF
ANNUAL SHAREHOLDERS' MEETING
AND
PROXY STATEMENT
-----------------------------
August 9, 1996
PORTLAND, OREGON
-----------------------------
(BIOJECT LOGO)
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
September 19, 1996
This Proxy is Solicited on Behalf of the Board of Directors
James C. O'Shea and Peggy J. Miller and each of them, as proxies, with full
power of substitution in each of them, are hereby authorized to represent and
to vote, as designated on the reverse of this proxy card, on all proposals and
in the discretion of the proxies on such other matters as may properly come
before the annual meeting of stockholders of Bioject Medical Technologies Inc.
to be held on September 19, 1996 or any adjournment(s), postponement(s), or
other delay(s) thereof (the "Meeting"), all shares of stock of Bioject Medical
Technologies Inc. (the "Company") to which the undersigned is entitled to vote
at the Meeting. Receipt of the Notice of Meeting and Proxy Statement is
hereby acknowledged by the undersigned.
(To be Signed on Reverse Side)
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES
LISTED BELOW:
1. Election of the following nominee(s) as directors to serve in such
capacities until their successors are duly elected and qualified.
/ / FOR ALL (Except as marked / / WITHHELD FOR ALL
to the contrary below)
Nominees: Grace K. Fey
William A. Gouveia
Eric T. Herfindal
James C. O'Shea
John Ruedy, M.D.
Cecil E. Spearman
2. Approval of an amendment to the Company's 1992 Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Transactions of such other business as may properly come before the
meeting or any adjournments thereof.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES AND
WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN, DATE, AND MAIL YOUR PROXY TODAY.
SIGNATURE: ______________________________ DATE: _________________________
SIGNATURE: ______________________________ DATE: _________________________
(SIGNATURE, IF HELD JOINTLY)
NOTE: _____________________________________________________
Capacity (Title of Authority, i.e., Executor, Trustee)
BIOJECT MEDICAL TECHNOLOGIES INC.
1992 STOCK INCENTIVE PLAN
(as amended through July 25, 1996)
1. Purpose. The purpose of this 1992 Stock Incentive Plan (the
"Plan") is to enable Bioject Medical Technologies Inc., an Oregon corporation
(the "Company"), to attract and retain the services of (a) selected employees,
officers and directors of the Company or of any parent or subsidiary
corporation of the Company, and (b) selected nonemployee agents, consultants,
advisers and independent contractors of the Company or any parent or
subsidiary.
2. Shares Subject to the Plan. Subject to adjustment as provided
below and in paragraph 11, up to 3,000,000 shares of Common Stock of the
Company (the "Shares") shall be offered and issued under the Plan. If an
option or a stock appreciation right granted under the Plan expires,
terminates or is cancelled, the unissued Shares subject to such option or
stock appreciation right shall again be available under the Plan. If Shares
sold or awarded as a bonus under the Plan are forfeited to the Company or
repurchased by the Company, the number of Shares forfeited or repurchased
shall again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan shall become effective when
adopted by the Board of Directors of the Company (the "Board"). However, no
option granted under the Plan shall become exercisable until the Plan is
approved by the affirmative vote of the holders of a majority of the Common
Stock of the Company represented at a shareholder meeting at which a quorum is
present, and any such awards under the Plan prior to such approval shall be
conditioned on and subject to such approval. Subject to this limitation,
options and stock appreciation rights may be granted and Shares may be awarded
as bonuses or sold under the Plan at any time after the effective date and
before termination of the Plan.
(b) Duration. No options or stock appreciation rights may be
granted under the Plan, no stock bonuses may be awarded under the Plan, and no
Shares may be sold pursuant to paragraph 8 of the Plan on or after July 30,
2002. However, the Plan shall continue in effect until all Shares available
for issuance under the Plan have been issued and all restrictions on such
Shares have lapsed. The Board may suspend or terminate the Plan at any time,
except with respect to options, stock appreciation rights and Shares subject
to restrictions then outstanding under the Plan. Termination shall not affect
any outstanding options, stock appreciation rights, any right of the Company
to repurchase Shares or the forfeitability of Shares issued under the Plan.
4. Administration.
(a) The Plan shall be administered by a committee appointed by
the Board consisting of not less than two directors (the "Committee"). The
Committee shall determine and designate from time to time the individuals to
whom awards shall be made, the amount of the awards, and the other terms and
conditions of the awards; provided, however, that only the Board may amend or
terminate the Plan as provided in paragraphs 3 and 14. At any time when the
officers and directors of the Company are subject to Section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the Committee shall
consist solely of "disinterested" directors as such term is defined from time
to time in Rule 16b-3 under the Exchange Act. No member of the Committee
shall be eligible to receive any award under the Plan while such person serves
as a Committee member, except pursuant to paragraph 10.
(b) Subject to the provisions of the Plan, the Committee may
from time to time adopt and amend rules and regulations relating to
administration of the Plan, advance the lapse of any waiting period,
accelerate any exercise date, waive or modify any restriction applicable to
Shares (except those restrictions imposed by law) and make all other
determinations in the judgment of the Committee necessary or desirable for the
administration of the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Committee shall be final
and conclusive. The Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any related agreement in the
manner and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final judge of such expediency.
5. Types of Awards; Eligibility. The Committee may, from time to
time, take the following actions under the Plan: (i) grant Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), as provided in paragraph 6(b); (ii) grant options other
than Incentive Stock Options ("Nonstatutory Stock Options") as provided in
paragraph 6(c); (iii) award stock bonuses as provided in paragraph 7; (iv)
sell Shares as provided in paragraph 8; and (v) grant stock appreciation
rights as provided in paragraph 9. Any such awards may be made to employees
(including employees who are officers or directors) of the Company or of any
parent or subsidiary corporation of the Company, and to other individuals
described in paragraph 1 who the Committee believes have made or will make an
important contribution to the Company or its parent or subsidiaries; provided,
however, that only employees of the Company or a parent or subsidiary shall be
eligible to receive Incentive Stock Options under the Plan, and, provided
further, that directors who are not employees shall receive awards only
pursuant to paragraph 10. The Committee shall select the individuals to whom
awards shall be made and shall specify the action taken with respect to each
individual to whom an award is made under the Plan. At the discretion of the
Committee, an individual may be given an election to surrender an award in
exchange for the grant of a new award.
6. Option Grants
(a) Grant. Each option granted under the Plan shall be
evidenced by a stock option agreement in such form as the Committee shall
prescribe from time to time in accordance with the Plan. With respect to each
option grant, the Committee shall determine the number of Shares subject to
the option, the option price, the period of the option, and the time or times
at which the option may be exercised and whether the option is an Incentive
Stock Option or a Nonstatutory Stock Option.
(b) Incentive Stock Options. Incentive Stock Options granted
under the Plan shall be subject to the following terms and conditions:
(i) No employee may be granted Incentive
Stock Options under the Plan such that the aggregate
fair market value, on the date of grant, of the Shares
with respect to which Incentive Stock Options are
exercisable for the first time by that employee during
any calendar year under the Plan and under any other
incentive stock option plan (within the meaning of
Section 422 of the Code) of the Company or of any
parent or subsidiary corporation of the Company exceeds
$100,000.
(ii) An Incentive Stock Option may be
granted under the Plan to an employee possessing more
than 10 percent of the total combined voting power of
all classes of stock of the Company or of any parent or
subsidiary corporation of the Company only if the
option price is at least 110 percent of the fair market
value, as described in paragraph 6(b)(iv), of the
Shares subject to the option on the date it is granted,
and the option by its terms is not exercisable more
than five years from the date of grant.
(iii) Subject to paragraphs 6(b)(ii) and
6(d), Incentive Stock Options granted under the Plan
shall continue in effect for the period fixed by the
Committee, except that no Incentive Stock Option shall
be exercisable more than 10 years from the date of
grant.
(iv) The option price per Share shall be
determined by the Committee at the time of grant.
Subject to paragraph 6(b)(ii), the option price shall
not be less than 100 percent of the fair market value
of the Shares covered by the Incentive Stock Option at
the date the option is granted. The fair market value
shall be deemed to be the average of the closing bid
and asked prices for the Common Stock of the Company as
reported on the National Association of Securities
Dealers, Inc. Automated Quotation System on the day
preceding the day the option is granted, or if there
has been no sale on that date, on the last preceding
date on which a sale occurred, or such other reported
value of the Common Stock of the Company as shall be
specified by the Committee.
(v) The Committee may at any time without
the consent of the optionee convert an Incentive Stock
Option into a Nonstatutory Stock Option.
(c) Nonstatutory Stock Options. Nonstatutory Stock Options
shall be subject to the following additional terms and conditions:
(i) The option price for Nonstatutory Stock
Options shall be determined by the Committee at the
time of grant. The option price may not be less than
75 percent of the fair market value of the Shares
covered by the Nonstatutory Stock Option on the date of
grant. The fair market value of the Shares covered by
a Nonstatutory Stock Option shall be determined
pursuant to paragraph 6(b)(iv).
(ii) Nonstatutory Stock Options granted
under the Plan shall continue in effect for the period
fixed by the Committee.
(d) Exercise of Options. Except as provided in paragraph 6(f)
or as determined by the Committee, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or
in the service of the Company or any parent or subsidiary corporation of the
Company and shall have been so employed or have provided such service
continuously since the date such option was granted. Absence on leave or on
account of illness or disability under rules established by the Committee
shall not, however, be deemed an interruption of employment for purposes of
the Plan. Unless otherwise determined by the Committee, vesting of options
shall not continue during an absence on leave (including an extended illness)
or on account of disability. No option may be exercised by an officer or
director of the Company within six months of the date of grant. Except as
provided in paragraphs 6(f), 11 and 12, options granted under the Plan may be
exercised from time to time over the period stated in each option in such
amounts and at such times as shall be prescribed by the Committee, provided
that options shall not be exercised for fractional shares. Unless otherwise
determined by the Committee, if the optionee does not exercise an option in
any one year with respect to the full number of Shares to which the optionee
is entitled in that year, the optionee's rights shall be cumulative and the
optionee may purchase those Shares in any subsequent year during the term of
the option.
(e) Nontransferability. Each option granted under the Plan by
its terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent
and distribution of the state or country of the optionee's domicile at the
time of death, and each option by its terms shall be exercisable during the
optionee's lifetime only by the optionee.
(f) Termination of Employment or Service.
(i) In the event the employment or service
of the optionee by the Company or a parent or
subsidiary corporation of the Company terminates for
any reason other than because of death or physical
disability, the option may be exercised at any time
prior to the expiration date of the option or the
expiration of three months after the date of such
termination, whichever is the shorter period, but only
if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(ii) In the event of the termination of the
optionee's employment or service with the Company or a
parent or subsidiary corporation of the Company because
the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code), the option may be
exercised at any time prior to the expiration date of
the option or the expiration of one year after the date
of such termination, whichever is the shorter period,
but only if and to the extent the optionee was entitled
to exercise the option at the date of such termination.
(iii) In the event of the death of an
optionee while employed by or providing service to the
Company or a parent or subsidiary corporation of the
Company, the option may be exercised at any time prior
to the expiration date of the option or the expiration
of one year after the date of such death, whichever is
the shorter period, but only if and to the extent the
optionee was entitled to exercise the option on the
date of death, and only by the person or persons to
whom such optionee's rights under the option shall pass
by the optionee's will or by the laws of descent and
distribution of the state or country of domicile at the
time of death.
(iv) The Committee, at the time of grant or
at any time thereafter, may extend the three-month and
one-year expiration periods any length of time not
later than the original expiration date of the option,
and may increase the portion of an option that is
exercisable, subject to such terms and conditions as
the Committee may determine.
(v) To the extent that the option of any
deceased optionee or of any optionee whose employment
or service terminates is not exercised within the
applicable period, all further rights to purchase
Shares pursuant to such option shall cease and
terminate.
(g) Purchase of Shares. Unless the Committee determines
otherwise, Shares may be acquired pursuant to an option only upon receipt by
the Company of notice in writing from the optionee of the optionee's intention
to exercise, specifying the number of Shares as to which the optionee desires
to exercise the option and the date on which the optionee desires to complete
the transaction, and, if required to comply with the Securities Act of 1933,
as amended, or state securities laws, the notice shall include a
representation that it is the optionee's present intention to acquire the
Shares for investment and not with a view to distribution. The certificates
representing the Shares shall bear any legends required by the Committee.
Unless the Committee determines otherwise, on or before the date specified for
completion of the purchase of Shares pursuant to an option, the optionee must
have paid the Company the full purchase price of such Shares in cash
(including, with the consent of the Committee, cash that may be the proceeds
of a loan from the Company), or, with the consent of the Committee, in whole
or in part, in Shares valued at fair market value, as determined pursuant to
paragraph 6(b)(iv). Unless the Committee determines otherwise, all payments
made to the Company in connection with the exercise of an option must be made
by a certified or cashier's bank check or by the transfer of immediately
available federal funds. No Shares shall be issued until full payment
therefor has been made. With the consent of the Committee, an optionee may
request the Company to apply automatically the Shares to be received upon the
exercise of a portion of a stock option (even though stock certificates have
not yet been issued) to satisfy the purchase price for additional portions of
the option. Each optionee who has exercised an option shall immediately upon
notification of the amount due, if any, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local tax withholding
requirements. If additional withholding is or becomes required beyond any
amount deposited before delivery of the certificates, the optionee shall pay
such amount to the Company on demand. If the optionee fails to pay the amount
demanded, the Company or any parent or subsidiary corporation of the Company
may withhold that amount from other amounts payable to the optionee by the
Company or the parent or subsidiary corporation, including salary, subject to
applicable law. With the consent of the Committee, an optionee may deliver
Shares to the Company to satisfy the withholding obligation.
7. Stock Bonuses. The Committee may award Shares under the Plan
as stock bonuses. Shares awarded as a stock bonus shall be subject to such
terms, conditions, and restrictions as shall be determined by the Committee,
all of which shall be evidenced in a writing signed by the recipient prior to
receiving the bonus Shares. The Committee may not require the recipient to
pay any monetary consideration other than amounts necessary to satisfy tax
withholding requirements. The certificates representing the Shares awarded
shall bear any legends required by the Committee. The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company
or any parent or subsidiary corporation of the Company may withhold that
amount from other amounts payable to the recipient by the Company or the
parent or subsidiary corporation, including salary, subject to applicable law.
With the consent of the Committee, a recipient may deliver Shares to the
Company to satisfy the withholding obligation.
8. Stock Sales. The Committee may issue Shares under the Plan
for such consideration (including promissory notes and services) as determined
by the Committee, provided that in no event shall the consideration be less
than 75 percent of the fair market value of the Shares at the time of
issuance, determined pursuant to paragraph 6(b)(iv). Shares issued under this
paragraph 8 shall be subject to the terms, conditions and restrictions
determined by the Committee. The restrictions may include restrictions
concerning transferability, repurchase by the Company and forfeiture of the
Shares issued, together with such other restrictions as may be determined by
the Committee. The certificates representing the Shares shall bear any legends
required by the Committee. The Company may require any purchaser of stock
issued under this paragraph 8 to pay to the Company in cash upon demand
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the purchaser fails to pay the amount demanded,
the Company or any parent or subsidiary corporation of the Company may
withhold that amount from other amounts payable to the purchaser by the
Company or any parent or subsidiary corporation, including salary, subject to
applicable law. With the consent of the Committee, a purchaser may deliver
Shares to the Company to satisfy the withholding obligation.
9. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be granted under the
Plan by the Committee, subject to such rules, terms, and conditions as the
Committee prescribes.
(b) Exercise.
(i) A stock appreciation right shall be
exercisable only at the time or times established by
the Committee. If a stock appreciation right is
granted in connection with an option, the stock
appreciation right shall be exercisable only to the
extent and on the same conditions that the related
option could be exercised. Upon exercise of a stock
appreciation right, any option or portion thereof to
which the stock appreciation right relates terminates.
If a stock appreciation right is granted in connection
with an option, upon exercise of the option, the stock
appreciation right or portion thereof to which the
option relates terminates. No stock appreciation right
granted to an officer or director may be exercised
during the first six months following the date of
grant.
(ii) The Committee may withdraw any stock
appreciation right granted under the Plan at any time
and may impose any conditions upon the exercise of a
stock appreciation right or adopt rules and regulations
from time to time affecting the rights of holders of
stock appreciation rights. Such rules and regulations
may govern the right to exercise stock appreciation
rights granted before adoption or amendment of such
rules and regulations as well as stock appreciation
rights granted thereafter.
(iii) Each stock appreciation right shall
entitle the holder, upon exercise, to receive from the
Company in exchange therefor an amount equal in value
to the excess of the fair market value on the date of
exercise of one Share over its fair market value on the
date of grant (or, in the case of a stock appreciation
right granted in connection with an option, the option
price per Share under the option to which the stock
appreciation right relates), multiplied by the number
of Shares covered by the stock appreciation right or
the option, or portion thereof, that is surrendered.
No stock appreciation right shall be exercisable at a
time that the amount determined under this subparagraph
is negative. Payment by the Company upon exercise of a
stock appreciation right may be made in Shares valued
at fair market value, in cash, or partly in Shares and
partly in cash, all as determined by the Committee.
(iv) For purposes of this paragraph 9, the
fair market value of the Shares shall be determined
pursuant to paragraph 6(b)(iv), on the trading day
preceding the date the stock appreciation right is
exercised.
(v) No fractional Shares shall be issued
upon exercise of a stock appreciation right. In lieu
thereof, cash may be paid in an amount equal to the
value of the fraction or, if the Committee shall
determine, the number of Shares may be rounded downward
to the next whole Share.
(vi) Each participant who has exercised a
stock appreciation right shall, upon notification of
the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state or
local tax withholding requirements. If the participant
fails to pay the amount demanded, the Company or any
parent or subsidiary corporation of the Company may
withhold that amount from other amounts payable to the
participant by the Company or any parent or subsidiary
corporation, including salary, subject to applicable
law. With the consent of the Committee, a participant
may satisfy this obligation, in whole or in part, by
having the Company withhold from any Shares to be
issued upon the exercise that number of Shares that
would satisfy the withholding amount due or by
delivering Shares to the Company to satisfy the
withholding amount.
(vii) Upon the exercise of a stock
appreciation right for Shares, the number of Shares
reserved for issuance under the Plan shall be reduced
by the number of Shares issued. Cash payments of stock
appreciation rights shall not reduce the number of
Shares reserved for issuance under the Plan.
10. Option Grants to Non-Employee Directors.
(a) Automatic Grants. Immediately after the close of each
annual shareholder meeting (commencing with the 1993 annual meeting), each
person then serving as a Non-Employee Director, including any such person who
is elected at such meeting, shall automatically be granted a Nonstatutory
Stock Option to purchase 17,500 Shares. A "Non-Employee Director" is a
director of the Company who is not an employee of the Company or of any parent
or subsidiary corporation of the Company on the date the option is granted.
(b) Terms of Options. The exercise price for options granted
under this paragraph 10 shall be the fair market value of the Shares on the
date of grant, determined pursuant to paragraph 6(b)(iv). Each such option
shall have an eight-year term from the date of grant, unless earlier
terminated as provided in paragraph 6(f), and shall become exercisable with
respect to 8,750 shares six months after the date of grant, with the remaining
8,750 shares becoming exercisable on the first anniversary of the date of
grant.
11. Changes in Capital Structure. If the outstanding shares of
Common Stock of the Company are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any recapitalization,
reclassification, stock split, combination of shares or dividend payable in
shares, the Committee shall make appropriate adjustments (i) in the number and
kind of shares available for awards under the Plan; and (ii) in the number and
kind of shares as to which outstanding options and stock appreciation rights,
or portions thereof then unexercised, shall be exercisable, so that the
participant's proportionate interest before and after the occurrence of the
event is maintained, provided that this paragraph 11 shall not apply with
respect to transactions referred to in paragraph 12. The Committee may also
require that any securities issued in respect of or exchanged for Shares
issued hereunder that are subject to restrictions be subject to similar
restrictions. Notwithstanding the foregoing, the Committee shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Committee.
Any such adjustment made by the Committee shall be conclusive.
12. Effect of Reorganization or Liquidation.
(a) Cash, Stock or Other Property for Stock. Except as
provided in paragraph 12(b), upon a merger, consolidation, reorganization,
plan of exchange or liquidation involving the Company, as a result of which
the shareholders of the Company receive cash, stock or other property in
exchange for or in connection with their Common Stock (any such transaction to
be referred to in this paragraph 12 as an "Accelerating Event"), any option or
stock appreciation right granted hereunder shall terminate, except as
specified in the following sentence, but the optionee shall have the right
during a 30-day period immediately prior to any such Accelerating Event to
exercise his or her option or stock appreciation right, in whole or in part,
without any limitation on exercisability. With respect to an option or stock
appreciation right granted to an officer or director less than six months
prior to any Accelerating Event, such officer or director shall have the right
to require the Company to purchase such option or stock appreciation right at
a purchase price computed pursuant to paragraph 12(c) during the 30-day period
following the expiration of six months following the date of such grant, and
this right shall apply even if the option or stock appreciation right has
otherwise terminated pursuant to paragraph 6(f) following such Accelerating
Event.
(b) Stock for Stock. If the shareholders of the Company
receive capital stock of another corporation ("Exchange Stock") in exchange
for their Common Stock in any transaction involving a merger, consolidation,
reorganization, or plan of exchange, all options granted hereunder shall be
converted into options to purchase shares of Exchange Stock and all stock
appreciation rights granted hereunder shall be converted into stock
appreciation rights measured by the Exchange Stock, unless the Committee, in
its sole discretion, determines that any or all such options or stock
appreciation rights granted hereunder shall not be converted, but instead
shall terminate in accordance with the provisions of paragraph 12(a). The
amount and price of converted options and stock appreciation rights shall be
determined by adjusting the amount and price of the options or stock
appreciation rights granted hereunder to take into account the relative values
of the Exchange Stock and the Common Stock in the transaction.
(c) Purchase Price. With respect to an option granted to an
officer or director less than six months prior to an Accelerating Event, the
purchase price payable pursuant to paragraph 12(a) shall be computed as
follows:
(i) With respect to a Nonstatutory Stock
Option and a stock appreciation right as to which no
Incentive Stock Option has been granted, the purchase
price shall be the product of (A) the excess, if any,
of the higher of (1) the purchase price paid for each
Share in the Accelerating Event, or (2) the highest
fair market value of a Share (determined pursuant to
paragraph 6(b)(iv)) during the 30-day period ending on
the day the Accelerating Event occurs, over the option
price, and (B) the number of Shares covered by the
option or stock appreciation right.
(ii) With respect to an Incentive Stock
Option and a stock appreciation right as to which an
Incentive Stock Option has been granted, the purchase
price shall be the product of (A) the excess, if any,
of the fair market value of each Share on the date of
exercise over the option price, and (B) the number of
Shares covered by the option or stock appreciation
right.
(iii) No option or stock appreciation right
may be exercised in connection with an Accelerating
Event if the purchase price determined under this
paragraph 12(c) is negative.
(d) The rights set forth in this paragraph 12 shall be
transferable only to the extent the related option or stock appreciation right
is transferable.
13. Corporate Mergers, Acquisitions, Etc. The Committee may also
grant options, grant stock appreciation rights, award stock bonuses and sell
stock under the Plan having terms, conditions and provisions that vary from
those specified in the Plan; provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock appreciation rights, stock bonuses and stock sold or awarded by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a parent or subsidiary corporation of the
Company is a party.
14. Amendment of Plan.
(a) The Board may at any time, and from time to time, modify
or amend the Plan in such respects as it shall deem advisable because of
changes in the law while the Plan is in effect or for any other reason.
Except as provided in paragraphs 6(b)(v), 11, 12 and 13, however, no change in
an award already granted shall be made without the written consent of the
holder of such award.
(b) Notwithstanding any other provision in the Plan, paragraph
10 may be amended or modified by the Board or the shareholders of the Company
only once in any six-month period, except as may be required to comport with
changes in the Code, or the Employee Retirement Income Security Act, or the
rules promulgated thereunder.
15. Approvals. The obligations of the Company under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company shall not be obligated to issue or
deliver Shares under the Plan if such issuance or delivery would violate
applicable state or federal securities laws, or if compliance with such laws
would, in the opinion of the Company, be unduly burdensome or require the
disclosure of information which would not be in the Company's best interests.
16. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any parent or subsidiary
corporation of the Company or shall interfere in any way with the right of the
Company or any parent or subsidiary corporation of the Company by whom such
employee is employed to terminate such employee's employment at any time, for
any reason, with or without cause, or to increase or decrease such employee's
compensation or benefits; or (ii) confer upon any person engaged by the
Company or any parent or subsidiary corporation of the Company any right to be
retained or employed by the Company or the parent or subsidiary or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company or the parent or subsidiary.
17. Rights as a Shareholder. The recipient of any award under the
Plan shall have no rights as a shareholder with respect to any Shares until
the date of issue to the recipient of a stock certificate for such Shares.
Except as otherwise expressly provided in the Plan, no adjustment shall be
made for dividends or other rights for which the record date is prior to
the date such stock certificate is issued.
