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):
[ ] $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 1, 1997
Dear Shareholders:
You are cordially invited to attend the 1997 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 11, 1997 at 9:00 a.m., Pacific
Daylight Time.
The matters to be acted upon at the meeting -- to elect the Board of
Directors; to reprice certain options granted to directors; 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 1997 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 11, 1997, 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 seven directors for the ensuing year;
2. To reprice certain options previously granted to the Company's
non-employee directors;
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. A copy of
the Company's 10-K containing the consolidated financial statements for
the year ended March 31, 1997, and the auditors' report on the financial
statements is also included. Only holders of common stock of record at the
close of business on July 25, 1997 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 1st day of August, 1997.
BY ORDER OF THE BOARD
/S/ PEGGY JARVIS MILLER
_______________________________
Peggy Jarvis Miller
Vice President, Chief Financial
Officer and Secretary/Treasurer
<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
Employment Contracts
Escrowed Shares
SEC Filings
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE
COMPENSATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK PERFORMANCE CHART
PROPOSAL #2: AMENDMENT TO DIRECTOR STOCK OPTIONS
OTHER MATTERS TO BE ACTED UPON
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
ANNUAL REPORT
INDEPENDENT ACCOUNTANTS
PROPOSALS OF SHAREHOLDERS FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
PROXY STATEMENT
as of August 1, 1997
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 11, 1997, 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 $3,500, 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 1, 1997.
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 July 25, 1997, 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 July 25, 1997, a total of 22,447,390 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 seven
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 only
upon the affirmative vote of shareholders owning in the aggregate at least
a majority of the Company's outstanding Common Shares at the Meeting in person
or by proxy and entitlted to vote. With regard to the election of directors,
vote may be cast for or withheld from each nominee. Votes that are withheld
will have no effect on the outcome of the election because directors will be
elected by a plurality of the votes cast. An abstention may be specified in
the proposals to approve the repricing of certain stock options granted to
non-employee directors. An abstention will be counted as present for purposes
of determining the existence of a quorom on such proposal and, therefore, have
the effect of a negative vote.
The following tables set forth certain information concerning the
beneficial ownership of the Company's common stock at June 30, 1997, 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>
Hambrecht & Quist (2)
50 Rowes Wharf, Boston, Massachusetts 02110 3,380,300 15.04%
Paramount Capital (3)
787 Seventh Avenue, New York, New York 10019 2,539,642 11.18
James C. O'Shea (4) 390,291 1.80
David H. de Weese (5) 10,000 *
Grace Keeney Fey (6) 27,250 *
William A. Gouveia (7) 61,250 *
Eric T. Herfindal (8) 8,750 *
Richard J. Plestina (5) 32,500 *
John Ruedy, MD (9) 144,450 *
Peggy J. Miller (10) 138,653 *
J. Michael Redmond (11) 50,000 *
All Directors and Executive
Officers as a Group (10 persons) (12) 933,891 4.23
</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 warrants to purchase 1,190,00 shares of common stock which are
presently exercisable.
(3) Includes warrants to purchase 1,428,571 shares of common stock which are
presently exercisable.
(4) Includes 50,000 options which are vested and become exercisable on
October 3, 1997 and 318,750 options which are vested and become exercisable
on April 3, 1998. Does not include 75,000 options that become vested and
exercisable after 60 days.
(5) Includes only shares directly owned. Does not include 17,500 option
shares that become exercisable after 60 days.
(6) Includes options to purchase 26,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares which become
exercisable after 60 days.
(7) Includes options to purchase 61,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares which become
exercisable after 60 days.
(8) Includes options to purchase 8,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares which become
exercisable after 60 days.
(9) Includes options to purchase 78,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares which become
exercisable after 60 days.
(10) Includes options to purchase 25,000 shares of common stock which are
vested and become exercisable on October 3, 1997 and options to purchase
105,000 shares of common stock which are vested and become exercisable on
April 3, 1998.
(11) Includes options to purchase 25,000 shares of common stock which are
vested and become exercisable on October 3, 1997, and options to purchase
25,000 shares of common stock which are presently vested and become
exercisable on April 3, 1998. Does not include 50,000 option shares which
become exercisable after 60 days.
(12) Includes 175,000 options which are presently exercisable, 115,000 options
which are vested and become exercisable on October 3, 1997 and 501,250 options
which are vested and become exercisable on April 3, 1998. Does not include
204,375 options which become vested and exercisable after 60 days.
All of the outstanding capital stock of Bioject Inc. is owned by the Company.
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 1997 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 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 52 Chairman, Chief Executive
Officer and President 1995
John Ruedy, M.D. 65 Director(a)(b) 1987
William Gouveia 55 Director(a)(c) 1994
Grace Keeney Fey 51 Director(b)(d) 1995
Eric T. Herfindal 56 Director(b)(c) 1996
Richard J. Plestina 51 Director(a)(d) 1997
David H. de Weese 55 Director 1997
_____________
(a) Member of Nominating Committee
(b) Member of Compensation Committee
(c) Member of Audit Committee
(d) Member of Stock Option 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.
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 a director of the Company since September
1996. He was Senior Vice President of Axion Healthcare, Inc., a disease
management company, from 1993 to 1996 and continues as a director of that
company, 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.
RICHARD J. PLESTINA was elected a director of the Company in April 1997.
Mr. Plestina is President of Quelah Corporation, NW, a family owned
investment firm, since 1986. In 1988, he was a consultant for Cologon, Inc.
DBA Alpine Glass Company, a large commercial and residential glass company.
From 1979 to 1986, he was an Executive Vice President of Orion Capital
Corporation, a multiline insurance company and President of EBI Companies,
which was later acquired by Orion Corporation in 1979. From 1974 to 1979
he served as the Vice President and Marketing Manager of EBIC. Mr. Plestina
has served previous directorships for Orion Capital Corporation, EBI
Companies, Associated Oregon Industries and Northwest Employer's Council.
DAVID H. DE WEESE was elected a director of the Company in June 1997. He
has served as Chairman of the Board of Directors, President and Chief
Executive Officer of the SIGA Pharmaceuticals, Inc., since November 1996.
Prior to joining the SIGA, Mr. de Weese served as a director and a consultant
to Biovector Therapeutics, S.A., a developer of drug delivery technology based
in France, and as an advisor to Paul Capital Partners, L.P., a private equity
investment manager with whom he maintains a consulting relationship. From
1993 to 1995, Mr. de Weese was President, Chief Executive Officer and a
Director of M6 Pharmaceuticals, Inc., a biopharmaceutical company. From 1986
to 1992, Mr. de Weese was the President, Chief Executive Officer, a Director
and a founder of Cygnus Therapeutic Systems (now Cygnus, Inc.), a developer and
manufacturer of transdermal drug delivery systems. Prior to that, Mr. de Weese
co-founded Medical Innovations Corporation, a medical device business currently
a division of Ballard Medical Products, Inc., and was Chairman of the Board,
President and Chief Executive Officer of Machine Intelligence Corporation,
a developer of computer software and hardware. Mr. de Weese received his
M.B.A. from the Harvard University Graduate School of Business.
BOARD OF DIRECTORS COMPOSITION, COMPENSATION AND COMMITTEES. The Board of
Directors is currently composed of seven members, one of whom is an employee
of the Company. Following the shareholder vote, the Board will be composed of
seven 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 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 six meetings of the Board of Directors during the last
fiscal year. Except for one telephonic meeting for which Ms. Fey was not
present and one telephonic meeting for which Mr. Gouveia 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 1997.
The Stock Option Committee took action by resolution eight times. The
Compensation Committee met one time during fiscal 1997. The Nominating
Committee met two times during fiscal 1997.
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 52 Chairman, Chief Executive
Officer and President 1995
Peggy J. Miller 50 Vice President, Chief Financial
Officer and Secretary/Treasurer 1993
Richard R. Stout, M.D. 44 Vice President of Clinical Affairs
of Bioject Inc. 1994
J. Michael Redmond 37 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.
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, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
___________________ ___________________
Fiscal Options Other
Name and Principal Position(1) Year Salary Bonus Other Shares(2) Other(3) Compensation
_________________________ _______ _______ ______ _____ ________ _______
_____________
<S> <C> <C> <C> <C> <C> <C> <C>
James C. O'Shea 1997 $195,000 - $5,225(5) 25,000(6) $3,017 $ -
Chairman, Chief Executive 1996 192,737(4) - 4,117(5) 500,000(7) 146,996(8)
Officer and President 1995 - - - - -
Peggy J. Miller 1997 105,000 - - 12,500(9) 1,983 -
Vice President, Chief 1996 105,000 - 127,500(10) -
Financial Officer and 1995 99,835 3,325(11) - 75,000(12) -
Secretary / Treasurer
J. Michael Redmond 1997 100,000 6,000(14) 100,000(15) 1,616 -
Vice President of 1996 14,231(13) 1,000(14) - - -
Sales and Marketing 1995 - - - - -
</TABLE>
________________________
(1) No other executive officers had salary and bonus compensation
greater than $100,000 in fiscal 1997.
(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.
(3) The Company 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. In fiscal 1997, the
Company made all employer matching contributions in shares of the Company's
common stock based on fair market value in the period of match.
(4) 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.
(5) 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.
(6) In fiscal 1997, Mr. O'Shea was granted 25,000 options vesting
immediately and exercisable on November 3, 1996.
(7) 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 vested 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.
(8) 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 federal
and state income taxes incurred on these reimbursements.
(9) In fiscal 1997, Ms. Miller was granted 12,500 options vesting
immediately and becoming exercisable November 3, 1996.
(10) 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.
(11) 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.
(12) 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. These options were replaced in fiscal 1996.
(13) Mr. Redmond commenced employment with the Company on February 8, 1996.
(14) Mr. Redmond receives an automobile allowance of $500 per month.
(15) In connection with his employment, Mr. Redmond was granted 100,000
options with one-third vesting on each anniversary of his employment with
the Company.
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, 1997 to the named executive officers. No stock appreciation
rights were granted during fiscal 1997.
<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
Options Employees Base Price Expiration for Option Term (4)
Name Granted in Fiscal 1997 (per share) Date 5% 10%
_______________ _______ ______________ ___________ __________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
James C. O'Shea 25,000(1) 4 1.31 03/31/03 12,277 29,500
Peggy J. Miller 12,500(2) 2 1.31 03/31/03 6,125 14,750
J. Michael Redmond 100,000(3) 14 1.30 02/07/03 50,000 119,000
</TABLE>
_____________________
(1) These options vested immediately upon grant and became exercisable
November 3, 1996. Fair market value of the Company's common stock on the
date of grant was $1.28 per share. Subsequent to year end, these
options were repriced to $0.75 per share subject to a 25% forfeiture and
delay in exercisability to April 3, 1998.
(2) These options vested immediately upon grant and became exercisable
November 3, 1996. Fair market value of the Company's common stock on the
date of grant was $1.28 per share. Subsequent to year end, these
options were repriced to $0.75 per share subject to a 25% forfeiture and
delay in exercisability to April 3, 1998.
(3) Of this total, 33,333 options vested immediately and became
exercisable on February 7, 1997, 33,333 become vested and exercisable on
February 7, 1998, and the remaining balance of 33,334 become vested and
exercisable on February 7, 1999. Subsequent to year end, these
options were repriced to $0.75 per share subject to a 25% forfeiture and
delay in exercisability to April 3, 1998.
(4) 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 1997 and prior years to the named
executive officers and held by them at March 31, 1997. None of the named
executive officers exercised any stock options during fiscal 1997. No stock
appreciation rights were outstanding or exercised during fiscal 1997.
<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, 1997 March 31, 1997(1)
____________________________ __________________________
Name Exercisable Unexercisable Exercisable Unexercisable
_____________ ___________ _____________ ____________ _____________
<S> <C> <C> <C> <C>
James C. O'Shea 425,000(2) 100,000(2) $ - $ -
Peggy J. Miller 140,000(2) - - -
J. Michael Redmond 33,333(2) 66,667(2) - -
</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
($0.79). 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.
(2) Subsequent to year end, the Stock Option Committee approved a proposal
whereby the named executive officers could reprice their options to $0.75 per
share subject to a forfeiture of 25% of the pre-repricing number of options
outstanding and subject further to a delay in exercisability until April 3,
1998. Based on this repricing, Mr. O'Shea would hold 393,750 unexercisable
options having a value of $15,750 at March 31, 1997; Ms. Miller would hold
105,000 unexercisable options having a value of $4,200 at March 31, 1997;
and Mr. Redmond would hold 75,000 unexercisable options having a value of
$3,000 at March 31, 1997.
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 was owned by Carl E. Wilcox, former chairman and chief executive
officer, 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 chief
executive officer 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.
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 recorded 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 $120,000 was recorded in the
financial statements in the first quarter of fiscal 1997.
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 1997, except for certain reports not filed by Mr. Cecil Spearman, a
director during fiscal 1997. Mr. Spearman filed 5 late reports with respect
to 5 purchase transactions.
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 is composed of the
following key elements:
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 four 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 1997, the Company's
Chief Executive Officer, Mr. O'Shea, was paid an annual salary of $195,000.
This has remained unchanged since he joined the Company on April 10, 1995; as
have all other executive officer salaries. Mr. O'Shea's 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 Mr. O'Shea's 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.
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 1997, the Company had a group incentive program with respect to
certain executive officers whereby specified stock options would be
automatically granted based on attainment of certain sales and operating
performance targets. These goals were not attained and, accordingly, the
options were not awarded under the program.
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 1997, Mr. O'Shea received a discretionary stock option
award which entitles him to purchase 50,000 shares of the Company's common
stock at $0.75 per share. Such award was made to Mr. O'Shea for his leadership
in improving financial community relations, completion of the self injector
project and increasing potential strategic partnership opportunities.
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. No additional long-term incentive awards were made to Mr.
O'Shea in fiscal 1997 because the original grant of 500,000 option shares
vesting over three years was considered adequate as a long-term incentive.
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 1997, Mr. O'Shea
received $3,017 (or 4,022 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, John Ruedy, Grace K. Fey, and
Eric T. Herfindal, and for the Stock Option Committee, Grace K. Fey and
Richard J. Plestina.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Executive compensation is administered by two committees of the Board: the
Compensation Committee and the Stock Option Committee. 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. 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
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, 1997 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, 1992, 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
3/92 3/93 3/94 3/95 3/96 3/97
____ ____ ____ ____ ____ ____
Bioject Medical
Technologies Inc. $100 $67 $61 $31 $21 $12
NASDAQ Stock Index $100 $115 $124 $138 $187 $208
Hambrecht and Quist
Health Care Fund
Excluding Biotech Index $100 $74 $65 $88 $134 $132
PROPOSAL #2: AMENDMENT TO DIRECTOR STOCK OPTIONS
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 11, 1997, a total of 550,000 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. The average of the high and low sales prices for the Company's common
stock reported on the NASDAQ National Market on July 11, 1996 was $0.65625.
ON APRIL 3, 1997, THE BOARD ADOPTED, SUBJECT TO SHAREHOLDER APPROVAL,
A RESOLUTION WHEREBY CERTAIN OPTIONS PREVIOUSLY GRANTED TO CURRENT AND
ONE FORMER NON-EMPLOYEE DIRECTOR WOULD BE REPRICED SUBJECT TO CERTAIN
FORFEITURE PROVISIONS. NO REVISIONS OR OTHER CHANGES WERE MADE TO THE
PLAN.
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS AS COMPENSATION FOR
SERVICES. As sole compensation for service on the Board, the Company's
non-employee directors receive an automatic grant of 17,500 option shares
each year priced as of the day immediately preceding the day of each Annual
Meeting of Shareholders.
On April 3, 1997, the Board approved the repricing certain options previously
automatically granted to certain of the Company's directors and a former
director in prior years subject to forfeiture of shares. If approved, the
options will be repriced at each director's election to the fair market value
of the Company's common stock on September 10, 1997, the day immediately
preceding the date of the Annual Meeting. However, in exchange for the
anticipated lower exercise price, the optionee forfeits 25% or 50%, depending
on the year of grant, of the shares subject to the repriced option. Approval
of this proposal will not affect future automatic annual grants to directors.
The repricing of the specific option grants is outlined below:
<TABLE>
<CAPTION>
Original No. of Original Grant If approved
Date of Grant Directors --------------------- -------------------------------------
- ------------- ---------------- # Shares Price/Share Forfeiture % # Shares Price/Share
-------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
9/96 5 87,500 $1.00 25% 65,625 *
10/95 4 70,000 $2.28 25% 52,500 *
1/95 3 52,500 $3.03 50% 26,250 *
1/94 3 52,500 $4.88 50% 26,250 *
11/92 2 35,000 $4.04 50% 17,500 *
</TABLE>
* Fair market value to be determined based on closing common stock prices on
September 10, 1997.
PURPOSE OF REPRICING. The annual stock option grants to the Company's non-
employee directors are the only compensation received by these directors for
their service to the Company. The exercise price for the annual stock option
grants is the market price of the Company's common stock on the day prior to
the date of the Annual Meeting of Shareholders. The decline in the Company's
common stock price has caused all outstanding stock options granted to non-
employee directors to be out-of-the-money and such options have yielded no
value and therefore no compensation to the directors. The repricing of such
options to the market price of the common stock on the day prior to the date
of the Annual Meeting will assist the Company in retaining the services of
valued directors. The Company believes that the forfeiture of 25% and 50% of
the options is adequate and appropriate consideration for the repricing of
such options.
Certain material terms of the Plan are summarized below:
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 Mr. Plestina.
Subject to shareholder approval, no Awards may be granted under the Plan,
on or after July 29, 2002.
At July 11, 1997, a total of 65 persons were eligible for Awards under
the Plan, including each of the Company's four executive officers, 45 other
employees, 10 non-employee advisors, and each of the Company's six 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.
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 OPTION REPRICING.
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, 1997, 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, 1997, 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 July 25, 1997, the record date for the 1997 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 1997. No change in
independent public accountants is contemplated for fiscal 1998. The Company
expects representatives of Arthur Andersen LLP to be present at the 1997 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 1998 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders to be presented at the Meeting to be held in
September 1998 must be received at the Company's executive offices by April
4, 1998, in order to be included in the Company's proxy statement and form of
proxy concerning that meeting.
DATED at Portland, Oregon, this 1st day of August, 1997.
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 1, 1997
PORTLAND, OREGON
-----------------------------
(BIOJECT LOGO)
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
ANNUAL MEETING OF SHAREHOLDERS
September 11, 1997
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 shareholders of Bioject Medical Technologies
Inc. to be held on September 11, 1997 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 SHAREHOLDERS 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: David H. de Weese
Grace K. Fey
William A. Gouveia
Eric T. Herfindal
James C. O'Shea
Richard J. Plestina
John Ruedy, M.D.
2. Approval of the repricing of certain stock options granted to
non-employee directors.
/ / FOR / / AGAINST / / ABSTAIN
3. Transaction 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)
