SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
FORM 10-K
(Mark one)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended March 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from __________ to ________
Commission File No. 0-15360
BIOJECT MEDICAL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Oregon 93-1099680
(State of other jurisdiction of (I.R.S. identification no.)
incorporation or organization)
7620 SW Bridgeport Road
Portland, Oregon 97224
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including areas code) (503) 639-7221
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Common Stock, no par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of voting stock held by non-affiliates of the
registrant, as of May 31, 1998: $40,833,088
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of May 29, 1998: Common Stock, no par value, 27,218,758 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement for the 1998 Annual
Shareholders' Meeting are incorporated by reference into Part III
<PAGE>
Table of Contents
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Item 6. Selected Consolidated Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Consolidated Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
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PART I
ITEM 1. BUSINESS
FORWARD-LOOKING STATEMENTS
Certain statements in this Report constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and factors include, among
others, those described under "Business -- Risk Factors."
GENERAL
Bioject Medical Technologies Inc. ("Bioject" or the "Company") develops,
manufactures and markets a jet injection system for needle-free drug delivery.
Using this technology to administer injections virtually eliminates the risk of
contaminated needlestick injuries and resulting blood- borne pathogen
transmission, a major concern throughout the healthcare industry. The Company
manufactures and markets a professional jet injection system, the Biojector(R)
2000, which allows healthcare professionals to inject medications through the
skin, both intramuscularly and subcutaneously, without a needle. The Biojector
2000 system consists of two components: a hand-held, reusable jet-injector (the
"Biojector 2000"); and a sterile, single-use disposable syringe ("Biojector
syringe"). The system is capable of delivering variable-dose needle-free
injections up to 1 ml. Additionally, the Company has developed and is awaiting
regulatory clearance to begin selling the B4000 jet-injection system for
self-delivery of various medications up to 1 ml. for use by non-professionals.
The Company is also developing systems for Hoffmann-La Roche to use with certain
of their products pursuant to an agreement signed January 10, 1995. On March 23,
1998 the Company entered into a transaction with Vitajet Corporation ("Vitajet")
whereby the Company acquired, along with certain other assets, the rights to the
Vitajet(R), a spring-powered self-injection device which currently has
regulatory clearance for administering injections of insulin. See "Research and
Product Development". In October 1997, the Company entered into a joint
development agreement with Elan Corporation, plc ("Elan") for the license of
certain blood glucose monitoring technology from Elan and the development and
commercialization of that technology by a newly formed subsidiary of the
Company. See "Research and Product Development." The Company intends to operate
as two distinct business segments: the jet-injection business and the blood
glucose monitoring business.
Needle-Free Injection Business.
Currently, medications are administered using various methods, each of which has
advantages and limitations. The leading drug delivery techniques include oral
ingestion, intravenous infusion, subcutaneous and intramuscular injection,
inhalation and transdermal diffusion "patch." Many drugs are effective only when
administered by injection. Published data indicates more than 1.7 billion
needle-syringes sold annually in the U.S. The Company believes that
approximately 80% of these syringes are used for subcutaneous or intramuscular
injections up to 1 ml.
Injections using traditional needle-syringes suffer from many shortcomings
including (i) the risk of needlestick injuries, (ii) the risk of penetrating a
patient's vein and (iii) patients' aversion to needles and discomfort. The most
important of these, the contaminated needlestick injury, occurs when a needle
that has been exposed to a patient's blood accidentally penetrates a healthcare
worker's skin. Contaminated needles can transmit deadly blood-borne pathogens
including such viruses as HIV and hepatitis B. Published data estimates the
total number of reported needlestick injuries in the U.S. at between 370,000 and
800,000 annually.
In recent years, with the growing awareness of blood-borne pathogen
transmission, safety has become a critical concern for hospitals and healthcare
professionals as well as patients. As a result, pressures on the healthcare
industry to eliminate the risk of contaminated needlestick injuries have
increased. For example, the U.S. Occupational Safety and Health Administration
("OSHA") issued regulations, effective in 1992, which require healthcare
institutions to treat all blood and other body fluids as infectious. These
regulations require the implementation of "engineering and work practice
controls" to "isolate or remove the blood-borne pathogens hazard from the
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workplace." Among the required controls are special handling and disposal of
contaminated "sharps" in biohazardous "sharps" containers and follow-up testing
for victims of needlestick injuries. These regulations have significantly
increased the cost of using needle-syringes.
The costs resulting from needlestick injuries vary widely. Uncontaminated
needlesticks involve relatively little cost, while investigating and following
up contaminated needlestick injuries are much more expensive. Investigation
typically includes identifying the source of contamination, testing the source
for blood-borne pathogens and repeatedly testing the needlestick victim over an
extended period. Some healthcare providers are requiring additional measures,
including presuming that all needlestick injuries involve contaminated needles
unless proven otherwise and, under certain circumstances, administering
prophylactic treatment such as zidovudine (AZT) or other drugs. The costs
associated with treating needlestick injuries that result in infection by
life-threatening pathogens, such as HIV or hepatitis B, are dramatically higher.
In an effort to protect healthcare workers from needlestick injuries, many
healthcare facilities have adopted more expensive, alternative technologies. One
such technology is an intravenous ("IV") port that permits the injection of
medication directly into the IV line without requiring the use of a sharp needle
for each administration. Another is the "safety syringe," generally a disposable
needle-syringe with a plastic sheath mechanism intended to cover the needle
after use. Despite many efforts to reduce the risk of needlestick injuries, such
injuries remain a major health concern.
The Company's long-term goal is to establish its needle-free injection systems
as the preferred drug delivery method for all medications administered by
intramuscular or subcutaneous injection. The Company currently markets the
Biojector 2000 system to public health and flu immunization clinics, has
developed and is awaiting regulatory clearance of a gas-powered self-injection
device for the
delivery of various medications by non-professionals in the home. In addition,
through a transaction with Vitajet Corporation, the Company has acquired the
Vitajet spring-powered self-injection system, and is developing
application-specific devices to be marketed by Hoffmann-La Roche. The Company is
also seeking relationships with pharmaceutical and biotechnology companies to
market its Biojector 2000 and self injector products for specific applications
and to develop other application-specific devices and companion syringes.
Blood Glucose Monitoring Business.
Diabetes mellitus is a disorder of carbohydrate metabolism that affects an
estimated 16.5 million Americans and 125 million people worldwide, half of whom
remain undiagnosed. Insulin facilitates the uptake of circulating blood glucose
into tissues, a fundamental process of metabolism. A lack of, or resistance to,
the hormone insulin characterizes the disease. Incidence of the disease, which
can originate from many factors, is rising, particularly in developing countries
as non-Caucasian populations begin to adopt western diet and culture.
Type I diabetics are individuals dependent on external administration of insulin
who must frequently measure their blood glucose level and, depending on the
results, administer injections of insulin or consume a carbohydrate-rich snack.
Fluctuation of a person's blood glucose level outside a normal range, which may
occur in the time interval between measurements frequently causes serious health
complications and even death. Using currently available blood glucose monitoring
systems to check their blood glucose level, diabetic patients must lance their
finger with a disposable lancet, draw a drop of blood, and place the blood on a
reagent strip which is then read by an electronic reader which displays the
results. Many patients find this procedure painful and inconvenient, and as a
result, many diabetics do not measure their blood glucose with sufficient
frequency.
The Company has licensed and intends to develop a convenient, easy to use
continuous blood glucose monitoring system which will permit diabetics to better
monitor and, thereby, better regulate their blood glucose levels so as to
diminish or eliminate the long-term complications of this disorder.
THE COMPANY
The Company's needle-free jet injection operations are conducted by Bioject
Inc., an Oregon corporation, which is a wholly owned subsidiary of Bioject
Medical Technologies Inc., an Oregon corporation. The Company's blood glucose
monitoring system development operations are conducted by a subsidiary, Bioject
JV Subsidiary Inc., an Oregon corporation.
<PAGE>
Although Bioject Inc. commenced operations in 1985, the Company was formed in
December 1992 for the sole purpose of acquiring all the capital stock of Bioject
Medical Systems Ltd., a company organized under the laws of British Columbia,
Canada, in a stock-for-stock exchange in order to establish a U.S. domestic
corporation as the publicly traded parent company for Bioject Inc. and Bioject
Medical Systems Ltd. Bioject Medical Systems Ltd. was terminated in fiscal 1997.
Bioject JV Subsidiary Inc. ("JV or JV Sub") was formed in October 1997 for the
purpose of developing and commercializing the blood glucose monitoring
technology. All references to the Company herein are to Bioject Medical
Technologies Inc. and its subsidiaries, unless the context requires otherwise.
The Company's executive offices and operations are located at 7620 SW Bridgeport
Road, Portland, Oregon 97224, and its telephone number is (503) 639-7221.
"Biojector", "Bioject", "Vitajet" and "Medivax" are registered trademarks of the
Company.
DESCRIPTION OF THE COMPANY'S PRODUCTS
Needle-free Injection Business.
The Company's current product, the Biojector 2000 system, is a refinement of jet
injection technology that enables healthcare professionals to reliably deliver
measured variable doses of medication through the skin, either intramuscularly
or subcutaneously, without a needle. Giving an injection with a Biojector 2000
system is easy and straightforward. The healthcare worker checks the CO2
pressure on the easy-to-read gauge at the rear of the injector, draws medication
up into a disposable plastic syringe, inserts the syringe into the power
injector, presses the syringe tip against the appropriate disinfected surface on
the patient's skin, and then presses an actuator thereby injecting the
medication. Medication is expelled rapidly through a precision molded, small
diameter orifice in a thin stream at a velocity sufficient to penetrate the skin
and force the medication into the tissue at the desired level. The Biojector
2000 system consists of two components: a hand-held, reusable jet injector; and
a sterile, single-use, disposable plastic syringe capable of delivering variable
doses of medication up to 1 ml.
The first component, the Biojector 2000, is a portable hand-held unit which is
approximately the size of a flashlight and is designed both for easy use by
healthcare professionals, as well as to be attractive and non-threatening to
patients. As described in the June 7, 1993 issue of BUSINESSWEEK, the Biojector
2000 won the 1993 Gold Industrial Design Excellence Award given by Industrial
Designers Society of America for its aesthetically pleasing and ergonomic
design. In July 1994, the Biojector 2000 also received the Alliance of
Children's Hospitals Seal of Approval. The Biojector 2000 injector uses
disposable CO2 cartridges as a power source. The CO2 cartridges, which are
purchased by the Company from an outside supplier, give an average of ten
injections before requiring replacement. The CO2 gas provides consistent,
reliable pressure on the plunger of the disposable syringe, thereby propelling
the medication into the tissue. The CO2 propellant does not come into contact
with either the patient or the medication.
The second component, the Biojector single-use disposable syringe, is provided
in a sterile, peel-open package and consists of a plastic, needle- free,
variable dose syringe containing a plunger, accompanied by a disposable plastic
vial adapter which is used to fill the syringe. (If requested by a customer, the
product can also be supplied with a needle which is used as an alternative to
the vial adapter for filling the syringe.) The body of the syringe is
transparent and has graduated markings to aid filling by healthcare workers.
There are five different Biojector syringes, each of which is intended for a
different injection depth or body type. The syringes are molded using the
Company's patented manufacturing process. The healthcare worker selects the
syringe appropriate for the intended type of injection. One syringe size is for
subcutaneous injections, while the others are designed for intramuscular
injections, depending on the patient's body characteristics.
The Vitajet is also made-up of two components, a portable injector unit and a
disposable syringe. It is smaller and lower in cost than other products in the
Company's needle-free offering. The method of operation and drug delivery is
similar to the Biojector, except that the Vitajet is powered by a spring rather
than by CO2. It is designed for self-injection and was acquired to fill a gap in
the Company's product line for a low-cost, home use, needle-free device.
Vitajet's current regulatory labeling limits its use to the injection of
insulin. The Company believes that the product has the potential to achieve
regulatory labeling for additional subcutaneous injections. See "Forward Looking
Statements" and "Risk Factors Government Regulation."
<PAGE>
The current suggested retail list price for the Biojector 2000 professional jet
injector is $995, and the suggested retail list price for Biojector syringes is
$1.00 a piece. CO2 cartridges are sold for a suggested retail price of $0.50 per
cartridge and average ten injections per cartridge. Discounts are offered for
volume purchases. The current suggested retail price for the Vitajet 3
needle-free injector is $399. A three month supply (13-count) of Vitajet
syringes is sold for a suggested retail price of $60.
The Company has other products in development which are intended to address
other markets or to enhance the Biojector 2000 system. See "Research and Product
Development."
Blood Glucose Monitoring Business.
The Company is currently in the development phase of its continuous blood
glucose monitoring product and currently has no products on the market in the
blood glucose monitoring business segment. See "Research and Product
Development."
MARKETING AND COMPETITION
Needle-free Injection Business.
Currently, the traditional needle-syringe is the primary method by which
intramuscular and subcutaneous injections are administered.
During the last 20 years, there have been many attempts to develop portable
one-shot jet injection hypodermic devices. Some of the problems which have
arisen in the attempts to develop such devices include: (a) inadequate injection
power; (b) little or no control of pressure and depth of penetration; (c)
complexity of design with related difficulties in cost and performance; (d)
difficulties in use, including filling and cleaning; and (e) the necessity for
sterilization between uses.
In recent years, several spring-driven needle-free injectors have been developed
and marketed primarily for the injection of insulin. Each of these devices
requires regular cleaning as well as filling from a separate medication bottle
or vial. Current prices for such injectors range from approximately $400 to $600
per injector. The Company believes that market acceptance of these devices has
been limited due to a combination of the cost of the devices coupled with the
difficulties of their use.
Also in recent years, various versions of a "safety syringe" have been designed
and marketed. Most versions of the safety syringe generally involve, as their
basic design, a standard or modified needle-syringe with a plastic guard or
sheathing surrounding the needle. Such covering is usually retracted or removed
in order to give an injection. Although the intent of the safety syringe is to
reduce or eliminate needlestick injuries, the syringes require manipulation
after injection and, therefore, still pose the risk of needlestick injury. They
are also bulky and add to contaminated waste disposal problems.
The Company is currently focusing it marketing efforts for the Biojector system
in two primary directions. The first of these marketing efforts continues the
Company's historical strategy of marketing directly to the end-user of the
product by gaining acceptance of the Biojector system as a safe, reliable
alternative to the needle-syringe and safety syringe. These efforts build on the
Company's established presence in the U.S. public health clinic and flu
immunization markets. The Company is also focusing its direct marketing on
creating arrangements to market the Biojector 2000 system to the home
healthcare market and the U.S. military.
The second area of marketing emphasis focuses on creating licensing and supply
arrangements with leading pharmaceutical and biotechnical companies for whose
products the Biojector technology provides either better medical efficacy or a
higher degree of market acceptance. Sales though this channel would be to the
pharmaceutical or biotechnology company whose salesforce would then sell that
company's own products along with the Biojector system to the end user.
Development of an injection system for specific applications which is
anticipated to be marketed by Hoffmann-La Roche is an example of such an
arrangement. Other opportunities include the possibility of pre-filled Biojector
syringes which, if developed, could be filled and marketed by the pharmaceutical
or biotechnology company whose product is involved.
Pursuing both of these marketing strategies, the Company plans eventually to
expand into international markets.
<PAGE>
To lead its direct sales and marketing efforts, The Company currently employs a
national sales manager who manages a staff of two full-time nurse trainers, 5 to
8 per diem part-time nurse trainers and a half-time U.S. military sales
representative. Bioject's direct sales efforts have resulted in the signing of
public health agreements for the state of North Carolina, the New York City
Middle Schools, and the health departments in the states of New Mexico, Oklahoma
and Illinois. The Company expects to sign additional agreements with other
public health agencies. In addition, the Company works closely on a national
basis with the Visiting Nurses Associations for use of the Biojector 2000 system
for flu immunization. The Company intends to leverage its success in these
immunization programs to attract pharmaceutical company strategic partners to
assist it in gaining access to the physician office and other specialized
markets where the benefits of jet injection drug delivery will enhance
distribution of their injectable medications.
In August 1994, Bioject signed an agreement with Homecare Management, Inc.
("HMI"), granting HMI exclusive rights to purchase Bioject's Needle-Free
Injection Management System, the Biojector 2000, for use in the home healthcare
market. Sales to HMI commenced in August 1994. In return for HMI's commitment to
purchase a minimum of 8,000 Biojector units over the ensuing two years, the
Company granted volume pricing discounts to HMI. Throughout the term of the
contract the selling price of Biojectors to HMI exceeded their standard cost.
During fiscal 1995 and 1996, the Company sold approximately 2,100 and 4,300
Biojectors to HMI for total sales revenue including syringes of $1.1 million and
$2.2 million, respectively. HMI had not placed the great majority of these
Biojectors with patients pending completion of negotiations with pharmaceutical
companies for certain pricing concessions for medication to be administered with
the Biojectors. In January 1996, HMI requested that further shipments under the
contract be suspended. In February 1996, the Company learned from HMI's press
releases that HMI expected to default under its loan, to take significant
write-offs for accounts receivable and inventories, planned operational
consolidations, and would restate certain prior period financial statements. In
fiscal 1997, the Company agreed to repurchase certain of the Biojector
inventories (including up to 6,000 devices) which HMI had on hand for a total of
$660,000 including $322,000 of forgiveness of accounts receivable and payment of
$338,000 in two installments, one-half of which was paid in July 1996 and with
the balance remaining outstanding. The Company was under no obligation to
repurchase these inventories, and the repurchase was at a substantial discount
to the original selling price to HMI.
The sale of new technologies to hospitals, large clinics and other large
institutions is typically a lengthy process. Introduction of new technologies to
a hospital or other large institution typically involves screening by several
individuals and committees within the institution, including new product
evaluation committees, infection control officers, medical staff and business
office personnel. Therefore, in order to shorten the sales cycle, the Company
has focused its primary direct sales strategy on the public health and flu
immunization markets where there are fewer and more concentrated decision
makers.
The medical equipment market is highly competitive, and competition is likely to
intensify. Many of the Company's existing and potential competitors have been in
business longer than the Company and have substantially greater technical,
financial, marketing, sales and customer support resources. The Company believes
the primary competition for the Biojector 2000 system and other jet injectors it
may develop is the traditional disposable needle- syringe and the safety
syringe. Leading suppliers of needle-syringes include: Becton-Dickinson & Co.,
Sherwood Medical Co., a subsidiary of American Home Products Corp., and Terumo
Corp. of Japan. Manufacturers of traditional needle-syringes compete primarily
on price, which generally ranges from approximately $0.17 to $0.15 per unit.
Manufacturers of safety syringes compete on features, quality and price. Safety
syringes generally are priced in a range of $0.25 to $0.45 per unit.
The Company expects to compete with traditional needle-syringes and safety
syringes based on healthcare worker safety, ease of use, reduced cost of
disposal, patient comfort, and reduced cost of compliance with OSHA regulations,
but not on purchase price. However, the Company believes that when all indirect
costs (including disposal of syringes and testing, treatment and workers'
compensation expense related to needlestick injuries) are considered, the
Biojector 2000 system will compete effectively. See "Forward Looking Statements"
and "Risk Factors."
<PAGE>
The Company is aware of other portable needle-free injectors on the market today
which are generally focused on subcutaneous self-injection applications of 0.5
ml. or less and compete with the Vitajet. However the Company is not aware of
any competing products with features and benefits comparable to the Biojector
2000 system. The Biojector is suitable for both intramuscular and subcutaneous
injections of up to 1 ml. in the professional and home injection markets.
Manufacturers of needle-syringes, as well as other companies, may develop new
products that compete directly or indirectly with the Company's products. There
can be no assurance that the Company will be able to compete successfully in
this market. See "Risk Factors - Competition,- "Dependence on Two Technologies".
A variety of new technologies (for example, transdermal patches) are being
developed as alternatives to injection for drug delivery. While the Company does
not believe such technologies have significantly affected the use of injection
for drug delivery to-date, there can be no assurance that they will not do so in
the future.
Blood Glucose Monitoring Business.
The diabetic blood glucose monitoring market is currently dominated by four
companies: LifeScan, a subsidiary of Johnson and Johnson, Boehringer Mannheim,
Miles Laboratories, a subsidiary of Bayer, and MediSense, a subsidiary of Abbott
Laboratories. All of these companies have in vitro blood glucose monitoring
systems which use blood test strips and an electronic reader.
Emerging technologies for less invasive monitoring of blood glucose have been in
development for many years. There are three broad modalities of blood glucose
analysis: Near infrared spectroscopy (near-IR), measurement of interstitial
fluid ("ISF"), the liquid between cells of the skin, and transdermal
technologies, where a patch applied to the skin causes diffusion of bodily
fluids to the skin surface from which levels of blood glucose can be measured.
There have been several recent attempts to introduce noninvasive in vivo blood
glucose sensors, based on near-IR spectroscopy. These instruments are currently
large and costly (around $10,000), as well as difficult to calibrate. Though
some are billed as "portable," they are impractical for ambulatory use.
Two companies, TCPI and Cygnus Therapeutics, are developing systems for
measuring the blood glucose concentration with patch membrane technologies.
Through application of an electrical current through the skin, interstitial
fluid is brought to the skin's surface, where it is captured by a patch from
which the glucose element can be measured. In the case of the TCPI device, the
patch is then removed from the skin and placed into a reader for glucose
measurement. The Cygnus device has a reader and membrane integrated in a
wristwatch which takes periodic readings and averages them to determine blood
glucose levels.
The Company has not yet fully developed and commercialized its continuous blood
glucose monitoring technology. However, based on the expected design and
performance of its continuous blood glucose monitoring device, the Company
expects to compete effectively based on the following anticipated key benefits:
To patients:
- - Real-time measurement of blood glucose concentration leading to a better,
more reliable monitoring of the blood sugar level with the resulting
opportunity to reduce the near and long-term medical complications of
diabetes.
- - Superior Information: Continuous availability of blood glucose levels in a
convenient and pain free format.
- - Lightweight and discreet.
- - Convenience; anticipated once-per-day application to provide continuous
results all day without further activation by the patient.
To third party payors:
- - Real-time measurement of blood glucose concentration leading to a better,
steadier regulation of the blood sugar level, translating to a potential
reduction of diabetic complications and their associated cost.
- - Freedom from the pain and inconvenience of frequent blood tests leading to
better patient compliance, which translates to better blood glucose
control, fewer long term complications, and lower costs.
To healthcare providers:
- - Superior Information: Real-time measurement of blood glucose concentration
leads to steadier regulation of the blood sugar levels, superior provider
capabilities, and improved patient care.
- - Continuous monitoring via once-a-day application greatly reducing the labor
requirements associated with patient-nurse interactions required by the
static tests currently employed to monitor patients' blood glucose levels.
<PAGE>
PATENTS AND PROPRIETARY RIGHTS
Needle-free Injection Business.
The Company believes that technology incorporated in its currently marketed
injection device and single-dose disposable plastic syringes as well as the
technology of products under development in both the jet injection and blood
glucose monitoring business segments coupled with the technology and ease of use
of the products acquired in the Vitajet acquisition give it significant
advantages over the manufacturers of other jet injection systems and over
prospective competitors seeking to develop similar systems. The Company attempts
to protect its technology through a combination of trade secrets,
confidentiality agreements and procedures and patent prosecution.
The Company has three U.S. patents which were issued with respect to jet
injection technology incorporated in earlier versions of its jet injection
systems and which expire from July 2007 to November 2008. Seven additional U.S.
patents have been issued which protect developments incorporated in the
Biojector 2000 system. These patents incorporate a number of claims including
claims regarding the jet injection system's design, method of operation, certain
aspects of the syringe design and the method of manufacturing the syringe
orifice. The Company has also been granted a patent relating a drug vial
adapter. The Company has made additional patent filings regarding pre-filled
syringe technologies and adapters for drug vial access. The Company also
generally files patent applications in Canada, Europe and Japan at the times and
under the circumstances it deems filing to be appropriate under the procedures
in place in each jurisdiction. There can be no assurance that any patents
applied for will be granted or that patents held by the Company will be valid or
sufficiently broad to protect the Company's technology or provide a significant
competitive advantage. See "Risk Factors." The Company also relies on trade
secrets and proprietary know-how that it seeks to protect through
confidentiality agreements with its employees, consultants, suppliers and
others. There can be no assurance that these agreements will not be breached,
that the Company would have adequate remedies for any breach, or that the
Company's trade secrets will not otherwise become known to or be developed
independently by competitors. In addition, the laws of foreign countries may not
protect the Company's proprietary rights to its technology, including patent
rights, to the same extent as the laws of the U.S.
Although the Company believes that it has independently developed its technology
and attempts to assure that its products do not infringe the proprietary rights
of others, if infringement were alleged and proved, there can be no assurance
that the Company could obtain necessary licenses on terms and conditions that
would not have an adverse affect on the Company. The Company is not aware of any
asserted claim that the Biojector 2000, Vitajet or any product under development
violates the proprietary rights of any person.
If a dispute arises concerning the Company's technology, litigation that could
result in substantial cost to and diversion of effort by the Company might be
necessary to enforce the Company's patents, to protect the Company's trade
secrets or know-how or to determine the scope of the proprietary rights of
others. Adverse findings in any proceeding could subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties or otherwise adversely affect the Company's ability to
manufacture and sell its products.
Blood Glucose Monitoring Business.
The continuous blood glucose monitoring system concept and proprietary aspects
of the design are covered by various patents . Corresponding patent applications
have been filed with the PCT, designating all member countries, including the
United States, E.U. and Japan, as well as in Taiwan and South Africa. Additional
patent applications will be filed in the course of the GlucoTrax development
program. These applications will cover new, innovative aspects and refinements
of the product.
<PAGE>
GOVERNMENTAL REGULATION
Needle-free Injection and Blood Glucose Monitoring Businesses.
The Company's products and manufacturing operations are subject to extensive
government regulations, both in the U.S. and abroad. In the U.S., the Food and
Drug Administration ("FDA") administers the Federal Food, Drug and Cosmetic Act
(the "FD&C") and has adopted regulations, including those governing the
introduction of new medical devices, the observation of certain standards and
practices with respect to the manufacturing and labeling of medical devices, the
maintenance of certain records and the reporting of device-related deaths,
serious injuries, and certain malfunctions to the FDA. Manufacturing facilities
and certain Company records are also subject to FDA inspections. The FDA has
broad discretion in enforcing the FD&C and the regulations thereunder, and
noncompliance can result in a variety of regulatory steps ranging from warning
letters, product detentions, device alerts or field corrections to mandatory
recalls, seizures, injunctive actions and civil or criminal penalties.
The FD&C provides that, unless exempted by regulation, medical devices may not
be commercially distributed in the U.S. unless they have been cleared or
approved by the FDA. The FD&C provides two basic review procedures for
pre-market clearance or approval of medical devices. Certain products qualify
for a submission authorized by Section 510(k) of the FD&C, wherein the
manufacturer provides the FDA with a premarket notification ("510(k)
notification") of the manufacturer's intention to commence marketing the
product. The manufacturer must, among other things, establish in the 510(k)
notification that the product to be marketed is substantially equivalent to
another legally marketed product, (i.e., that it has the same intended use and
that it as safe and effective as a legally marketed device and does not raise
questions of safety and effectiveness that are different from those associated
with the legally marketed device). Marketing may commence when the FDA issues a
letter finding substantial equivalence to such a legally marketed device. The
FDA may require, in connection with the 510(k) submission, that it be provided
with animal and/or human test results. If a medical device does not qualify for
the 510(k) procedure, the manufacturer must file a premarket approval ("PMA")
application. A PMA must show that the device is safe and effective and is
generally a much more complex submission than a 510(k) notification typically
requiring more extensive prefiling testing and a longer FDA review process.
A 510(k) notification is required when a device is being introduced into the
market for the first time. A 510(k) notification is also required when the
manufacturer makes a change or modification to an already marketed device that
could significantly affect safety or effectiveness, or where there is a major
change or modification in the intended use of the device. When any change or
modification is made in a device or its intended use, the manufacturer is
expected to make the initial determination as to whether the change or
modification is of a kind that would necessitate the filing of a new 510(k)
notification. The FDA's regulations provide only limited guidance in making this
determination.
In April 1987, the Company received 510(k) marketing clearance from the FDA
allowing the Company to market a hand-held CO2-powered jet injection system.
Although the Biojector 2000 system incorporates changes from the system with
respect to which the Company's 1987 510(k) marketing clearance was received and
expands its intended use, the Company made the determination that these were not
major changes or modifications in intended use or changes in the device that
could significantly affect the safety or effectiveness of the device and that,
accordingly, the 1987 510(k) clearance permitted the Company to market the
Biojector 2000 system in the U.S. In June 1994, the Company received clearance
from the FDA under 510(k) to market a version of its Biojector 2000 system in a
configuration targeted at high volume injection applications. In October 1996,
the Company received 510(k) clearance for a non-needle disposable vial access
device. In March 1997, the Company received additional 510(k) clearance for
certain enhancements to its Biojector 2000 system. The Company currently has
applications pending before the FDA for 510(k) clearance of the B2020 1.5ml jet
injector, the B4000 self-injector. There can be no assurance that the FDA will
concur with the Company's determination that the products can be qualified by
means of a 510(k) submission.
<PAGE>
The continuous blood glucose monitoring system will be designed to meet
international standards of product safety, reliability and biocompatibility. In
the U.S., while the Company believes that the FDA, based on an earlier clearance
of a "Biostator Monitor", sold by Miles Laboratories, will allow the continuous
blood glucose monitoring system to be sold under a 510(k) pre-market
notification, a final determination has not been made in this regard and there
can be no assurance that the FDA will allow the use of a 510(k) pre-market
notification. See "Risk Factors - Governmental Regulation". European regulatory
clearance will be in accordance with the essential requirements set out in the
new Medical Device Directives, which will come into law in June 1998.
The Company continues to seek arrangements with pharmaceutical companies to
develop pre-filled Biojector syringe applications to permit the pharmaceutical
companies to market their products packaged in Biojector prefilled containers.
See "Research and Product Development." Before pre-filled Biojector syringes may
be distributed for use in the U.S., certain FDA-mandated stability tests may be
required of those pharmaceutical companies. Pre-filled syringes involve drugs
packaged as a component of a medical device. It is current FDA policy that such
pre-filled syringes, which are considered to be combination products, are
evaluated by the FDA as drugs rather than medical devices. Marketing of
pre-filled syringes by pharmaceutical companies will require prior clearance via
a new or amended Drug Application ("NDA") or an Abbreviated New Drug Application
("ANDA"). An NDA is a complex submission required to establish that a drug will
be safe and effective for its intended uses. An ANDA is a less detailed process
which does not require, among other things, that the applicant provide complete
reports of preclinical and clinical studies of safety and efficacy as are
required for NDAs. Assuming that the drugs used in the pre- filled syringes have
previously been approved by the FDA for injection, the FDA will likely require
that ANDAs, rather than NDAs, be submitted. The Company believes that if a drug
to be used in the Company's pre-filled syringe were already the subject of an
approved NDA or ANDA for intramuscular or subcutaneous injection, the main issue
affecting clearance for use in the pre-filled syringe would be the adequacy of
the syringe to store the drug, to assure its stability until used and to safely
deliver the proper dose. See "Forward Looking Statements" and "Risk Factors
Government Regulation."
The FDA also regulates the Company's quality control and manufacturing
procedures by requiring the Company and its contract manufacturers to
demonstrate compliance with current Good Manufacturing Practice ("GMP")
Regulations. These regulations require, among other things, that (i) the
manufacturing process must be regulated and controlled by the use of written
procedures and (ii) the ability to produce devices which meet the manufacturer's
specifications must be validated by extensive and detailed testing of every
aspect of the process. They also require investigation of any deficiencies in
the manufacturing process or in the products produced and detailed
record-keeping. Further, the FDA's interpretation and enforcement of these
requirements has been increasingly strict in recent years and seems likely to be
even more stringent in the future. Failure to adhere to GMP requirements would
cause the products produced to be considered in violation of the Act and subject
to enforcement action. The FDA monitors compliance with these requirements by
requiring manufacturers to register with the FDA, and by subjecting them to
periodic FDA inspections of manufacturing facilities. If the inspector observes
conditions that might be violated, the manufacturer must correct those
conditions or explain them satisfactorily, or face potential regulatory action
that might include physical removal of the product from the marketplace.
The FDA's Medical Device Reporting Regulation requires that the Company provide
information to the FDA on the occurrence of any death or serious injuries
alleged to have been associated with the use of the Company's products, as well
as any product malfunction that would likely cause or contribute to a death or
serious injury if the malfunction were to recur. In addition, FDA regulations
prohibit a device from being marketed for unapproved or uncleared indications.
If the FDA believes that the company is not in compliance with these
regulations, it can institute proceedings to detain or seize products, issue a
recall, seek injunctive relief or assess civil and criminal penalties against
such company.
The use and manufacture of the Company's products are subject to OSHA and other
federal, state and local laws and regulations relating to such matters as safe
working conditions for healthcare workers and Company employees, manufacturing
practices, environmental protection and disposal of hazardous or potentially
hazardous substances and the policies of hospitals and clinics relating to
compliance therewith. There can be no assurance that the Company will not be
required to incur significant costs to comply with such laws, regulations or
policies in the future, or that such laws, regulations or policies will not
increase the costs or restrictions related to the use of the Company's products
or otherwise have a materially adverse effect upon the Company's ability to do
business. See "Risk Factors."
<PAGE>
Laws and regulations regarding the manufacture, sale and use of medical devices
are subject to change and depend heavily on administrative interpretations.
There can be no assurance that future changes in regulations or interpretations
made by the FDA, OSHA or other regulatory bodies, will not adversely affect the
Company.
Sales of medical devices outside of the United States are subject to foreign
regulatory requirements. The requirements for obtaining premarket clearance by a
foreign country may differ from those required for FDA clearance. Devices
having an effective 510(k) clearance or PMA may be exported without further FDA
authorization. FDA authorization is generally required in order to export other
medical devices.
RESEARCH AND PRODUCT DEVELOPMENT
Needle-free Injection Business.
Research and development efforts are focused on enhancing the Company's current
product offerings and on developing both new jet injection technology and new
products. The Company continues to use clinical, magnetic resonance imaging and
tissue studies to determine the reliability and performance of new and existing
products. As of March 31, 1998, the Company's research and product development
staff, including clinical and regulatory staff members, consisted of 7
employees. During fiscal 1996, 1997 and 1998, the Company spent $1.9 million,
$1.6 million, and $884,000, respectively, on research and development.
In March 1994, the Company entered into an agreement with Schering AG, Germany
("Schering"), for the development of a self-injection device for delivery of
Betaseron (R) to multiple sclerosis patients. During fiscal 1995 through 1997,
the Company developed prototypes to Schering specifications which were accepted
by Schering. During fiscal 1997, the Company entered into a supply agreement
with Schering and commenced activities related to full production of the self
injector. Schering loaned the Company a total of $1.6 million to purchase molds
and tooling for production of the product. In January 1997, the Company received
notice that its contract with Schering would be cancelled. Under provisions of
the contract, Schering had the option of canceling the agreement if the FDA
required extensive clinical studies beyond an originally planned safety study.
Schering received a review letter from the FDA which would have required
Schering to conduct additional material clinical studies in order to use
non-traditional delivery mechanisms with its Betaseron (R) product. Under terms
of the contract, Schering was required to convert its $1.6 million note due from
Bioject into approximately 460,000 shares of Bioject common stock at a
conversion price of $3.50 per share. In addition, $106,000 of accrued interest
was converted into approximately 27,000 shares of Bioject common stock at a
conversion price of $3.50 per share. The Company retained ownership of the molds
and tooling. The B4000 self-injector, which was developed as a result of the
Schering agreement, is currently awaiting regulatory clearance prior to
marketing. See "Risk Factors - Governmental Regulation".
In January 1995, the Company signed a joint development agreement with
Hoffmann-La Roche ("Roche") to develop proprietary drug delivery systems for
Roche products. The agreement provides for Bioject to develop, manufacture and
sell Biojector jet injection drug delivery systems designed to Roche
specifications. In return, Bioject has granted Roche exclusive worldwide rights
to distribute these systems and their components for use with certain Roche
products. Hoffmann-La Roche Inc. is the United States affiliate of the
multinational group of companies headed by Roche Holding of Basel, Switzerland,
one of the world's leading, research-intensive healthcare companies.
As of 1995 fiscal year end, the Company had commenced design of a prototype
device and had agreed with Roche on product specifications. During fiscal 1996,
the Company developed and delivered to Roche preproduction prototypes for
testing and developed the clinical preproduction prototypes which were delivered
to Roche in April 1996. As of fiscal 1997 year end, the Company and Roche were
finalizing their submission to obtain regulatory clearance to market the
product. As of the end of fiscal 1998, the Company had submitted its component
of the proprietary drug delivery system for regulatory clearance.
In February 1995, Hoffmann-La Roche paid a one-time licensing fee totaling
$500,000. The agreement provides that it will pay specified product development
fees on an agreed upon schedule of which $400,000 was recognized in fiscal 1996,
$500,000 was recognized in fiscal 1997 and $500,000 was recognized in fiscal
1998.
<PAGE>
In March, 1998 the Company acquired the assets of Vitajet Corporation in a
stock-for-assets exchange. The Company paid 100,000 shares of its common stock
for certain molds, tooling, patent rights and customer lists, the value of which
totaled $134,400 at the date of acquisition. In addition to shares already paid,
the Company is obligated to issue 60,000 shares of its common stock in each of
the three years subsequent to the acquisition if certain development milestones
are met. Up to an additional 90,000 shares is also payable subject to the
Company realizing specified, aggregate levels of incremental revenue during the
three years subsequent to the Vitajet acquisition as a result of sales of
products acquired from or developed by Vitajet
In addition to activities described above, the Company is seeking arrangements
with pharmaceutical and biotechnology companies for the use of pre-filled
syringes to eliminate the filling and measuring procedures associated with
traditional injection of medications. Before pre-filled Biojector syringes may
be distributed for use in the U.S., these companies must commit to the packaging
and distribution of their products in this manner and to the time and financial
resources necessary for FDA review and clearance. This process could be lengthy.
See "Business - Governmental Regulation." There can be no assurance that such
companies will commit efforts to develop pre-filled packaging and pursue
regulatory clearance or that regulatory clearance of pre-filled Biojector
syringes will be obtained.
The Company intends to continue research and development efforts designed to
further its understanding of the physics and physiology of jet injection. These
efforts will include further clinical studies to demonstrate efficacy of jet
injection and to evaluate new products and enhancements to the Company's
existing products. To advance these studies, in April 1994 the Company formed a
Department of Clinical Affairs research group, which initiates and coordinates
these studies.
Blood Glucose Monitoring Business.
In October 1997, the Company signed a joint development agreement with Elan
Corporation, plc ("Elan") to license from Elan certain continuous blood glucose
monitoring technology (the "License") and then to commercialize that technology
for manufacture and world-wide distribution. To date, the Company has continued
testing and development of a clinical prototype and has scheduled a small, human
clinical study of the prototype device for the first quarter of fiscal 1999.
Based on the results of this study, the Company will then plan and conduct
comprehensive clinical trials of the monitoring system which are intended to
support its applications to the FDA to market the product in the United States.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
MANUFACTURING
Needle-free Injection Business.
The Company assembles the Biojector 2000 and related syringes from components
purchased from outside suppliers. Prior to introduction of the Biojector 2000
system in 1993, the Company had not engaged in manufacturing on a commercial
scale. However, in connection with that introduction, the Company increased its
manufacturing capabilities and built inventories to support anticipated product
sales.
Throughout fiscal 1994 and 1995, the Company's manufacturing processes were
primarily manual. These processes did not permit the Company to produce its
products at costs which would allow it to operate profitably. During fiscal
1996, the Company implemented a plan to increase manufacturing capacity and
refine production methods to meet anticipated future demand and to reduce
product costs. For the Biojector 2000, cost reduction efforts included
converting from a two-piece to a one-piece housing, converting to continuous
process manufacturing and implementing volume purchasing programs from
suppliers. For the Biojector syringes, these efforts included increasing
supplier mold capacity and automating final assembly and packaging. See "Risk
Factors - Limited Manufacturing Experience, Need to Reduce Unit Cost."
<PAGE>
During fiscal 1998, the Company, having a sufficient inventory of jet injectors
on-hand as a result of the repurchase of product from HMI, focused its
manufacturing efforts on refining the manufacturing processes and efficiencies
of the syringe manufacturing line. See "Marketing and Competition - Needle-Free
Injection Business".
In order to succeed at expanding manufacturing capacity and reducing unit
production cost, the Company must attract and retain qualified assembly workers
and must establish and maintain relationships with suppliers that can deliver
large quantities of components that meet applicable quality standards in a
timely and reliable manner at acceptable prices.
Blood Glucose Monitoring Business.
At present, the Company has no manufacturing operation related to the blood
glucose monitoring system. When approved for sale, the Company intends to
manufacture the device in its own facilities, the location of which has not yet
been determined.
EMPLOYEES
As of March 31, 1998, the Company had 33 full-time employees with 4 employees
engaged in research and product development, 2 in sales and marketing, 2 in
technical product support, 13 in manufacturing and 12 in administration. The
Company engages a limited number of part-time consultants who assist with
research and development, sales and marketing and investor relations activities.
The Company also employs temporary contract workers primarily for assembly
operations, the number of which varies, depending upon production requirements.
As of March 31, 1998, there were 4 consultants, 5 to 8 per diem nurses and 1
contract/temporary worker employed by the Company. None of the Company's
employees is represented by a labor union.
PRODUCT LIABILITY
The Company believes that its products reliably inject medications both
subcutaneously and intramuscularly when used in accordance with product
guidelines. The Company's current insurance policies provide coverage at least
equal to an aggregate limit of $11 million with respect to certain product
liability claims. The Company has not experienced any product liability claims
to date. There can be no assurance, however, that the Company will not become
subject to such claims, that the Company's current insurance would cover such
claims, or that insurance will continue to be available to the Company in the
future. The Company's business may be adversely affected by product liability
claims.
RISK FACTORS
Investment in the securities of the Company involves a high degree of risk. In
addition to the other information in this annual report, the following factors
should be considered carefully in evaluating the Company and its business. The
Company cautions the reader that this list of factors may not be exhaustive.
Uncertainty of Market Acceptance. The Company's success will depend upon market
acceptance of its jet injection drug delivery system, the Biojector 2000 system,
the blood glucose monitoring system and, to a lesser extent, other products
under development. Currently, the dominant technology used for intramuscular and
subcutaneous injections is the hollow-needle syringe. Needle-syringes, while low
in cost, have limitations, particularly relating to contaminated needlestick
injuries. Use of the Biojector 2000 system for intramuscular and subcutaneous
injections virtually eliminates the associated risk of these injuries; however,
<PAGE>
the cost per injection is significantly higher. There can be no assurance that
the Biojector 2000 system will compete successfully. A previous jet injection
system manufactured by the Company did not achieve market acceptance and is no
longer being marketed. The Biojector 2000 was introduced in January 1993. To
date, the major portion of sales have been to HMI, which units were not placed
in service and which the Company has repurchased at a substantial discount to
the original selling price after the cancellation of its agreement with HMI.
Failure of the Biojector 2000 system to gain market acceptance would have a
material adverse effect on the Company's financial condition and results of
operations.
Uncertainty of New Product Development. The Company's joint venture with Elan,
JV Sub, intends to develop certain technology licensed from Elan and to create
an ambulatory monitoring system which permits the continuous monitoring of blood
glucose levels in persons with diabetes. The system is in the early stages of
development, and there can be no assurance that JV Sub will be successful in
developing a product or that any such product can be manufactured or marketed in
a commercially viable manner. It also is likely that significant additional
levels of funding will be required to complete development of the technology,
which will likely require the future issuance of debt or equity securities by
either the Company or JV Sub. Further, there can be no assurance that, should a
blood glucose monitoring system be developed, such system would receive the
requisite governmental clearance. See "Governmental Regulation."
History of Losses; Uncertain Profitability. Since its formation in 1985, the
Company has incurred significant annual operating losses and negative cash flow.
At March 31, 1998, the Company had an accumulated deficit of $50.9 million, $12
million of which related to the fiscal 1998 write-off, after minority interest,
of in-process research and development acquired in connection with the
acquisition of blood glucose monitoring technology from Elan. Historically, the
Company's revenues have been derived primarily from licensing and technology
fees and from limited product sales, which were principally sales to dealers for
the stocking of inventories and to HMI. More recently, the Company has sold its
products to end-users, primarily to public health clinics for vaccinations and
to nursing organizations for flu immunizations. The Company has not attained
profitability at these sales levels . There can be no assurance that the Company
will be able to generate significant revenues or achieve profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
Possible Termination of the License. Pursuant to the terms of the License, the
License may be terminated under certain conditions. In the event that 15% of JV
Sub's equity is acquired by any one of a number of specified companies
identified by Elan as actual or potential competitors, or any other entity to
which Elan does not consent, which consent shall not be unreasonably withheld in
the case of such other unspecified companies, the License may be immediately
terminated at Elan's option. Further, the License itself is contingent, on a
country-by-country basis, on JV Sub's diligently seeking and obtaining
regulatory marketing clearance for licensed products and on JV Sub's timely
commercial launch of the licensed products in countries where such clearance has
been obtained. Termination of the License may have a material adverse effect on
the Company's financial condition and results of operations.
Need for Additional Financing. The Company's revenues from operations have not
been sufficient to satisfy its cash requirements and it has relied on the
proceeds of sales of equity securities to fund its operations. The Elan
Transaction involves significant future financial commitments by the Company to
fund the development and marketing activities of JV Sub, as well as significant
payment obligations, totaling $15.5 million, by JV Sub to Elan as product
<PAGE>
development milestones are met. These payment obligations are in addition to the
Company's cash requirements relating to current activities involving the
Company's jet injection technology. The Company plans to fund its cash
requirements through revenues, debt and sales of equity securities, and
anticipates that JV Sub will fund its activities through debt and sales of
equity securities to the Company and Elan or to third parties. There can be no
assurance that financing sufficient to fund either the Company's jet injection
business activities or blood glucose monitoring business activities will be
obtained on favorable terms or at all. Failure to obtain adequate financing
would have a material adverse impact on the Company's business and could result
in defaults on the Company's or JV Sub's obligations relating to the Elan
Transactions, loss of JV Sub's rights to the technology under the License,
dilution of the Company's interest in JV Sub or the need to curtail operations
of the Company or JV Sub due to inadequate cash resources or other adverse
consequences. The sale of equity securities on unfavorable terms to meet the
Company's obligations could result in material dilution to the existing
shareholders.
Effects of Convertible Preferred Stock. The Company's Common Stock is subject to
the rights and preferences of the Series A and B Convertible Preferred Stock,
which has a liquidation preference of $12.405 million plus accrued and unpaid
dividends. Further, the Series A and B Convertible Preferred Stock is
convertible to Common Stock at a conversion price of $1.50 per share at any
time, and at the end of seven years unless earlier converted by the holders or
redeemed by the Company, the shares Series A and B Convertible Preferred Stock
and accrued but unpaid dividends convert automatically into Common Stock at the
conversion price equal to the lesser of $1.50 per share or 80% of the then
prevailing market price of Common Stock. Accordingly, conversion of Series A and
B Convertible Preferred Stock to Common Stock could result in issuances of
significant amounts of Common Stock at prices lower than prevailing market
prices at the time of conversion. Should the Company issue Series C Convertible
Preferred Stock or other similar series of Preferred Stock to Elan to enable the
Company to fund capital contributions to JV Sub, the aggregate amount of
Preferred Stock liquidation preferences and Common Stock issuable upon
conversion of Preferred Stock would increase.
Limited Manufacturing Experience; Need to Reduce Unit Cost. The Company has
limited experience manufacturing its products in commercially viable quantities.
The Company has increased its production capacity for the Biojector 2000 system
through automation of, and changes in, production methods. The current cost per
injection of the Biojector 2000 system is substantially higher than that of
traditional needle-syringes, its principal competition. A key element of the
Company's business strategy has been to reduce the overall manufacturing cost
through automating production and packaging. There can be no assurance that the
Company will be able to develop and implement effective high volume production
or achieve necessary unit cost reductions. Failure to do either would adversely
affect the Company's financial condition and results of operations. While the
Company believes that its experience manufacturing the Biojector enhances the
probability of its success in manufacturing the Vitajet, the Company has no
experience manufacturing the Vitajet and as of March 31, 1998 has not installed
a manufacturing line to produce the Vitajet. There can be no assurance that the
Company will be able to successfully manufacture the Vitajet at a unit cost that
will allow the product to be sold profitably. Failure to do so would adversely
affect the Company's financial condition and results of operation. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Manufacturing"
Governmental Regulation. The Company's products and manufacturing operations are
subject to extensive government regulation, both in the U.S. and abroad. In the
U.S., the development, manufacture, marketing and promotion of medical devices
are regulated by the Food and Drug Administration ("FDA") under the Federal
Food, Drug, and Cosmetic Act ("FD&C"). In 1987, the Company received clearance
from the FDA under Section 510(k) of the FD&C to market a hand-held CO2-powered
jet injection system. The FD&C provides that new premarket notifications under
Section 510(k) of the FD&C are required to be filed when, among other things,
there is a major change or modification in the intended use of a device or a
change or modification to a legally marketed device that could significantly
affect its safety or effectiveness. A device manufacturer is expected to make
the initial determination as to whether the change to its device or its intended
<PAGE>
use is of a kind that would necessitate the filing of a new 510(k) notification.
Although the Biojector 2000 system incorporates changes from the system with
respect to which the Company's 1987 510(k) marketing clearance was received and
expands its intended use, the Company made the determination that these were not
major changes or modifications in intended use or changes in the device that
could significantly affect the safety or effectiveness of the device.
Accordingly, the Company further concluded that the 1987 510(k) clearance
permitted the Company to market the Biojector 2000 system in the U.S. In June
1994, the Company received clearance from the FDA under 510(k) to market a
version of its Biojector 2000 system in a configuration targeted at high volume
injection applications. In October 1996, the Company received 510(k) clearance
for a needle-free disposable vial access device. In March 1997, the Company
received additional 510(k) clearance for certain enhancements to its Biojector
2000 system. The Company currently has applications pending before the FDA for
510(k) clearance of the B2020 1.5ml jet injector and the B4000 self-injector.
There can be no assurance that the FDA will concur with the Company's
determination that the products can be qualified by means of a 510(k)
submission.
Future changes to manufacturing procedures could necessitate the filing of a new
510(k) notification. Also, future products, product enhancements or changes, or
changes in product use may require clearance under Section 510(k), or they may
require FDA premarket approval ("PMA") or other regulatory clearances. PMAs and
regulatory clearances other than 510(k) clearance generally involve more
extensive prefiling testing than a 510(k) clearance and a longer FDA review
process. Under current FDA policy, applications involving prefilled syringes
would be evaluated by the FDA as drugs rather than devices, requiring FDA new
drug applications ("NDAS") or ANDAs. Depending on the circumstances, drug
regulation can be much more extensive and time consuming than device regulation.
See "Governmental Regulation".
No clearances from the FDA have been obtained for the marketing of products that
may be developed based on the blood glucose monitoring technology licensed from
Elan. The Company is researching and has not finally determined which FDA
clearances will be required with respect to any products developed based on this
technology. The Company anticipates that extensive testing and FDA review will
be required of any such product, and there can be no assurance that FDA
clearance will be obtained in a timely manner or at all.
FDA regulatory processes are time consuming and expensive. There can be no
assurance that product applications submitted by the Company will be cleared or
approved by the FDA. In addition, the Company's products must be manufactured in
compliance with Good Manufacturing Practices ("GMP") as specified in regulations
under the FDA Act. The FDA has broad discretion in enforcing the FDA Act, and
noncompliance with the Act could result in a variety of regulatory actions
ranging from product detentions, device alerts or field corrections, to
mandatory recalls, seizures, injunctive actions, and civil or criminal
penalties.
Distribution of the Company's products in countries other than the U.S. may be
subject to regulation in those countries. An application was made to the Japan
Ministry of Health and Welfare to obtain necessary approvals to market the
Biojector 2000 system in Japan which was not carried to completion by the
Company's then current Japanese distributor. See "Governmental Regulations".
<PAGE>
Uncertainty in Healthcare Industry. The healthcare industry is subject to
changing political, economic and regulatory influences that may affect the
procurement practices and operations of healthcare facilities. During the past
several years, the healthcare industry has been subject to increased government
regulation of reimbursement rates and capital expenditures. Among other things,
third party payors are increasingly attempting to contain or reduce healthcare
costs by limiting both coverage and levels of reimbursement for healthcare
products and procedures. Because the price of the Biojector 2000 system exceeds
the price of needle injection systems, cost control policies of third party
payors, including government agencies, may adversely affect use of the Biojector
2000 system.
Dependence on Third-Party Relationships. The Company is dependent on third
parties for distribution of the Biojector 2000 system to certain market
segments, for the manufacture of component parts, and for assistance with the
development and distribution of future application-specific systems.
The Company's current manufacturing processes for the Biojector 2000 jet
injector and disposable syringes as well as manufacturing processes anticipated
to produce the Vitajet consist primarily of assembling component parts supplied
by outside suppliers. Certain of these components are currently obtained from
single sources, with some components requiring significant production lead
times. In the past, the Company has experienced delays in the delivery of
certain components, although to-date no such delays have had a material adverse
effect on the Company's operations. There can be no assurance that the Company
will not experience delays in the future, or that such delays would not have a
material adverse effect on the Company's financial condition and result of
operations. See "Manufacturing".
The Company has entered into agreements with certain major pharmaceutical
companies for development and distribution of jet injection systems and for the
development and commercialization of a continuous blood glucose monitoring
system. These companies have the right to terminate these agreements at certain
phases as defined in the agreements. There can be no assurance that these
companies' interest and participation in the projects will continue. Failure to
receive additional funding from these companies could adversely affect the
development and production of the products involved and, correspondingly, the
Company's financial condition and results of operations.
Ability to Manage Growth. If the Company's products achieve market acceptance,
the Company expects to achieve rapid growth. This growth strategy will require
expanded customer services and support, increased personnel throughout the
Company, expanded operational and financial systems, and the implementation of
new and expanded control procedures. There can be no assurance that the Company
will be able to attract qualified personnel or successfully manage expanded
operations. As the Company expands, it may from time to time experience
constraints that would adversely affect its ability to satisfy customer demand
in a timely fashion. Failure to manage growth effectively could adversely affect
the Company's financial condition and results of operations.
Competition. The medical equipment market is highly competitive and competition
is likely to intensify. The Company's products compete primarily with
traditional needle-syringes, "safety syringes" and also with other alternative
drug delivery systems. While the Company believes its products provide a
superior drug delivery method, there can be no assurance that the Company will
be able to compete successfully with existing drug delivery products. Many of
the Company's competitors have longer operating histories as well as
substantially greater financial, technical, marketing and customer support
resources than the Company. There can be no assurance that one or more of these
competitors will not develop an alternative drug delivery system that competes
more directly with the Company's products, or that the Company's products would
be able to compete successfully with such a product. Further, should JV Sub
develop an ambulatory blood glucose monitoring system which obtains all
necessary regulatory clearances, there can be no assurance that either the
Company's or JV Sub's competitors will not develop other competing systems, or
that JV Sub's system would be able to compete successfully with other systems or
products.
<PAGE>
Dependence on Two Technologies. The Company's strategy has been to focus its
development and marketing efforts on its jet injection technology. The strategy
of its Joint Venture with Elan is to focus on development and commercialization
of a continuous blood glucose monitoring system. Focus on these two technologies
leaves the Company vulnerable to competing products and alternative drug
delivery systems, as well as to alternative methods to monitor blood glucose
levels in diabetics. The Company believes that healthcare providers' desire to
minimize the use of the traditional needle-syringe has stimulated development of
a variety of alternative drug delivery systems such as "safety syringes," jet
injection systems and transdermal diffusion "patches." In addition,
pharmaceutical companies frequently attempt to develop drugs for oral delivery
instead of injection. The Company also believes that there will be high market
demand for a minimally invasive blood glucose monitoring system such as that
being developed by the Company and that the size of that market will likely
attract significant competition to the Company's blood glucose monitoring
product.
While the Company believes that for the foreseeable future there will continue
to be a significant need for injections, there can be no assurance that
alternative drug delivery methods will not be developed which are preferable to
injection. Further, there can be no assurance that alternative blood glucose
monitoring systems will not be developed which are preferable to that to be
developed by the Company.
Patents and Proprietary Rights. The Company relies on a combination of trade
secrets, confidentiality agreements and procedures, and patents to protect its
proprietary technologies. The Company has been granted a number of patents in
the United States and several patents in certain other countries covering
certain technology embodied in its current jet injection system and certain
manufacturing processes. Additional patent applications are pending in the U.S.
and certain foreign countries. There can be no assurance that the claims
contained in any patent application will be allowed, or that any patent will
provide adequate protection for the Company's products and technology. In the
absence of patent protection, the Company may be vulnerable to competitors who
attempt to copy the Company's products or gain access to its trade secrets and
know-how. In addition, the laws of foreign countries may not protect the
Company's proprietary rights to this technology to the same extent as the laws
of the U.S. The Company believes that it has independently developed its
technology, attempts to ensure that its products do not infringe the proprietary
rights of others and the Company knows of no such infringement claims. However,
any such claims could have a material adverse affect on the Company's financial
condition and results of operations.
Product Liability. Producers of medical devices may face substantial liability
for damages in the event of product failure or if it is alleged the product
caused harm. The Company currently maintains product liability insurance and,
to-date, has not experienced any product liability claims. There can be no
assurance, however, that the Company will not be subject to such claims, that
the Company's current insurance would cover such claims, or that adequate
insurance will continue to be available on acceptable terms to the Company in
the future. The Company's business could be adversely affected by product
liability claims.
Dependence upon Key Employees. The Company's success depends on the retention of
its executive officers and other key employees. Competition exists for qualified
personnel and the Company's success will depend, in part, on attracting and
retaining such personnel. Failure in these efforts could have a material adverse
effect on the Company's business, financial condition or results of operations.
Shares Eligible For Future Sale In December 1996, the Company completed a
private placement of 3,434,493 units (each unit representing one share of common
stock and a warrant to purchase one share of common stock). The Company also
granted a warrant to its placement agent in the private placement to purchase
156,000 shares of common stock. The shares issued in the private placement and
the underlying shares issuable upon exercise of the warrants were registered for
resale on a Form S-3 registration statement. In June and July 1997, the Company
completed a private placement of 2,906,977 units, each unit consisting of one
share of Common Stock and one warrant to purchase one-half share of Common
Stock. In May 1997, in return for services provided, the Company granted to Amy
Factor a warrant to purchase 25,000 shares of Common Stock. The shares issued in
the private placement and the underlying shares issuable upon exercise of the
<PAGE>
warrants were registered for resale on a Form S-3 registration statement. In
connection with the Elan transactions in October 1997, Elan purchased 2,727,273
shares of Common Stock and was granted a five year warrant to purchase 1.75
million shares of common stock. In January, 1998, the shares issued to Elan as
well as the 487,390 shares issued to Schering (see "Research and Product
Development - Needle-free Injection Business") were registered for resale on a
Form S-3 registration statement. In October, 1997, the Company granted warrants
to purchase 350,000 shares of stock to Robert Gonnelli in connection with his
guarantee of an equity investment in the Company. In February, 1998, the Company
granted Raphael, L.L.C., a management consulting company which introduced Elan
to the Company, a warrant to purchase 100,000 shares of Common Stock. See
"Recent Developments." Subsequent to year-end, in June, 1998, the Company
granted warrants to purchase 130,243 shares of stock to Robert Gonnelli in
return for services to the Company. Also subsequent to year-end, the warrants
issued in the June and July 1997 private placement were exercised, in exchange
for which the Company issued 147,850 new warrants. Sales of substantial numbers
of common stock in the public market, or the availability of such shares for
sale, could adversely affect the market price for the common stock and make it
more difficult for the Company to raise funds through equity offerings in the
future.
Possible Adverse Effects on Trading Market. The Common Stock is quoted on the
NASDAQ National Market. There are a number of continuing requirements that must
be met in order for the Common Stock to remain eligible for quotation on the
NASDAQ National Market or the NASDAQ SmallCap Market. In August 1997, NASDAQ
approved changes to its quantitative and qualitative standards for issuers
listing on NASDAQ. Among the changes are the elimination of the alternative test
for issuers failing to meet the minimum bid price of $1.00 and an increase in
the quantitative standards for both the NASDAQ National Market and the NASDAQ
SmallCap Market. The failure to meet the maintenance criteria in the future
could result in the delisting of the Company's Common Stock from NASDAQ. In such
event, trading, if any, in the Common Stock may then continue to be conducted in
the non- NASDAQ over-the-counter market. As a result, an investor may find it
more difficult to dispose of or to obtain accurate quotations as to the market
value of the Company's Common Stock. In addition, if the Common Stock were
delisted from trading on NASDAQ and the trading price of the Common Stock were
less than $5.00 per share, trading in the Common Stock would also be subject to
the requirements of certain rules promulgated under the Exchange Act, which
require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as a penny stock. The additional burdens imposed upon
broker-dealers may discourage broker-dealers from effecting transactions in
penny stocks, which could reduce the liquidity of the shares of Common Stock and
thereby have a material adverse effect on the trading market for the securities.
Possible Volatility of Stock Price. The market for the Company's Common Stock
and for the securities of other early-stage, small market-capitalization
companies has been highly volatile in recent years. The Company believes that
factors such as quarter-to-quarter fluctuations in financial results, new
product introductions by the Company or its competition, public announcements,
changing regulatory environments, sales of Common Stock by certain existing
shareholders and substantial product orders could contribute to the volatility
of the price of the Company's Common Stock, causing it to fluctuate
dramatically. General economic trends such as recessionary cycles and changing
interest rates may also adversely affect the market price of the Company's
Common Stock.
Item 2. PROPERTIES
The Company's principal offices are located in Portland, Oregon in approximately
23,000 square feet of leased office and manufacturing space under a lease which
expires in September 2002. The monthly minimum lease obligation for this
facility is approximately $15,000. These facilities include the Company's sales
and administration offices and equipment, research and engineering facilities, a
clean room assembly area, assembly line, testing facilities and a warehouse
area.
<PAGE>
The Company leases additional warehouse space totaling approximately 5,000
square feet for finished goods storage and shipments to customers. This lease,
which also expires in September 2002, has minimum monthly lease obligations
totaling $2,000.
The Company believes its current facilities will be sufficient to support its
operations for the next 2-3 fiscal years. As the Company requires additional
space to accommodate growth in its sales and manufacturing activities, it is the
Company's intention to lease additional facilities adjacent to or near its
present operations. The Company believes that, if necessary, it will be able to
obtain facilities at rates and under terms comparable to those of the current
leases.
Item 3. LEGAL PROCEEDINGS
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Stockholders of Bioject Medical Technologies, Inc. was
convened at 1:00 p.m., on February 20, 1998, at the Company's headquarters, 7620
S.W. Bridgeport Road, Portland, Oregon.
There were 25,368,342 shares of Common Stock issued and outstanding on the
record date, December 23, 1997.
Of the total shares outstanding on the record date, there were 16,325,537 shares
present at the meeting in person or by proxy, which is 64.35% of the Common
Stock entitled to vote, thereby constituting a quorum.
All of the proposals as set forth in the proxy statement for the Special Meeting
were approved. The voting recorded is as follows:
Proposal #1: The proposal to approve the exchange of a promissory note in
the original principal amount of $12.015 million issued by the
Company to Elan for approximately 832,000 shares of the Company's
Series A and Series B Convertible Preferred Stock received the
following votes:
FOR AGAINST ABSTAIN
---------- ------- -------
15,964,575 214,940 146,022
Proposal #2: The proposal to approve the issuance of the Company's Series C
Convertible Preferred Stock or other similar convertible preferred
stock to Elan in connection with future funding of blood glucose
monitoring research and development received the following votes:
FOR AGAINST ABSTAIN
---------- ------- -------
15,961,959 216,291 147,287
Proposal #3: The proposal to approve the issuance to Raphael, LLC, of a
warrant to purchase 100,000 shares of the Company's Common Stock
received the following votes:
FOR AGAINST ABSTAIN
---------- ------- -------
15,696,136 452,669 176,732
As a result of the passage of Proposal #1, the exchange of debt for Series A and
Series B convertible preferred stock was completed effective March 2, 1998.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the NASDAQ National Market under the
Symbol "BJCT." The following table sets forth the high and low closing sale
prices of the Company's Common Stock on the NASDAQ National Market.
High Low
----- -----
Fiscal year Ended March 31, 1996:
First Quarter 3.00 1.44
Second Quarter 2.97 1.19
Third Quarter 2.81 1.81
Fourth Quarter 1.94 1.25
Fiscal Year Ended March 31, 1997:
First Quarter 1.41 1.28
Second Quarter 1.03 0.97
Third Quarter 0.78 0.75
Fourth Quarter 0.78 0.63
Fiscal Year Ended March 31, 1998:
First Quarter .94 .47
Second Quarter 1.03 .59
Third Quarter 1.57 1.19
Fourth Quarter 1.50 1.09
The closing sale price on May 29, 1998, as reported on the NASDAQ National
Market, was $1.688 per share.
The Company has declared no dividends during its history and has no intention of
declaring a dividend in the foreseeable future. As of May 29, 1998 the number of
shareholders of record of the Company's Common Stock was 1,386.
In October 1997, in connection with a joint development agreement entered into
with Elan, the Company issued a promissory note to Elan with a principal amount
of $12.015 million. Upon receiving shareholder approval to convert the note into
the Company's preferred stock, on March 2, 1998, a total of 692,694 shares of
Series A Convertible Preferred Stock and 134,333 shares of Series B Convertible
Preferred Stock were issued to Elan (the "Elan Issuance").
On March 23, 1998, the Company acquired the assets of Vitajet Corporation in a
stock-for assets exchange (the "Vitajet Issuance"). The Company issued 100,000
shares of its common stock in exchange for certain molds, tooling, patent rights
and customer lists, the value of which totaled $134,000 at the date of
acquisition. The Company is obligated to issue an additional 60,000 shares in
each of the next three years if certain development milestones are met. Up to an
additional 90,000 shares are also payable subject to the Company realizing
specified, aggregate levels of incremental revenue over the next three years.
In April 1998, warrants issued in June 1997 were exercised in exchange for the
Company's commitment to issue additional warrants to purchase 147,850 shares of
the Company's Common Stock (the "Series N Warrants"). The Series N Warrants have
an exercise price of $1.348 per share and expire on March 31, 2003. The Company
relied upon Rule 506 of Regulation D of the Securities Act for the issuance of
the Series N Warrants. The Company relied upon representations and warranties of
the warrantholders in addition to its own information.
The Elan Issuance and Vitajet Issuance were completed pursuant to an exemption
from registration under Section 4(2) of the Securities Act. In relying upon such
exemption (i) the Company did not engage in any "general solicitation," (ii)
the purchasers represented and the Company reasonably believed that the
purchasers had knowledge and experience in financial and business matters such
that they were capable of evaluating the merits and risks of the prospective
investment, (iii) the purchasers were provided access to all necessary and
<PAGE>
adequate information to enable the purchasers to evaluate the financial risk
inherent in making an investment, (iv) the offers were part of an agreement to
establish a joint venture in Elan's case and part of an acquisition agreement in
Vitajet's case and as such was made only to Elan and Vitajet, respectively, and
(v) the purchasers represented that they were acquiring the shares for
themselves and not for distribution.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
FINANCIAL DATA
The statement of operations and balance sheet data set forth below for the five
fiscal years in the period ended March 31, 1998 have been derived from the
consolidated financial statements of the Company. The selected consolidated
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
with the detailed consolidated financial statements and notes thereto included
elsewhere in this Report.
SUMMARY FINANCIAL INFORMATION
(in thousands, except per share data)
YEAR ENDED MARCH 31,
1998* 1997 1996 1995 1994
------ ------ ------ ------ ------
Statement of Operations Data:
Revenues $1,935 $2,235 $4,209 $2,924 $1,463
Operating expenses 21,157 6,637 9,851 9,008 6,110
Net loss (16,630)* (4,296) (5,431) (5,656) (4,395)
Net loss per share (0.72) (0.26) (0.39) (0.43) (0.39)
Shares used in per
share calculation 23,151 16,705 14,074 13,167 11,230
AS OF MARCH 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Balance Sheet Data:
Working capital $3,019 $2,858 $4,327 $6,404 $12,593
Total assets 6,978 7,088 7,519 9,498 13,836
Long-term debt - - - - -
Shareholders' equity 5,975 5,766 6,027 7,964 13,377
*In fiscal 1998, the Company acquired certain blood glucose monitoring
technology from Elan for an up-front licensing fee of $15 million which was
required to be expensed in the year paid. As a result, the 1998 net loss
includes a $12 million, net of minority interest, one-time charge for acquired
in-process research and development.
The Company has declared no dividends during its history and has no intention of
declaring a dividend in the foreseeable future.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Operating losses have resulted in an accumulated deficit of approximately $50.9
million as of March 31, 1998. In fiscal 1996, the Company incurred significantly
increased costs associated with the production and sale of the Biojector 2000
system, including sales and marketing efforts, manufacturing ramp-up and
inventory build-up. In September 1997, the Company acquired rights to certain
continuous blood glucose monitoring technology from Elan Corporation for an
initial payment of $15 million and future milestone payments totaling $15.5
million and royalties on future product sales. In fiscal 1998, the $15 million
up front payment was expensed as acquired in-process research and development.
In March, 1998, the Company acquired the rights to the Vitajet self-injector,
along with certain other assets, in a stock-for-assets transaction with Vitajet
<PAGE>
Corporation. The Company's ability to achieve and sustain profitability will
depend in part upon customer acceptance of the Biojector 2000 system and the
continuous blood glucose monitoring system, sustained product performance,
implementing additional product cost reductions, successful commercial
development of the blood glucose monitoring system, and attaining revenues
sufficient to support profitable operations.
In August 1994, Bioject signed an agreement with Health Management, Inc. (HMI),
granting HMI exclusive rights to purchase Bioject's Needle-Free Injection
Management System (R), the Biojector 2000, for use in the home healthcare
market. In return for HMI's commitment to purchase a minimum of 8,000 Biojector
units over the ensuing two years, the Company granted volume pricing discounts
to HMI. During the term of the contract, the selling price of Biojectors to HMI
exceeded their standard cost. During fiscal 1996, the Company sold approximately
4,300 Biojectors to HMI for total sales revenue including syringes of $2.2
million. HMI did not place the great majority of these Biojectors with patients,
pending completion of negotiations with pharmaceutical companies for certain
pricing concessions for medication to be administered with the Biojectors. In
January 1996 HMI requested that Bioject suspend shipments to HMI. In February
1996, the Company learned from HMI's press releases that HMI expected to default
on its debts, anticipated taking significant write-offs relating to accounts
receivable and inventories, planned operational consolidations, and would
restate certain prior period financial statements. In fiscal 1997, although not
obligated to do so, the Company agreed to repurchase certain of the HMI
inventories, including up to 6,000 Biojector units, for cash and forgiveness of
accounts receivable totaling $660,000. The repurchase of these inventories was
at a substantial discount to the original selling price to HMI.
In March 1994, the Company entered into an agreement with Schering AG, Germany,
for the development of a self-injection device (the "Self-Injector") for
delivery of Betaseron (R) to multiple sclerosis patients. During fiscal 1996,
the Company delivered the preproduction clinical prototypes to Schering and
worked on finalizing the production prototype design. During fiscal 1997, the
Company entered into a supply agreement with Schering AG and commenced
activities related to full production of the self-injector. Schering loaned the
Company a total of $1.6 million to purchase molds and tooling to produce the
product.
In January 1997, the Company received notice that its contract with Schering AG
would be cancelled. Under provisions of the contract, Schering AG had the option
of canceling the agreement if the FDA required extensive clinical studies beyond
an originally planned safety study. Schering AG received a review letter from
the FDA which would have required Schering to conduct additional, material
clinical studies in order to use non-traditional delivery mechanisms with its
Betaseron (R) product. Under terms of the contract, Schering was required to
convert its $1.6 million note due from Bioject plus accrued interest into
approximately 487,000 shares of Bioject common stock at a conversion price of
$3.50 per share. In addition, Schering was obligated to pay Bioject for the cost
of product ordered through the date of cancellation of the contract, which
payment was made in June 1997.
In January 1995, the Company signed a joint development agreement with
Hoffmann-La Roche to develop proprietary drug delivery systems for Roche
products. The agreement provides for Bioject to develop, manufacture and sell
Biojector jet injection drug delivery systems designed to Roche specifications.
In return, Bioject has granted Roche exclusive worldwide rights to distribute
these systems and their components for use with certain Roche products.
Hoffmann-La Roche Inc. is the United States affiliate of the multinational group
of companies headed by Roche Holding of Basel, Switzerland, one of the world's
leading research-intensive healthcare companies. As of the 1995 fiscal year end,
the Company had commenced design of a prototype device and had agreed with Roche
on product specifications. During fiscal 1996, the Company developed and
delivered to Roche preproduction prototypes for testing and developed the
clinical preproduction prototypes which were delivered to Roche in April 1996.
As of March 31, 1998, the Company and Hoffmann-LaRoche were finalizing their
submission to obtain regulatory clearance to market the product. Hoffmann-
LaRoche is also gathering marketing information which the Company anticipates
will lead to the signing of a supply agreement between the Company and
Hoffman-LaRoche.
<PAGE>
In September 1997, the Company and Elan Corporation signed a licensing and joint
development agreement for the development and commercialization by the Company
of certain continuous blood glucose monitoring technology licensed from Elan.
Under terms of the agreement, the Company borrowed $12.015 million from Elan
(subsequently converted to Series A and B convertible preferred stock) and Elan
invested $2.985 million in a new subsidiary of the Company created for the
purpose of developing the technology. The Company's new subsidiary, owned 80.1%
by the Company and 19.9% by Elan, paid Elan $15 million for rights to the
technology and has committed to pay an additional $15.5 million to Elan as
future milestones are achieved as well as royalties on future sales of the
product. The new subsidiary will develop the blood glucose monitoring technology
and will seek regulatory clearance for the sale of such product. Such regulatory
clearance is expected in the next 3-4 years with estimated development costs for
the monitoring technology, exclusive of milestone payments, estimated to total
at least $10 million. As part of the agreement, in October 1997, Elan acquired
2.7 million shares of common stock and 1.75 million warrants to purchase the
Company's common stock at $2.50 per share for $3 million. In addition, Elan
agreed to partially fund development of the blood glucose monitoring technology
up to a total of $4 million through the purchase of the Company's Series C
convertible preferred stock and through direct purchase of additional stock in
JV Sub to a maximum of $1 million. Elan also agreed to fund development of the
Company's pre-filled jet injection technology through a grant of up to $500,000.
In March 1998, in a transaction with Vitajet Corporation, the Company paid
100,000 shares of its common stock for certain molds, tooling, patent rights and
customer lists, the value of which totaled $134,400 at the date of acquisition.
In addition to shares already paid, the Company is obligated to issue 60,000
shares of its common stock each year in each of the three years subsequent to
the acquisition if certain development milestones are met. Up to an additional
90,000 shares are also payable subject to the Company realizing specified,
aggregate levels of incremental revenue during the three years subsequent to the
Vitajet acquisition as a result of sales of products acquired from or developed
by Vitajet.
During fiscal 1996, the Company implemented a plan to increase manufacturing
capacity and refine production methods to meet anticipated future demand and to
reduce product costs. For the Biojector 2000, cost reduction efforts included
converting from a two piece to a one piece housing, converting to continuous
process manufacturing and implementing volume purchasing programs from
suppliers. For the Biojector syringes, these efforts included increasing
supplier mold capacity and automating final assembly and packaging. During
fiscal 1997, the Company's manufacturing activities focused on retesting the
devices repurchased from HMI to ensure their continuing compliance with new
product standards and elective upgrade of certain of these units to current
version configuration. Also during fiscal 1997 manufacturing focused on
finalizing product engineering and on planning for, designing and installing
manufacturing lines for the new self injector device syringe manufacturing lines
in advance of the launch of that product. During fiscal 1998, having a
sufficient inventory of jet injectors on-hand as a result of the repurchase of
product from HMI, the Company focused its manufacturing efforts on refining
manufacturing processes and efficiencies of the disposable syringe manufacturing
line.
<PAGE>
The Company's revenues to date have not been sufficient to cover operating
expenses. However, the Company believes that if its products achieve market
acceptance and the volume of sales increases, and its product costs are reduced,
its costs of goods as a percentage of sales will decrease and eventually the
Company will generate net income. See "Forward Looking Statements" and "Business
- - Risk Factors." The level of sales required to generate net income will be
affected by a number of factors including the pricing of the Company's products,
its ability to attain efficiencies that can be attained through volume and
automated manufacturing, and the impact of inflation on the Company's
manufacturing and other operating costs. There can be no assurance that the
Company will be able to successfully implement its manufacturing cost reduction
program or sell its products at prices or in volumes sufficient to achieve
profitability or offset increases in its costs should they occur.
Revenues and results of operations have fluctuated and can be expected to
continue to fluctuate significantly from quarter to quarter and from year to
year. Various factors may affect quarterly and yearly operating results
including (i) length of time to close product sales, (ii) customer budget
cycles, (iii) implementation of cost reduction measures, (iv) uncertainties and
changes in purchasing due to third party payor policies and proposals relating
to national healthcare reform, (v) timing and amount of payments under
technology development agreements, (vi) timing and cost of development of the
continuous blood glucose monitoring technology, and (vii) timing of new product
introductions by the Company and its competition.
In the future, the Company may incur a non-cash charge to compensation expense
in connection with the issuance of 100,000 shares of Common Stock to the
Company's Chief Executive Officer and 15,000 shares of common stock to the
Company's Chief Financial Officer. Under terms of their employment agreements,
each will receive the shares of common stock when the Company first achieves two
consecutive quarters of positive earnings per share. Upon issuance of such
shares the Company will record a non-cash charge to compensation at the fair
market value of the stock on the last day of the quarter in which the shares are
earned.
During the next fiscal year, the Company will continue to focus its efforts on
expanding sales of existing products, commencing manufacture and sale of the
Vitajet, commencing manufacture and sale of the B4000 Self-Injector if
regulatory clearance is obtained, reducing the cost of its products, continuing
development and cooperation in pursuing regulatory clearance of a 1.5 ml.
injector for Hoffmann-La Roche, developing the blood glucose monitoring
technology, pursuing additional alliances with pharmaceutical companies and
conserving its fiscal resources. The Company does not expect to report net
income from operations in fiscal 1999. See "Forward Looking Statements" and
"Risk Factors."
RESULTS OF OPERATIONS
Product sales decreased from to $3.1 million in fiscal 1996 to $1.3 in fiscal
1997 and increased to $1.4 million in fiscal 1998. Sales in fiscal 1996
consisted of $2.3 million of sales to HMI with the remainder primarily to public
health and flu immunization clinics. Sales in fiscal 1997 and 1998, consisted
primarily of sales to public health and flu immunization clinics.
License and technology fees ranged from $1.2 million in fiscal 1996, to $966,000
in fiscal 1997 and $500,000 in fiscal 1998. The fiscal 1996 and 1997 fees
consisted principally of product development revenues recognized for work
performed under the Schering and Hoffmann-La Roche agreements. The fiscal 1998
fees consisted of revenues for work on the Hoffmann-La Roche project.
<PAGE>
Manufacturing expense consists of the costs of product sold and manufacturing
overhead expense related to excess manufacturing capacity. The total of these
costs varied from $4.8 million in fiscal 1996, to $1.9 million in fiscal 1997
and $1.7 million in fiscal 1998 due in part to changes in sales and, therefore,
to changes in the total costs of product sold. The decrease in expense from
fiscal 1996 to 1997 and from fiscal 1997 to fiscal 1998 reflects reductions in
the cost of materials and labor for injectors and syringes as well as reductions
in fixed and variable manufacturing overhead expense. Manufacturing overhead
totaled $1.67 million, $1.17 million and $981,000 in fiscal 1996, 1997 and 1998,
respectively.
Research and development expense decreased from $1.9 million in fiscal 1996 to
$1.6 million in fiscal 1997 and to $884,000 in fiscal 1998 (exclusive of
acquired in-process research and development). Fiscal 1996 expenditures related
entirely to work performed under the Schering and Hoffmann-La Roche agreements.
Fiscal 1997 expenditures related to final design and transfer to manufacturing
of the Schering device and additional development work on the Hoffmann-LaRoche
system. Fiscal 1998 expenditures related to further development of the B4000
Self Injector and to pursuing regulatory clearance for the vial adapter product.
See "Risk Factors - Governmental Regulation".
Selling, general and administrative expense totaled, $3.2 million in fiscal 1996
and 1997, and $3.5 million in fiscal 1998. During fiscal 1996 through 1998,
sales and marketing expense remained constant at $1.6 million per year. General
and administrative expense totaled $1.6 million in fiscal 1996 and 1997 and
increased to $1.9 million in fiscal 1998 primarily due to consulting fees and
certain travel expenditures.
As of September 30, 1997, the Company recorded an expense of $15 million related
to acquired in-process research and development expenditures. Such expense
relates to the blood glucose monitoring technology that has not yet established
technological feasibility and at present has no alternate future uses.
Accounting rules require that such costs be charged to expense as incurred. The
Company believes that these research and development efforts will result in
commercially viable products within the next three to four years at an
additional cost to the Company of at least $10 million, exclusive of additional
milestone payments totaling $15.5 million to Elan.
Interest expense in fiscal 1998 relates to the $12.015 million debt due to Elan
for the period from October 15, 1997 through March 2, 1998 when the note and
accrued interest was converted to Series A and Series B convertible preferred
stock.
Other income consists of earnings on available cash balances. Other income
varied as a result of changes in cash balances and interest rates from year to
year.
The reduction in net loss in fiscal 1998 resulting from minority interest
allocations reflects the portion of the joint venture subsidiary loss allocable
to Elan Corporation as a result of its 19.9% ownership in the subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception in 1985, the Company has financed its operations, working
capital needs and capital expenditures primarily from private placements of
securities, exercises of stock options, proceeds received from its initial
public offering in 1986, proceeds received from a public offering of Common
Stock in November 1993, licensing and technology revenues and more recently from
sales of products. Net proceeds received upon issuance of securities from
inception through March 31, 1998 totaled approximately $56.9 million.
The Company has no long-term debt.
Cash, cash equivalents and marketable securities totaled $2.1 million at March
31, 1997 and $1.9 million at March 31, 1998. The decrease resulted from
operating losses and capital expenditures offset in part by net proceeds from a
private placement of common stock and warrants in June and July 1997 and October
1997 and the issuance of Series A and B convertible preferred stock in March
1998.
<PAGE>
Inventories increased from $1.7 million at March 31, 1997 to $1.9 million at
March 31, 1998 due to the build-up of syringe inventories to support anticipated
future product sales.
The Company has fixed commitments for facilities rent and equipment leases which
total approximately $250,000 for fiscal 1999.
The Company expended approximately $1.6 million for capital equipment in fiscal
1997. Substantially all of these expenditures related to preparation of
manufacturing for the Schering product launch. These assets continue to be
carried at their cost on the Company's balance sheet because the product is
suitable for other home injection applications which the Company is pursuing.
The Company expended approximately $380,000 on capital equipment additions in
fiscal 1998 approximately $270,000 of which related to Biojector 2000 units
transferred from inventories to property and equipment to support the Company's
flu season device rental program.
The Company has assessed the impact of the Year 2000 issue and has determined
that costs to upgrade its information and operating systems are not expected to
be material.
The Company believes that its current cash position, together with cash received
from the exercise of warrants and stock options in April and May 1998, combined
with revenues, other cash receipts, proceeds from issuance of the Company's
Series C preferred stock and proceeds from the purchase by Elan of additional
stock in JV Sub may not be sufficient to fund the Company's operations through
the end of fiscal 1999. The Company has identified a number of potential
financing sources and is pursuing them aggressively. See "Forward Looking
Statements." Even if the Company is successful in raising additional financing,
unforeseen costs and expenses or lower than anticipated cash receipts from
product sales or research and development activities could accelerate or
increase the financing requirements. The Company has been successful in raising
additional financing in the past and believes that sufficient funds will be
available to fund future operations. See "Forward Looking Statements." However,
there can be no assurance that the Company's efforts will be successful, and
there can be no assurance that such financing will be available on terms which
are not significantly dilutive to existing shareholders. Failure to obtain
needed additional capital on terms acceptable to the Company, or at all, would
significantly restrict the Company's operations and ability to continue product
development and growth and materially adversely affect the Company's business.
The Company has no banking line of credit or other established source of
borrowing. The Company's independent accountants have qualified their opinion
with respect to their audit of the Company's 1998 consolidated financial
statements as the result of doubts concerning the Company's ability to continue
as a going concern in the absence of sufficient additional financing.
<PAGE>
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
Report of Independent Public Accountants
Consolidated Balance Sheets at March 31, 1998 and 1997
Consolidated Statements of Operations for the years ended
March 31, 1998, 1997 and 1996
Consolidated Statements of Shareholders' Equity for the years
ended March 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended
March 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
Supplementary Data (none required)
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Bioject Medical Technologies Inc:
We have audited the accompanying consolidated balance sheets of Bioject Medical
Technologies Inc. (an Oregon corporation) and subsidiaries as of March 31, 1998
and 1997, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended March 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bioject Medical Technologies
Inc. and subsidiaries, as of March 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and, at March 31, 1998, has an accumulated deficit of $---- million that raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plan in regards to these matters is also described in Note 1. The
financial statements do not include any adjustments relating to recoverability
and classification of asset carrying amounts that might result should the
Company be unable to continue as a going concern.
/S/ ARTHUR ANDERSEN LLP
Portland, Oregon
April 30, 1998
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,
1998 1997
------------ ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,900,839 $ 2,116,478
Accounts receivable, net of allowance for
doubtful accounts of $83,000 and $27,500,
respectively 153,721 311,856
Inventories 1,891,970 1,706,456
Other current assets 75,292 45,222
------------ -----------
Total current assets 4,021,822 4,180,012
------------ -----------
PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment 2,241,904 1,923,174
Production molds 1,945,267 1,878,858
Furniture and fixtures 158,477 176,897
Leasehold improvements 94,115 80,447
------------ -----------
4,439,763 4,059,376
Less - accumulated depreciation (1,947,006) (1,462,338)
------------ -----------
2,492,757 2,597,038
OTHER ASSETS 463,031 310,981
------------ ----------
$6,977,610 $ 7,088,031
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 497,180 $ 659,973
Accrued payroll 218,424 213,130
Other accrued liabilities 277,122 199,384
Deferred revenue 10,000 250,000
------------ -----------
Total current liabilities 1,002,726 1,322,487
------------ -----------
COMMITMENTS (Note 6)
SHAREHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares
authorized; issued and outstanding
Series A Convertible-692,694 shares,
$15 stated value 7,826,157 -
Series B Convertible -134,333 shares,
$15 stated value 1,491,289 -
Common stock, no par, 100,000,000 shares
authorized; issued and outstanding 25,503,038
and 19,540,413 shares at March 31, 1998 and
1997, respectively 47,557,297 40,035,736
Accumulated deficit (50,899,859) (34,270,192)
------------ -----------
Total shareholders' equity 5,974,884 5,765,544
------------ -----------
$6,977,610 7,088,031
============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended March 31,
1998 1997 1996
----------- ---------- ----------
REVENUES:
Net sales of products $1,435,107 $1,269,882 $3,059,018
Licensing/technology fees 500,000 965,500 1,150,000
----------- ---------- ----------
1,935,107 2,235,382 4,209,018
----------- ---------- ----------
OPERATING EXPENSES:
Manufacturing 1,749,064 1,862,922 4,797,218
Research and development 883,632 1,596,708 1,885,303
Selling, general and administrative 3,524,615 3,177,228 3,168,618
Acquired in-process research &
development 15,000,000 - -
---------- ---------- ----------
Total operating expenses 21,157,311 6,636,858 9,851,139
---------- ---------- ----------
Operating loss (19,222,204) (4,401,476) (5,642,121)
Interest expense (390,411) - -
Other income 109,983 105,149 211,049
----------- ----------- ----------
LOSS BEFORE TAXES (19,502,632) (4,296,327) (5,431,072)
PROVISION FOR INCOME TAXES - - -
----------- ----------- -----------
NET LOSS BEFORE MINORITY INTEREST (19,502,632) (4,296,327) (5,431,072)
MINORITY INTEREST ALLOCATION 2,985,000 - -
------------ ----------- ----------
NET LOSS (16,517,632) (4,296,327) (5,431,072)
PREFERRED STOCK DIVIDEND 112,035 - -
----------- ----------- -----------
NET LOSS ALLOCABLE
TO COMMON SHAREHOLDERS $(16,629,667) $(4,296,327) $(5,431,072)
=========== =========== ============
BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.72) $ (0.26) $ (0.39)
============ =========== ===========
SHARES USED IN PER SHARE CALCULATION 23,151,135 16,705,274 14,074,349
============ =========== ===========
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
---------------- ------------------- Accumulated
Series A Series B Shares Amount Deficit Total
-------- ---------- ------- -------- --------- --------
Shares Amount Shares Amount
------ ------- ------ ------ ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, MARCH 31, 1995 - $ - - $ - 13,259,074 $32,507,095 $(24,542,793) $7,964,302
Issuance of common stock in
exchange for services - - - - 23,149 39,962 - 39,962
Issuance of common stock
and warrants in a private
placement in November
and December 1995 - - - - 2,303,009 3,454,101 - 3,454,101
Net loss applicable
to common shareholders - - - - - - (5,431,072) (5,431,072)
------- ------- ------ ------ ----------- ----------- ---------- ----------
BALANCES, MARCH 31, 1996 - - - - 15,585,232 36,001,158 (29,973,865) 6,027,293
Issuance of common stock in
exchange for services - - - - 33,298 159,350 - 159,350
Issuance of common stock
and warrants in a private
placement in December 1996 - - - - 3,434,493 2,163,000 - 2,163,000
Issuance of stock to Schering AG
in exchange for debt - - - - 487,390 1,712,228 - 1,712,228
Net loss applicable to
common shareholders - - - - - - (4,296,327) (4,296,327)
------- ------- ------ ------- ----------- ---------- ----------- -----------
BALANCES, MARCH 31, 1997 - - - - 19,540,413 40,035,736 (34,270,192) 5,765,544
Issuance of common stock in
exchange for services - - - - 49,646 94,936 - 94,936
Issuance of common stock
and warrants in a private
placement in June and
July 1997 - - - - 2,906,977 1,225,000 - 1,225,000
Issuance of common stock
and warrants in a private
placement in October 1997 - - - - 2,727,273 2,800,000 - 2,800,000
Issuance of common stock pursuant
to stock option exercises - - - - 136,098 154,869 - 154,869
Issuance of common stock under
401(k) matching plan - - - - 42,631 31,006 - 31,006
Issuance of warrants in
exchange for services - - - - - 81,350 - 81,350
Issuance of common stock
in acquisition of assets - - - - 100,000 134,400 - 134,400
Issuance of preferred stock
in exchange for debt, net
of expenses 692,694 10,220,411 134,333 1,985,000 - - - 12,205,411
Adjustment for inherent
dividend - (2,500,000) - (500,000) - 3,000,000 - -
Preferred stock dividend - 105,746 - 6,289 - - - 112,035
Net loss applicable to
common shareholders - - - - - - (16,629,667)(16,629,667)
--------- ---------- --------- ---------- ----------- --------- ------------ -----------
BALANCES, MARCH 31, 1998 692,694 $7,826,157 134,333 $1,491,289 25,503,038 $47,557,297 $(50,899,859) $5,974,884
========= ========== ========= ========= ========== ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended March 31,
1998 1997 1996
------------ ----------- -----------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss applicable to
common shareholders $(16,629,667) $(4,296,327) $(5,431,072)
Adjustments to net loss:
Depreciation and amortization 514,668 443,700 520,714
Contributed capital for services 207,292 159,350 39,962
Acquired in-process R&D, net of
minority interest 12,015,000 - -
Preferred stock dividends 112,035 - -
Interest paid in preferred stock 390,411 - -
Net changes in assets
and liabilities:
Accounts receivable 158,135 113,003 305,864
Inventories (455,514) (450,511) (147,237)
Other current assets (30,070) 492 6,435
Accounts payable (162,793) 109,799 (257,704)
Accrued payroll 5,294 54,905 (92,512)
Other accrued liabilities 77,738 (17,540) (102,080)
Deferred revenue (240,000) (316,000) 410,000
--------- ---------- -----------
Net Cash Used in Operating Activities (4,037,471) (4,199,129) (4,747,630)
----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Securities purchased - - (1,977,856)
Securities sold - 993,056 4,974,268
Property and equipment (110,387) (1,617,052) (597,100)
Other assets (47,650) (33,876) (64,916)
Acquisition of blood glucose
monitoring technology (15,000,000) - -
------------ ----------- -----------
Net Cash Provided By (Used In)
Investing Activities (15,158,037) (657,872) 2,334,396
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from common stock 4,179,869 2,163,000 3,454,101
Borrowing from long-term debt
subsequently converted to common stock - 1,712,228 -
Issuance of preferred stock 12,015,000
Minority interest capital
contribution to subsidiary 2,985,000
Preferred stock issuance costs (200,000) - -
----------- ---------- -----------
Net Cash Provided by Financing
Activities 18,979,869 3,875,228 3,454,101
--------- ---------- -----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash
and cash equivalents (215,639) (981,773) 1,040,867
Cash and cash equivalents at
beginning of year 2,116,478 3,098,251 2,057,384
--------- ---------- -----------
Cash and cash equivalents at
end of year $1,900,839 $2,116,478 $3,098,251
========== ========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes - - -
Purchase of goodwill for stock 134,400 - -
------- -------- -------
$134,400 $ - $ -
======== ========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY:
The consolidated financial statements of Bioject Medical Technologies Inc. (the
"Company" or "Bioject"), include the accounts of Bioject Medical Technologies
Inc. ("BMT"), an Oregon Corporation, and its wholly owned subsidiary, Bioject
Inc., an Oregon Corporation ("BI"), and its 80.1% owned subsidiary, Bioject JV
Subsidiary Inc. ("JV"), an Oregon corporation. All significant intercompany
transactions have been eliminated. Although Bioject Inc. commenced operations in
1985, the Company was formed in December 1992 for the purpose of acquiring all
of the capital stock of Bioject Medical Systems Ltd., a Company organized under
the laws of British Columbia, Canada, in a stock-for-stock exchange in order to
establish a U.S. domestic corporation as the publicly traded parent company of
Bioject Inc. and Bioject Medical Systems Ltd. Bioject Medical Systems Ltd. was
terminated in fiscal 1997. Bioject JV Subsidiary Inc. was formed in October 1997
in connection with a joint venture arrangement with Elan Corporation, plc
("Elan"). All references to the Company include Bioject Medical Technologies
Inc. and its subsidiaries, unless the context requires otherwise.
The Company commenced operations in 1985 for the purpose of developing,
manufacturing and distributing a new drug delivery system. Since its formation,
the Company has been engaged principally in organizational, financing, research
and development, and marketing activities. In the last quarter of fiscal 1993,
the Company launched U.S. distribution of its Biojector 2000 system primarily to
the hospital and large clinic market. The Company's products and manufacturing
operations are subject to extensive government regulation, both in the U.S. and
abroad. In the U.S., the development, manufacture, marketing and promotion of
medical devices is regulated by the Food and Drug Administration ("FDA") under
the Federal Food, Drug, and Cosmetic Act ("FFDCA"). In 1987, the Company
received clearance from the FDA under Section 510(k) of the FFDCA to market a
hand-held CO2-powered jet injection system. In June 1994, the Company received
clearance from the FDA under 510(k) to market a version of its Biojector 2000
system in a configuration targeted at high volume injection applications. In
October 1996, the Company received 510(k) clearance for a non-needle disposable
vial access device. In March 1997, the Company received additional 510(k)
clearance for certain enhancements to its Biojector 2000 system. On September
30, 1997, the Company entered into a joint venture agreement with Elan for the
development and commercialization of certain blood glucose monitoring technology
which the Company licensed from Elan (see Note 2 regarding "Accounting
Policies-Research and Development and Licensing/Technology Revenues"). Such
technology is also subject to government regulation in the U.S. by the FDA and
abroad by various agencies.
Since its inception the Company has incurred operating losses and at March 31,
1998 has an accumulated deficit of approximately $51 million. The Company's
revenues to date have been derived primarily from licensing and technology fees
for the jet injection technology and more recently from sales of the Biojector
2000 system and Biojector syringes to public health clinics, flu immunization
clinics and physicians offices. Future revenues will depend upon acceptance and
use by healthcare providers of the Company's jet injection technology and
successful development, regulatory clearance and market acceptance of its blood
glucose monitoring technology. Uncertainties over government regulation and
competition in the healthcare industry may impact healthcare provider
expenditures and third party payer reimbursements and, accordingly, the Company
cannot predict what impact, if any, subsequent healthcare reforms and industry
trends might have on its business. In the future the Company is likely to
require substantial additional financing. Failure to obtain such financing on
favorable terms could adversely affect the Company's business.
The Company's revenues to date have not been sufficient to cover operating
expenses. However, the Company believes that if its products achieve market
acceptance and the volume of sales increase, and its product costs are reduced,
its cost of goods as a percentage of sales will decrease and eventually the
Company will generate net income. The level of sales required to generate net
income will be affected by a number of factors including the pricing of the
Company's products, its ability to attain efficiencies that can be attained
through volume and automated manufacturing, and the impact of inflation on the
Company's manufacturing and other operating costs. There can be no assurance
that the Company will be able to successfully implement further manufacturing
cost reductions or sell its products at prices or in volumes sufficient to
achieve profitability or offset increase in its costs should they occur.
<PAGE>
The Company believes that its current cash position, combined with revenues,
other cash receipts, proceeds from the exercise of stock warrants and options,
proceeds from the issuance of the Company's Series C preferred stock and
proceeds from the purchase by Elan of additional stock in JV, may not be
sufficient to fund the Company's operations through the end of fiscal 1999. The
Company has identified a number of potential financing sources and is pursuing
them aggressively. Even if the Company is successful in raising additional
financing, unforeseen costs and expenses or lower than anticipated cash receipts
from product sales or research and development activities could accelerate or
increase the financing requirements. The Company has been successful in raising
additional financing in the past and believes that sufficient funds will be
available to fund future operations. However, there can be no assurance that the
Company's efforts will be successful, and there can be no assurance that such
financing will be available on terms which are not significantly dilutive to
existing shareholders. Failure to obtain needed additional capital on terms
acceptable to the Company, or at all, would significantly restrict the Company's
operations and ability to continue product development and growth and materially
adversely affect the Company's business. The financial statements do not include
any adjustments relating to the recoverability and classification of asset
carrying amounts that might result should the Company be unable to continue as a
going concern.
2. ACCOUNTING POLICIES:
CASH EQUIVALENTS
The Company considers cash equivalents to consist of short-term, highly liquid
investments with an original maturity of less than three months.
SECURITIES AVAILABLE FOR SALE
The Company accounts for its investments in marketable securities in accordance
with Financial Accounting Standards Board Statement No. 115, Accounting for
Certain Investments in Debt and Equity Securities (SFAS 115) as securities
available for sale. There were no significant realized gains or losses in fiscal
1998, 1997, and 1996.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined in a
manner which approximates the first-in, first out (FIFO) method. Costs utilized
for inventory valuation purposes include labor, materials and manufacturing
overhead. Net inventories consist of the following:
March 31,
1998 1997
---------- ----------
Raw Materials $ 754,715 $ 815,868
Work in Process 9,763 9,763
Finished Goods 1,127,492 880,825
----------- ----------
$1,891,970 $1,706,456
========== ==========
PROPERTY AND EQUIPMENT
For financial statement purposes, depreciation expense on property and equipment
is computed on the straight-line method using the following lives:
Furniture and Fixtures............................5 years
Machinery and Equipment...........................7 years
Computer Equipment................................3 years
Production Molds..................................5 years
Leasehold improvements are amortized on the straight-line method over the
shorter of the remaining term of the related lease or the estimated useful lives
of the assets.
Included in machinery and equipment and production molds are molds, tooling and
production fixtures constructed or acquired by the Company under a supply
agreement with Schering AG for the manufacture and sale of a needle-free
self-injection system. The construction of these assets commenced in May and
June 1996 and continued until January 1997 when they were ready for their
intended use. Schering loaned the Company $1.6 million to fund acquisition of
the assets, and therefore, in accordance with SFAS 34, the Company has
capitalized $106,000 of interest incurred on this debt.
<PAGE>
OTHER ASSETS
Other assets include costs incurred for the application of patents, totaling
$503,344 and $455,694 at March 31, 1998 and 1997, respectively. These costs are
amortized on a straight-line basis over 17 years. Accumulated amortization
totaled $174,713 and $144,713 at March 31, 1998 and 1997, respectively.
Amortization expense for the years ended March 31, 1998, 1997 and 1996 totaled
$30,000, $30,000, and $20,000 respectively.
Also included in other assets is the cost of assets acquired from Vitajet
Corporation in a stock for assets exchange. In March 1998 the Company paid
100,000 shares of its common stock for certain molds, tooling, patent rights and
customer lists, the value of which totaled $134,400 at the date of acquisition
and is being amortized over 15 years. In addition to shares already paid, the
Company is obligated to issue 60,000 shares of its common stock each year in
each of the three years, subsequent to the acquisition if certain development
milestones are met. Up to an additional 90,000 shares is also payable subject to
the Company realizing specified, aggregate levels of incremental revenue during
the three years subsequent to the Vitajet acquisition as a result of sales of
products acquired from or developed by Vitajet
ACCOUNTING FOR LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of"(SFAS 121), which requires the Company to review for
impairment of its long-lived assets and certain identifiable intangibles
whenever events or changes in circumstances indicate that the carrying amount of
an asset might not be recoverable. In certain situations, an impairment loss
would be recognized. SFAS 121 became effective for the Company's year ended
March 31, 1997. The Company continues to study the implications of SFAS 121 and,
based on its evaluation, does not believe that an adjustment to the carrying
value of its long-lived assets is necessary.
REVENUE RECOGNITION FOR PRODUCT SALES
The Company records revenue from sales of its products upon shipment. In fiscal
1998, 1997 and 1996, sales to one customer (different for each period presented)
accounted for 12%, 17% and 75%, respectively, of net sales of products. At March
31, 1998, 1997 and 1996 accounts receivable from one customer (different for
each period presented) accounted for 19%, 62%, and 67%, respectively, of total
accounts receivable.
RESEARCH AND DEVELOPMENT AND LICENSING/TECHNOLOGY REVENUES Licensing fees are
recognized as revenue when due and payable. All licensing fee arrangements have
been on a non-refundable basis and impose no future performance requirements or
other obligations on the Company. Product development revenue is deferred upon
receipt and is recognized as revenue as qualifying expenditures are incurred.
Expenditures for research and development are charged to expense as incurred.
SCHERING AG. In March 1994, the Company entered into a joint development
agreement with Schering AG, a major pharmaceutical manufacturer, for the
development of an application-specific self injection system (the
"Self-Injector"). Under terms of the agreement, the Company received a $500,000
licensing fee in April 1994 and received partial funding of product development
expenses on an agreed schedule. In fiscal 1995, the Company received a total of
$1.1 million from Schering, consisting of $500,000 in licensing fees, which were
recognized as revenue during fiscal 1995, and $600,000 of Phase I product
development revenues, $444,000 of which were recognized as revenue in fiscal
1995. In fiscal 1996, the Company received an additional $660,000 and a total of
$751,000 was recognized as revenue. In fiscal 1997, the Company received final
product development payments totaling $349,500 and recognized revenue of
$414,500. During fiscal 1997, the Company entered into a supply agreement with
Schering and commenced activities related to preparing for production of the
Self Injector. Schering loaned the Company a total of $1.6 million to purchase
molds and tooling to produce the product. In January 1997, the Company received
notice that its contract with Schering would be cancelled. Under provisions of
<PAGE>
the contract, Schering had the option of canceling the agreement if the FDA
required extensive clinical studies beyond an originally planned safety study.
Schering received a review letter from the FDA which would have required
Schering to conduct additional material clinical studies in order to use
non-traditional delivery mechanisms with its Betaseron (R) product. Under terms
of the contract, Schering was required to convert its $1.6 million note due from
Bioject into approximately 460,000 shares of Bioject common stock at a
conversion price of $3.50 per share. In addition, $106,000 of accrued interest
was converted into approximately 27,000 shares of Bioject common stock at a
conversion price of $3.50 per share. Additionally, Schering was obligated to pay
Bioject for the cost of product ordered through the date of cancellation of the
contract.
HOFFMANN-LA ROCHE. In January 1995, the Company entered into a joint development
agreement with Hoffmann-La Roche, a major pharmaceutical manufacturer, for the
development of application specific-products. The Company received a licensing
fee totaling $500,000 which was recognized as revenue in fiscal 1995. The
Company is also receiving specified product development fees on an agreed
schedule. In fiscal 1996, the Company received $900,000, of which $399,000 was
recognized as revenue. In fiscal 1997, the Company received $250,000 in product
development fees and recognized revenue of $501,000. In fiscal 1998, the Company
received $250,000 in product development fees and recognized revenues of
$500,000.
ELAN CORPORATION. On September 30, 1997, the Company signed a binding letter
agreement (the "Agreement") with Elan Corporation, plc ("Elan") the goals of
which included the development and commercialization of Elan's blood glucose
monitoring technology and a collaborative arrangement to further develop the
Company's jet injection technology. Among various terms, all of which were
determined in arms-length negotiation, the Agreement provides for:
- - Investment by Elan of $3 million in Bioject in exchange for approximately
2.7 million shares of common stock and a five year warrant to purchase 1.75
million shares of common stock at $2.50 per share.
- - Formation of JV which is owned 80.1% by Bioject and 19.9% by Elan to
further develop and commercialize the blood glucose monitoring technology.
- - Payment of a $15 million up front fee and future milestone payments
totaling $15.5 million and royalties on net sales in exchange for North
American rights to Elan's blood glucose monitoring technology.
- - The loan of $12.015 million to Bioject on a long-term promissory note
bearing interest at 9% per annum through December 31, 1997 and 12%
thereafter for the purpose of Bioject's investment in the new subsidiary's
common stock.
- - The investment by Elan of $2.985 million in JV's common stock.
- - The commitment by Elan to further develop the blood glucose monitoring
technology until the earlier of human clinical trials, March 31, 1998 or
$2.5 million is expended by Elan.
- - The submission to Bioject's shareholders of a proposal to approve the
exchange of the long-term promissory note for $10 million plus accrued
interest for the Company's Series A Convertible Preferred Stock and $2.015
million for Series B Convertible Preferred Stock, with the Series A
Convertible Preferred Stock accruing dividends at the rate of 9% per annum
(compounded semi-annually) and the Series B Convertible Preferred Stock
accruing no mandatory dividends.
- - The submission to Bioject's shareholders of a proposal to approve the
issuance of up to $4 million of Bioject's Series C Convertible Preferred
Stock to Elan to provide Bioject with funds to contribute toward JV's
additional development funding needs.
- - The agreement by Elan to extend the license on a worldwide basis if the
shareholders approve the exchange of the $12.015 million promissory note
for convertible preferred stock.
- - The agreement by Elan to provide a grant of $500,000 toward development of
Bioject's jet injection technology in a pre-filled application.
<PAGE>
Final closing agreements were signed among the Company, Elan and the Company's
new subsidiary on October 15, 1997. On that date the $3 million investment in
the Company was made by Elan and approximately 2.7 million shares of common
stock and a warrant to purchase 1.75 million shares at $2.50 per share were
issued. Elan loaned Bioject $12.015 million which Bioject transferred to the new
subsidiary in exchange for 801,000 shares of the subsidiary's common stock. Elan
invested $2.985 million in the new subsidiary in exchange for 199,000 shares of
the subsidiary's common stock. The new subsidiary paid $15 million to Elan as
its initial payment on the licensing agreement.
On February 20, 1998, the Company's shareholders approved the exchange of the
long-term promissory note plus accrued interest for Series A and Series B
Convertible Preferred Stock and the issuance to Elan of Series C Convertible
Preferred Stock or other similar convertible preferred stock to fund JV
development work. Accordingly, on March 2, 1998, a total of 692,694 shares of
Series A Convertible Preferred Stock and 134,333 shares of Series B Convertible
Preferred Stock were issued to Elan and the promissory note was cancelled.
The Company believes that the license is likely to run for most of the useful
life of the products that may be commercialized under it. The license itself is
contingent, on a country-by-country basis, on JV's diligently seeking and
obtaining regulatory marketing clearance for licensed products and on JV's
timely commercial launch of the licensed products in countries where such
clearance has been obtained. In addition, in the event that a significant
percentage of JV's equity is acquired by any one of a number of specified
companies identified by Elan as actual or potential competitors, or any other
entity to which Elan does not consent (which consent shall not be unreasonably
withheld in the case of such other, unspecified companies), the license may be
immediately terminated at the option of Elan.
As of September 30, 1997, the Company recorded an expense of $15 million related
to acquired in-process research and development expenditures. Such expense
relates to the blood glucose monitoring technology that has not yet established
technological feasibility and at present has no alternate future uses.
Accounting rules require that such costs be charged to expense as incurred. The
Company believes that these research and development efforts will result in
commercially viable products within the next three to four years at an
additional cost to the Company of at least $10 million, exclusive of additional
milestone payments totaling $15.5 million due to Elan.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, Accounting For Income Taxes (SFAS 109). Under the
liability method specified by SFAS 109, deferred tax assets and liabilities are
determined based on the temporary differences between the financial statement
and tax bases of assets and liabilities as measured by the enacted tax rates for
the years in which the taxes are expected to be paid. At March 31, 1998, the
Company had total deferred tax assets of approximately $20 million, consisting
principally of available net operating loss carryforwards. No benefit for these
operating losses has been reflected in the accompanying financial statements as
they do not satisfy the recognition criteria set forth in SFAS 109. Total
deferred tax liabilities were insignificant as of March 31, 1998.
As of March 31, 1998, BMT has net operating loss carryforwards of approximately
$668,000 available to reduce future federal taxable income, which expire in 2008
through 2013. BI has net operating loss carryforwards of approximately $38.9
million available to reduce future federal taxable income, which expire in 2001
through 2013. JV has net operating loss carryforwards of approximately $12.6
million available to reduce future federal taxable income, which expire in 2013.
Approximately $3.0 million of BI's carryforwards were generated as a result of
deductions related to exercises of stock options. When utilized, this portion of
BI's carryforwards, as tax effected, will be accounted for as a direct increase
to contributed capital rather than as a reduction of that year's provision for
income taxes. The principal differences between net operating loss carryforwards
for tax purposes and the accumulated deficit result from capitalization of
certain start-up costs and deductions related to the exercise of stock options
for income tax purposes.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
<PAGE>
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' expenses to conform
to the current year's presentation.
NET LOSS PER SHARE
Beginning with Fiscal 1998, basic earnings per shares (EPS) and diluted EPS are
computed using the methods required by Statement of Financial Accounting
Standard No. 128, Earnings per Share (SFAS 128). Under SFAS 128, basic EPS is
calculated using the weighted average number of common shares outstanding for
the period. The computation of diluted earnings per share includes the effects
of stock options, warrants and convertible preferred stock, if such effect is
dilutive. Prior period amounts have been restated to conform with the
presentation requirements of SFAS 128. For the periods presented, the Company
has been in a loss position and, accordingly there is no difference between
basic EPS and diluted EPS since the common stock equivalents and the effect of
convertible preferred stock under the "if-converted" method would be
antidilutive. All earnings per share amounts in the following table are
presented to conform to the SFAS 128 requirement:
Year ended March 31,
1998 1997 1996
Net loss ($16,629,667) ($4,296,327) ($5,431,072)
Weighted average number
of shares of common stock and
common stock equivalents
outstanding:
Weighted average number of
common shares outstanding
for computing basic earnings
per share 23,151,135 16,705,274 14,074,349
Dilutive effect of warrants
and stock options after
applications of the
treasury stock method * * *
---------- ----------- -----------
Weighted average number of
common shares outstanding
for computing diluted earnings
per share 23,151,135 16,705,274 14,074,349
========== ========== ==========
Net loss per share -
basic and diluted ($0.72) ($0.26) ($0.39)
========== ========== ==========
*The following common stock equivalents are excluded from earnings per share
calculations as their effect would have been antidilutive:
Year ended March 31, 1998 1997 1996
Warrants and stock options 11,578,490 7,962,146 4,139,034
Convertible preferred stock 8,270,270
----------- ----------- -----------
19,848,760 7,962,146 4,139,034
========== ========= =========
<PAGE>
3. SEGMENT INFORMATION
The Company has adopted the segment reporting requirements of SFAS No.131,
Disclosures about Segments of an Enterprise and Related Information. At present,
the Company has two reportable segments which offer different products and are
managed separately because each business requires different technology and
marketing strategies. The following sets forth the unaudited results of
operations of the Company for its two segments of operations - jet injection
technology and blood glucose monitoring technology (in thousands):
Jet Injection Blood glucose Monitoring
Year Ended Year ended
March 31, March 31,
------------- ----------------
1998 1997 1998 1997
----- ----- ----- -----
REVENUES $1,935 $2,235 $ - $ -
EXPENSES:
Manufacturing 1,749 1,863 - -
R&D 884 1,596 - -
Selling, general
& administrative 3,427 3,177 97 -
Acquired in-process R&D - - 15,000 -
---- ----- --------- -----
6,060 6,636 15,097 -
----- ----- --------- ------
Operating loss (4,125) (4,401) (15,097) -
Interest expense (390) - - -
Other income 109 105 - -
------ ----- -------- ------
(4,406) (4,296) (15,097) -
MINORITY
INTEREST ALLOCATION - - 2,985 -
------- ------- ------- ------
NET LOSS (4,406) (4,296) (12,112) -
LESS - PREFERRED STOCK
DIVIDENDS (112) - - -
------- ------- ------- --------
NET LOSS ALLOCABLE TO
COMMON SHAREHOLDERS $(4,518) $(4,296) $(12,112) $ -
======== ======= ======== ========
At March 31, 1998, no significant assets exist related to the blood glucose
monitoring technology other than the acquired in-process research and
development which, as discussed in Note 2 above, was required to be written off
at acquisition. Accordingly, the accompanying consolidated balance sheets
effectively represent the assets of the jet injection business segment. In the
future, certain proceeds from the sale of equity or issuance of debt by JV may
be restricted to JV operations only. To the extent that they meet certain
reporting requirements, the separate assets, liabilities and equity of the
parent and its subsidiary will be appropriately disclosed.
4. 401(K) RETIREMENT BENEFIT PLAN:
The Company has a 401(k) Retirement Benefit Plan for its employees. All
Employees, subject to certain age and length of service requirements, are
eligible to participate. The plan permits certain voluntary employee
contributions to be excluded from the employees' current taxable income under
provisions of the Internal Revenue Code Section 401(k) and regulations
thereunder. Effective January 1, 1996, the Company amended the plan to provide
for voluntary employer matches of employee contributions up to 6% of salary and
for discretionary profit sharing contributions to all employees. Such employer
matches and contributions may be either in cash or Company common stock. For
calendar 1996, the Company agreed to match 25% of employee contributions up to
6% of salary with Company stock. For calendar 1997 and 1998, the Company agreed
to match 37.5% of employee contributions up to 6% of salary with Company stock.
In fiscal 1998, 1997 and 1996, the Company recorded an expense of $21,755,
$25,000 and $4,800, respectively, related to voluntary employer matches under
the 401(k) Plan. The Board of Directors has reserved up to 100,000 shares of
common stock for these voluntary employer matches of which 42,631 shares have
been issued and 30,470 shares have been committed through March 31, 1998.
<PAGE>
5. SHAREHOLDERS' EQUITY:
PREFERRED STOCK
The Company has authorized 10 million shares of preferred stock to be issued
from time to time with such designations and preferences and other special
rights and qualifications, limitations and restrictions thereon, as permitted by
law and as fixed from time to time by resolution of the Board of Directors.
During fiscal 1998, as described in note 2 regarding the Elan transactions, the
Company borrowed $12.015 million from Elan for the purpose of investing such
funds in JV. On February 20, 1998, the Company's shareholders approved the
exchange of this debt, plus accrued interest, for Series A and Series B
convertible preferred stock and approved the future issuance of Series C
Convertible Preferred Stock. At March 31, 1998, the Company had preferred stock
authorized and outstanding as follows:
Series A Convertible Preferred Stock. Series A preferred stock accumulates
dividends at 9% per annum, compounded semi-annually, payable in additional
Series A Convertible Preferred Stock. Each original share may be converted at
the holder's election into 10 shares of common stock and may be redeemed at the
Company's election on the third, fourth and fifth anniversaries of issuance if
the Company's common stock is greater than or equal to $2.25 per share by the
payment to the holder of an amount equal to the original issuance price plus
accumulated dividends thereon. If not earlier converted or redeemed, the
original issuance price of the Series A Convertible Stock plus accumulated
dividends thereon must be converted into common stock of the Company on October
15, 2004 at the lesser of $1.50 or 80% of the average of the closing prices of
common stock for the ten trading days ending on October 13, 2004. The Series A
Convertible Preferred Stock has preference in liquidation to the common stock of
the Company. A total of 692,694 shares with an original issuance value of $15.00
per share has been issued.
Series B Convertible Preferred Stock. Series B preferred stock has all of the
rights and preferences of the Series A Convertible Preferred Stock including
optional conversion, optional redemption and mandatory conversion except that it
bears no mandatory dividend but participates in dividends pro rata with the
common shareholders. A total of 134,333 shares of Series B Convertible Preferred
Stock with an original issuance value of $15.00 per share have been issued.
Series C Convertible Stock. Series C preferred stock has all of the rights and
preferences of the Series A Convertible Preferred Stock including optional
conversion, optional redemption and mandatory conversion except that it bears no
mandatory dividend but participates in dividends pro rata with the common
shareholders. Its original issuance price will be equal to market value, if and
when such shares are issued. Proceeds are restricted for use in the JV. There
are no shares issued and outstanding at March 31, 1998.
Inherent dividend. As described above, under certain conditions the Series A and
Series B Convertible Preferred Stock is convertible into common stock of the
Company at a price which represents a 20% discount to its par value of $15.00
per share. The value of this inherent dividend has been recorded as a discount
to preferred stock and an increase to common stock totaling $3 million and is
being accreted as additional preferred stock dividends on a straight-line basis
from March 2, 1998 until mandatory conversion on October 15, 2004.
COMMON STOCK
Holders of common stock are entitled to one vote for each share of record held
on all matters to be voted on by shareholders. No shares have been issued
subject to assessment, and there are no preemptive or conversion rights and no
provision for redemption, purchase or cancellation, surrender or sinking or
purchase funds. Holders of common stock are not entitled to cumulate their
shares in the election of directors. A total of 100,000 shares of common stock
have been reserved by the Board of Directors for issuance to 401(k) plan
participants (see note 4) of which 42,631 shares have been issued and 30,470
shares are committed to be issued through March 31, 1998.
<PAGE>
STOCK OPTIONS
Options may be granted to directors, officers and employees of the Company by
the Board of Directors under terms of the Bioject Medical Technologies Inc. 1992
Stock Incentive Plan (the "Plan"), which was approved by the Company's
shareholders on November 20, 1992 and adopted by the Board effective December
17, 1992. Under the terms of the Plan, eligible employees may receive statutory
and nonstatutory stock options, stock bonuses and stock appreciation rights for
purchase of shares of the Company's common stock at prices and vesting as
determined by a committee of the Board. Except for options whose terms were
extended, options granted under a prior plan maintain their previous option
price, vesting and expiration dates. As amended in fiscal 1995, a total of up to
3,000,000 shares of the Company's common stock, including options outstanding at
the date of initial shareholder approval of the Plan, may be granted under the
Plan. Options outstanding at March 31, 1998 expire through April 2006.
In October 1995, the Financial Accounting Standards Board issued Statement No.
123, Accounting for Stock-Based Compensation (SFAS 123), which establishes a
fair value-based method of accounting for stock-based compensation plans and
requires additional disclosures for those companies that elect not to adopt the
new method of accounting. The Company has elected to continue to account for
stock options under APB Opinion No. 25, Accounting for Stock Issued to
Employees. However, as prescribed by SFAS 123 the Company has computed, for pro
forma disclosure purposes, the value of all options granted during fiscal 1998,
1997 and 1996 using the Black-Scholes option- pricing model and the following
weighted average assumptions:
Year ended March 31,
1998 1997 1996
------ ------ ------
Risk-free interest rate 6% 6% 6%
Expected dividend yield 0% 0% 0%
Expected life 1.5 yrs. 1.5 yrs. 1.5 yrs.
Expected volatility 78% 47% 47%
The total value of options granted during fiscal 1998, 1997 and 1996 would be
amortized on a pro forma basis over the vesting period of the options. Options
generally vest equally over three years. If the Company had accounted for these
plans in accordance with SFAS 123, the Company's net loss and net loss per share
would have increased as reflected in the following pro forma amounts (in
thousands of $):
Year ended March 31,
1998 1997 1996
------ ------ ------
Net loss:
As reported $(16,630) $(4,296) $(5,431)
Pro forma $(16,969) $(4,480) $(5,541)
Net loss per share:
As reported $(0.72) $(0.26) $(0.39)
Pro forma $(0.73) $(0.27) $(0.39)
The above determination of proforma expense has been calculated consistent with
SFAS 123 which does not take into consideration limitations on exercisability
and transferability imposed by the Company's Stock Incentive Plan. Further, the
valuation model is heavily weighted to stock price volatility, even with a
declining stock price, which tends to increase calculated value. The actual
value, if any, and, therefore, imputed proforma expense will vary based on the
exercise date and the market price of the related common stock when sold.
Stock option activity is summarized as follows:
Exercise
Shares Price Amount
--------- ------------ ----------
Balances - March 31, 1995 1,543,650 $2.60 - 5.00 $5,906,967
Options granted 1,316,439 1.25 - 4.50 3,129,177
Options exercised - - -
Options canceled or expired (1,161,150) 2.34 - 5.00 (4,302,332)
---------- ------------ -----------
Balances - March 31, 1996 1,698,939 1.25 - 4.50 4,733,812
Options granted 705,525 1.00 - 1.30 830,006
Options exercised -
Options canceled or expired (472,906) 1.00 - 4.00 (809,880)
---------- ------------ -----------
Balances March 31, 1997 1,931,558 1.00 - 4.50 4,753,938
<PAGE>
Exercise
Shares Price Amount
--------- ------------ ----------
Options granted 2,086,642 .625 - 1.25 1,506,818
Options exercised (136,098) .75 - 1.31 (154,869)
Options canceled or expired (1,567,179) 1.00 - 4.88 (4,179,757)
---------- ------------ -----------
Balances - March 31, 1998 2,314,923 $.625 - 4.88 $1,926,130
========== ============ ===========
The following table sets forth as of March 31, 1998 the number of shares
outstanding, exercise price, weighted average remaining contractual life,
weighted average exercise price, number of exercisable shares and weighted
average exercise price of exercisable options by groups of similar price and
grant date:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Exercise Outstanding Weighted Average Weighted Exercisable Weighted
Price shares Remaining Average Options Average
at 3/31/98 Contractual Exercise Exercise
Life(Years) Price Price
- ------------ ----------- ----------- -------- --------- --------
$0.625 - 0.99 1,946,140 5.21 $0.71 989,910 $0.73
1.00 - 1.25 289,583 2.48 1.12 251,748 1.12
1.26 - 3.75 44,200 3.71 1.49 24,565 1.45
3.76 - 4.09 35,000 2.00 4.09 35,000 4.09
WARRANTS
Warrant activity is summarized as follows:
Exercise
Shares Price Amount
--------- ------------ ----------
Balances - March 31, 1995 - $ - $ -
Warrants issued in a private
placement expiring Nov. 2000 1,864,343 1.97 - 2.00 3,724,401
Warrants issued in a private
placement expiring Feb. 1998 575,752 2.00 1,151,505
Warrants exercised - - -
Warrants canceled or expired - - -
--------- ------------ ----------
Balances - March 31, 1996 2,440,095 1.97 - 2.00 4,875,906
Warrants issued in a private
placement expiring Dec. 2001 3,590,493 .82 - 1.00 3,562,413
Warrants exercised - - -
Warrants canceled or expired - - -
--------- ------------ ----------
Balances - March 31, 1997 6,030,588 .82 - 2.00 8,438,319
Warrants issued in a private
placement expiring June 2002 1,478,488 .50 - .71 1,044,476
Warrants issued in a private
placement expiring Sep. 2002 450,000 .85 - 1.10 450,000
Warrants issued in a private
placement expiring Oct. 2002 1,750,000 2.50 4,375,000
Warrants issued for services
expiring September 2002 130,243 1.10 143,267
Warrants exercised - - -
Warrants canceled or expired (575,752) 2.00 (1,151,505)
--------- ------------ ----------
Balances - March 31, 1998 9,263,567 $ .50 - 2.50 $13,299,557
========= ============ ==========
<PAGE>
Warrants issued for services are accounted for in accordance with SFAS 123,
"Accounting for Stock-Based Compensation," and accordingly, an expense totaling
$81,350 has been recorded in the financial statements for the year ended March
31, 1998. All other warrants have been issued in connection with equity
transactions. Subsequent to year end, the warrants issued in a private placement
which would have expired in June 2002 were exercised in exchange for the
Company's commitment to issue 147,850 new warrants with an expiration date of
March 2003 and as an exercise price of $1.348 per share.
6. COMMITMENTS:
Leases. BI has operating leases for its manufacturing, sales and administrative
facilities and warehouse facilities with options to renew for an additional
five-year term upon expiration. BI also leases office equipment under operating
leases for periods up to five years. At March 31, 1998, future minimum payments
under noncancellable operating leases with terms in excess of one year are as
follows:
Year Ending March 31, Facilities Equipment
---------- ---------
1999 $ 202,308 $ 29,250
2000 203,058 9,132
2001 216,888 9,132
2002 204,048 9,132
95,424 5,347
Thereafter
Lease expense for the years ended March 31, 1998, 1997 and 1996 totaled
$255,000, $283,000 and $221,000 respectively.
7. RELATED PARTY TRANSACTION:
On October 22, 1997, Robert Gonnelli was elected Chairman of Bioject's joint
venture subsidiary Board of Directors. From October 1997 through April 1998 he
received no fees for such services but will participate in any future subsidiary
director compensation programs including any subsidiary stock incentive plans.
Effective May 1, 1998, Mr. Gonnelli became interim president of JV and will
receive compensation totaling $15,000 per month.
In addition to his position on the JV Board, Mr. Gonnelli serves as a consultant
to the Company for which he received monthly consulting fees of $8,500 per
month, aggregating to $50,500, in fiscal 1998. He was also issued 350,000 five
year warrants in connection with the private placement completed with Elan and
130,243 warrants for his services related to investor relations and sales
consulting. In fiscal 1999, in addition to his monthly fees through April 30,
1998, the Company has committed to issue up 100,000 warrants for his investor
relations and sales consulting services.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
The Company has omitted from Part III the information that will appear in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on September 10, 1998(the "Proxy Statement"), which will be filed within
120 days after the end of the Company's fiscal year pursuant to Regulation 14A.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated by reference to the
information under the caption "DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT" in the Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
information under the caption "EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS" in
the Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
information under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" in the Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
information under the caption "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
in the Proxy Statement.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Consolidated Financial Statements and Report of Independent Public
Accountants are included under Item 8, in Part II.
(2) Consolidated Financial Statement Schedules and Report of Independent
Public Accountants on those schedules:
None required
(3) Exhibits: The following exhibits are filed as part of this report. an
asterisk (*) beside the exhibit number indicates the subset of the
exhibits containing each management contract, compensatory plan, or
arrangement required to be identified separately in this report.
Exhibit
Number Exhibit Description
- ------- -----------------------------------------------------------------
3.1 Articles of Incorporation of Bioject Medical Technologies Inc.
incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended January 31, 1993.
3.1.1 Articles of Amendment to the Articles of Incorporation of the
Incorporation of the Company incorporation by reference to the
Same exhibit number of the Company's Form 8-K filed March 6, 1998.
3.2 Amended and Restated By-laws of Bioject Medical Technologies Inc.
Incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the quarter ended September 30, 1994.
4.3* Bioject Medical Technologies Inc. 1992 Stock Incentive Plan, as
amended through April 3, 1997. Incorporated by reference to the same
exhibit number of the Company's From 10-Q for the year ended December
31, 1997.
<PAGE>
10.4 Lease Agreement dated March 21, 1989 between Spieker-Hosford-
Eddy-Souther #174, Limited Partnership and Bioject Inc. for the
Portland, Oregon facility incorporated by reference to the same
exhibit number of Company's Form 10-K for the year ended January 31,
1989.
10.4.1 Amended Lease Agreement dated June 18, 1992 between Bridgeport Woods
Investors (successors in interest to Spieker-Hosford-Eddy- Souther
#174 Limited Partnership) and Bioject Inc. for the Portland, Oregon
facility incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended January 31, 1993.
10.4.2 Lease Agreement dated September 10, 1996 between Bridgeport Woods
Business park and Bioject Inc. for the Portland, Oregon facility.
Incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the period ended September 30, 1996.
10.5 Lease Extension Agreement dated October 4, 1994, between Earl J. Itel
and Loris Itel Trust and Bioject, Inc., for the 6000 sq. ft. Tualatin,
Oregon warehouse. Incorporated by reference to the same exhibit number
of the Company's Form 10-Q/A for the period ended December 31, 1996.
10.7* Executive Employment Contract with Peggy J. Miller, dated January 18,
1993 incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended January 31, 1993.
10.8* Executive Employment Contract with J. Michael Redmond, dated February
8, 1996. Incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended March 31, 1996.
10.14 Common Stock Purchase Agreement between Eli Lilly and Company and
Bioject Medical Systems Ltd. dated April 29, 1992 incorporated by
reference to the same exhibit number of Company's Form 8, dated May
28, 1992, amending Company's Form 10-K for the year ended January 31,
1992.
10.17 Development and Licensing Agreement between Eli Lilly & Company and
Bioject Inc., dated April 29, 1992 incorporated by reference to the
same exhibit number of Company's Form 8, dated October 9, 1992,
amending Company's Form 10-Q for the quarter ended April 30, 1992.
Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an Application for Confidential
Treatment filed with the Commission under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
10.17.1 Amendment to Development and Licensing Agreement between Eli Lilly and
Company and Bioject Inc., effective May 5, 1993 incorporated by
reference to the same exhibit number of Company's Form S-1, No.
33-68846, dated November 1, 1993. Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 406 under the Securities Act of 1933, as amended.
Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an Application for Confidential
Treatment filed with the Commission under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
<PAGE>
10.23 Development and Licensing Agreement between Schering, AG, Bioject Inc.
and Bioject Medical Technologies Inc. dated March 28, 1994
incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended March 31, 1994. Confidential treatment
has been granted with respect to certain portions of this exhibit
pursuant to an Application for Confidential Treatment filed with the
Commission under Rule 24b-2 under the Securities exchange Act of 1934,
as amended.
10.26 Heads of Agreement between Hoffmann-La Roche Inc. and Bioject Inc.
dated January 10, 1995. Confidential treatment has been granted with
respect to certain portions of this exhibit pursuant to an Application
for Confidential Treatment filed with the Commission under Rule 24b-2
under the Securities Exchange Act of 1934 as amended.
10.27* Employment Agreement with James C. O'Shea dated October 3, 1995
incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the quarter ended September 30, 1995.
10.28 Form of Amended and Restated Registration Rights Agreement between
Bioject Medical Technologies Inc. and the participants in the 1995
private placement incorporated by reference to exhibit 4.2 of the
Company's Registration Statement on Form S-3 (No. 33-80679).
10.29 Form of Amended and Restated Series "A" Common Stock Purchase Warrant
incorporated by reference to exhibit 4.3 of the Company's Registration
Statement on Form S-3 (No. 33-80679).
10.30 Form of Series "B" Common Stock Purchase Warrant incorporated by
reference to exhibit 4.4. of the Company's Registration Statement on
Form S-3 (No. 33-80679).
10.31 Form of Amended and Restated Series "C" Common Stock Purchase Warrant
incorporated by reference to exhibit 4.5 of the Company's Registration
Statement on Form S-3 (No. 33-80679). Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
10.32 Supply Agreement dated June 26, 1996 between Bioject Inc. and Schering
Aktiengesellschaft. Incorporated by reference to the same exhibit
number of the Company's Form 8-K/A dated June 26, 1996. Confidential
treatment has been granted with respect to certain portions of this
exhibit pursuant to an Application for Confidential Treatment filed
with the Commission under Rule 24b-2 under the Securities exchange Act
of 1934, as amended.
10.32.1 Security Agreement dated June 26, 1996 between Bioject Inc. and
Schering Aktiengesellschaft. Incorporated by reference to the same
exhibit number of the Company's Form 10-Q for the period ended June
30, 1996.
10.33 Form of Series "D" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.6 of the Company's form 8-K dated December 11,
1996.
10.34 Form of Series "E" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.7 of the Company's Form 8-K dated December 11,
1996.
10.35 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1996 private placement.
Incorporated by reference to exhibit 4.8 of the Company's Form 8-K
dated December 11, 1996.
10.36 Form of Series "F" Common Stock Purchase Warrant.
10.37 Form of Series "G" Common Stock Purchase Warrant.
<PAGE>
10.38 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1997 private placement.
Incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended March 31, 1997.
10.39 Agreement between Elan Corporation, plc, Elan International Services,
Ltd. and Bioject Medical Technologies, Inc. dated September 30, 1997.
Incorporated by reference to the same exhibit number of the Company's
Form 8-K filed October 3, 1997. Confidential treatment has been
requested with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 24b-2(b) under the Securities Exchange Act of 1934, as
amended.
10.40 License Agreement between Elan Corporation, plc and Bioject JV
Subsidiary Inc. dated October 15, 1997. Incorporated by reference to
the same exhibit number of the Company's Form 8-K/A filed January 22,
1998. Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an application for Confidential
Treatment filed with the Commission under Rule 24b-2(b) under the
Securities Exchange Act of 1934, as amended.
10.40.1 Amendment to License Agreement between Elan Corporation, plc and
Bioject JV Subsidiary Inc. dated October 15, 1997 incorporated by
reference to the same exhibit number of the Company's Form 8-K filed
on November 3, 1997.
10.41 Securities Purchase Agreement between Elan International Services,
Ltd. and Bioject Medical Technologies Inc. dated October 15, 1997.
10.41.1 Amendment to Securities Purchase Agreement between Elan International
Services, Ltd. and Bioject Medical Technologies Inc. dated October 15,
1997 incorporated by reference to the same exhibit number of the
Company's Form 8-K filed on November 3, 1997.
10.42 Bioject Medical Technologies Inc. Registration Rights Agreement
between Elan International Services, Ltd. and Bioject Medical
Technologies Inc. dated October 15, 1997. Incorporated by reference to
the same exhibit number of the Company's Form 8-K filed October 31,
1997.
10.43 Series K Warrant to Purchase Shares of Common Stock dated October 15,
1997. Incorporated by reference to the same exhibit number of the
Company's Form 8-K filed October 31, 1997.
10.44 Promissory Note dated October 15, 1997 in favor of Elan International
Services, Ltd. Incorporated by reference to the same exhibit number of
the Company's Form 8-K filed on November 3, 1997.
10.45 Newco Subscription and Stockholders Agreement between Elan
International Services, Ltd., Bioject Medical Technologies Inc. and
Bioject JV Subsidiary Inc. dated October 15, 1997. Incorporated by
Reference to the same exhibit number of the Company's Form 8-K/A filed
January 22, 1998.
10.45.1 Amendment to Newco Subscription and Stockholders Agreement between
Elan International Services, Ltd., Bioject Medical Technologies Inc.
and Bioject JV Subsidiary Inc. dated October 15, 1997 incorporated by
reference to the same exhibit number of the Company's Form 8-K filed
on November 3, 1997.
10.46 Bioject JV Subsidiary Inc. Registration Rights Agreement between Elan
International Services, Ltd. and Bioject JV Subsidiary Inc. dated
October 15, 1997. Incorporated by reference to the same exhibit number
of the Company's Form 8-K filed November 3, 1997.
<PAGE>
10.47 Form of Series "H" Common Stock Purchase Warrant.
10.48 Form of Series "I" Common Stock Purchase Warrant.
10.49 Form of Series "J" Common Stock Purchase Warrant.
10.50 Form of Series "L" Common Stock Purchase Warrant.
10.51 Form of Series "M" Common Stock Purchase Warrant.
10.52 Form of Series "N" Common Stock Purchase Warrant.
10.53 Asset Purchase Agreement among Bioject Medical Technologies, Inc.
Vitajet Corporation and Serio Landau and Mara C. Landau dated
March 23, 1998.
10.54* Executive Employment Agreement dated April 17, 1998 between Bioject
Medical Technologies Inc., Bioject Inc., and Michael A. Temple.
10.55 Form of Termination Agreement between Bioject Technolgies, Inc. and
Peggy Miller.
10.56 Form of Massachussetts Biotechnology Research Park, Three Biotech
Park, Space Lease dated April 20, 1998.
10.57 Amendment to Massachusetts Biotechnology Research Park Space Lease.
10.58 Restated 1992 Stock Incentive Plan
21 List of Subsidiaries
23 Consent of Independent Public Accountants
27 Financial Data Schedule
(b) Forms 8K filed since last report:
Form 8-K/A (Amendment No. 1) filed on January 22, 1998 amending Form
8-K originally filed on January 14, 1997 regarding a private placement
in December 1996.
Form 8-K filed on January 22, 1998 regarding amendments to Exhibit
10.40, Exhibit 10.41 and Exhibit 10.45 and filing such amendments as
Exhibit 10.40.1, Exhibit 10.41.1 and Exhibit 10.45.1.
8-K/A (Amendment No. 2) filed on January 22, 1998 which refiled
Exhibit 10.40 and Exhibit 10.45. Confidential Treatment was granted
with regard to portions of Exhibit 10.40.
Form 8-K filed on March 6, 1998 regarding results of Special Meeting
Of Shareholders held on February 20, 1998.
Form 8-K filed on March 27, 1998 for the purpose of filing as an
exhibit the press release announcing the resignation of the Chief
Financial Officer.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Bioject Medical Technologies Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized:
BIOJECT MEDICAL TECHNOLOGIES INC.
(Registrant)
By: /S/ JAMES C. O'SHEA
James C. O'Shea
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the request of the Securities Exchange Act of 1934, this report has
been signed below on behalf of the Registrant and in the capacities indicated on
the dates shown.
SIGNATURE TITLE
/S/ JAMES C. O'SHEA Chairman of the Board, President
James C. O'Shea and Chief Executive
Officer
/S/ MICHAEL A. TEMPLE Vice President, Chief Financial
Michael A. Temple Officer and Secretary/Treasurer
/s/ DAVID H. DE WEESE Director
David H. de Weese
/S/ GRACE K. FEY Director
Grace K. Fey
/S/ WILLIAM A. GOUVEIA Director
William A. Gouveia
/S/ ERIC T. HERFINDAL Director
Eric T. Herfindal
/S/ RICHARD PLESTINA Director
Richard Plestina
/S/ JOHN RUEDY, M.D. Director
John Ruedy, M.D.
Director
Michael Sember
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- ------- -----------------------------------------------------------------
3.1 Articles of Incorporation of Bioject Medical Technologies Inc.
incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended January 31, 1993.
3.1.1 Articles of Amendment to the Articles of Incorporation of the
Incorporation of the Company incorporation by reference to the
Same exhibit number of the Company's Form 8-K filed March 6, 1998.
3.2 Amended and Restated By-laws of Bioject Medical Technologies Inc.
Incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the quarter ended September 30, 1994.
4.3* Bioject Medical Technologies Inc. 1992 Stock Incentive Plan, as
amended through April 3, 1997. Incorporated by reference to the same
exhibit number of the Company's From 10-Q for the year ended December
31, 1997.
10.4 Lease Agreement dated March 21, 1989 between Spieker-Hosford-
Eddy-Souther #174, Limited Partnership and Bioject Inc. for the
Portland, Oregon facility incorporated by reference to the same
exhibit number of Company's Form 10-K for the year ended January 31,
1989.
10.4.1 Amended Lease Agreement dated June 18, 1992 between Bridgeport Woods
Investors (successors in interest to Spieker-Hosford-Eddy- Souther
#174 Limited Partnership) and Bioject Inc. for the Portland, Oregon
facility incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended January 31, 1993.
10.4.2 Lease Agreement dated September 10, 1996 between Bridgeport Woods
Business park and Bioject Inc. for the Portland, Oregon facility.
Incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the period ended September 30, 1996.
10.5 Lease Extension Agreement dated October 4, 1994, between Earl J. Itel
and Loris Itel Trust and Bioject, Inc., for the 6000 sq. ft. Tualatin,
Oregon warehouse. Incorporated by reference to the same exhibit number
of the Company's Form 10-Q/A for the period ended December 31, 1996.
10.7* Executive Employment Contract with Peggy J. Miller, dated January 18,
1993 incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended January 31, 1993.
10.8* Executive Employment Contract with J. Michael Redmond, dated February
8, 1996. Incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended March 31, 1996.
10.14 Common Stock Purchase Agreement between Eli Lilly and Company and
Bioject Medical Systems Ltd. dated April 29, 1992 incorporated by
reference to the same exhibit number of Company's Form 8, dated May
28, 1992, amending Company's Form 10-K for the year ended January 31,
1992.
10.17 Development and Licensing Agreement between Eli Lilly & Company and
Bioject Inc., dated April 29, 1992 incorporated by reference to the
same exhibit number of Company's Form 8, dated October 9, 1992,
amending Company's Form 10-Q for the quarter ended April 30, 1992.
Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an Application for Confidential
Treatment filed with the Commission under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
<PAGE>
10.17.1 Amendment to Development and Licensing Agreement between Eli Lilly and
Company and Bioject Inc., effective May 5, 1993 incorporated by
reference to the same exhibit number of Company's Form S-1, No.
33-68846, dated November 1, 1993. Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 406 under the Securities Act of 1933, as amended.
Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an Application for Confidential
Treatment filed with the Commission under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
10.23 Development and Licensing Agreement between Schering, AG, Bioject Inc.
and Bioject Medical Technologies Inc. dated March 28, 1994
incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended March 31, 1994. Confidential treatment
has been granted with respect to certain portions of this exhibit
pursuant to an Application for Confidential Treatment filed with the
Commission under Rule 24b-2 under the Securities exchange Act of 1934,
as amended.
10.26 Heads of Agreement between Hoffmann-La Roche Inc. and Bioject Inc.
dated January 10, 1995. Confidential treatment has been granted with
respect to certain portions of this exhibit pursuant to an Application
for Confidential Treatment filed with the Commission under Rule 24b-2
under the Securities Exchange Act of 1934 as amended.
10.27* Employment Agreement with James C. O'Shea dated October 3, 1995
incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the quarter ended September 30, 1995.
10.28 Form of Amended and Restated Registration Rights Agreement between
Bioject Medical Technologies Inc. and the participants in the 1995
private placement incorporated by reference to exhibit 4.2 of the
Company's Registration Statement on Form S-3 (No. 33-80679).
10.29 Form of Amended and Restated Series "A" Common Stock Purchase Warrant
incorporated by reference to exhibit 4.3 of the Company's Registration
Statement on Form S-3 (No. 33-80679).
10.30 Form of Series "B" Common Stock Purchase Warrant incorporated by
reference to exhibit 4.4. of the Company's Registration Statement on
Form S-3 (No. 33-80679).
10.31 Form of Amended and Restated Series "C" Common Stock Purchase Warrant
incorporated by reference to exhibit 4.5 of the Company's Registration
Statement on Form S-3 (No. 33-80679). Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
10.32 Supply Agreement dated June 26, 1996 between Bioject Inc. and Schering
Aktiengesellschaft. Incorporated by reference to the same exhibit
number of the Company's Form 8-K/A dated June 26, 1996. Confidential
treatment has been granted with respect to certain portions of this
exhibit pursuant to an Application for Confidential Treatment filed
with the Commission under Rule 24b-2 under the Securities exchange Act
of 1934, as amended.
10.32.1 Security Agreement dated June 26, 1996 between Bioject Inc. and
Schering Aktiengesellschaft. Incorporated by reference to the same
exhibit number of the Company's Form 10-Q for the period ended June
30, 1996.
10.33 Form of Series "D" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.6 of the Company's form 8-K dated December 11,
1996.
10.34 Form of Series "E" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.7 of the Company's Form 8-K dated December 11,
1996.
<PAGE>
10.35 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1996 private placement.
Incorporated by reference to exhibit 4.8 of the Company's Form 8-K
dated December 11, 1996.
10.36 Form of Series "F" Common Stock Purchase Warrant.
10.37 Form of Series "G" Common Stock Purchase Warrant.
10.38 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1997 private placement.
Incorporated by reference to the same exhibit number of the Company's
Form 10-K for the year ended March 31, 1997.
10.39 Agreement between Elan Corporation, plc, Elan International Services,
Ltd. and Bioject Medical Technologies, Inc. dated September 30, 1997.
Incorporated by reference to the same exhibit number of the Company's
Form 8-K filed October 3, 1997. Confidential treatment has been
requested with respect to certain portions of this exhibit pursuant to
an Application for Confidential Treatment filed with the Commission
under Rule 24b-2(b) under the Securities Exchange Act of 1934, as
amended.
10.40 License Agreement between Elan Corporation, plc and Bioject JV
Subsidiary Inc. dated October 15, 1997. Incorporated by reference to
the same exhibit number of the Company's Form 8-K/A filed January 22,
1998. Confidential treatment has been granted with respect to certain
portions of this exhibit pursuant to an application for Confidential
Treatment filed with the Commission under Rule 24b-2(b) under the
Securities Exchange Act of 1934, as amended.
10.40.1 Amendment to License Agreement between Elan Corporation, plc and
Bioject JV Subsidiary Inc. dated October 15, 1997 incorporated by
reference to the same exhibit number of the Company's Form 8-K filed
on November 3, 1997.
10.41 Securities Purchase Agreement between Elan International Services,
Ltd. and Bioject Medical Technologies Inc. dated October 15, 1997.
10.41.1 Amendment to Securities Purchase Agreement between Elan International
Services, Ltd. and Bioject Medical Technologies Inc. dated October 15,
1997 incorporated by reference to the same exhibit number of the
Company's Form 8-K filed on November 3, 1997.
10.42 Bioject Medical Technologies Inc. Registration Rights Agreement
between Elan International Services, Ltd. and Bioject Medical
Technologies Inc. dated October 15, 1997. Incorporated by reference to
the same exhibit number of the Company's Form 8-K filed October 31,
1997.
10.43 Series K Warrant to Purchase Shares of Common Stock dated October 15,
1997. Incorporated by reference to the same exhibit number of the
Company's Form 8-K filed October 31, 1997.
10.44 Promissory Note dated October 15, 1997 in favor of Elan International
Services, Ltd. Incorporated by reference to the same exhibit number of
the Company's Form 8-K filed on November 3, 1997.
10.45 Newco Subscription and Stockholders Agreement between Elan
International Services, Ltd., Bioject Medical Technologies Inc. and
Bioject JV Subsidiary Inc. dated October 15, 1997. Incorporated by
Reference to the same exhibit number of the Company's Form 8-K/A filed
January 22, 1998.
<PAGE>
10.45.1 Amendment to Newco Subscription and Stockholders Agreement between
Elan International Services, Ltd., Bioject Medical Technologies Inc.
and Bioject JV Subsidiary Inc. dated October 15, 1997 incorporated by
reference to the same exhibit number of the Company's Form 8-K filed
on November 3, 1997.
10.46 Bioject JV Subsidiary Inc. Registration Rights Agreement between Elan
International Services, Ltd. and Bioject JV Subsidiary Inc. dated
October 15, 1997. Incorporated by reference to the same exhibit number
of the Company's Form 8-K filed November 3, 1997.
10.47 Form of Series "H" Common Stock Purchase Warrant.
10.48 Form of Series "I" Common Stock Purchase Warrant.
10.49 Form of Series "J" Common Stock Purchase Warrant.
10.50 Form of Series "L" Common Stock Purchase Warrant.
10.51 Form of Series "M" Common Stock Purchase Warrant.
10.52 Form of Series "N" Common Stock Purchase Warrant.
10.53 Asset Purchase Agreement among Bioject Medical Technologies, Inc.
Vitajet Corporation and Serio Landau and Mara C. Landau dated
March 23, 1998.
10.54* Executive Employment Agreement dated April 17, 1998 between Bioject
Medical Technologies Inc., Bioject Inc., and Michael A. Temple.
10.55* Form of Termination Agreement between Bioject Technolgies, Inc. and
Peggy Miller.
10.56 Form of Massachussetts Biotechnology Research Park, Three Biotech
Park, Space Lease dated April 20, 1998.
10.57 Amendment to Massachusetts Biotechnology Research Park Space Lease.
10.58 Restated 1992 Stock Incentive Plan
21 List of Subsidiaries
23 Consent of Independent Public Accountants
27 Financial Data Schedule
EXHIBIT 10.47
FORM OF
WARRANT H001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "H" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, Robert
Gonnelli, a(n) individual or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to 200,000 fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $1.00.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on September
21, 2002 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933 or any state securities law. The
Corporation shall have no obligation to register such Warrant Stock for resale.
The foregoing notwithstanding, any obligation undertaken by the Corporation to
register the Warrant Stock shall be limited to the Corporation's use of its best
efforts to do so, and in no event shall the Corporation be required to file or
maintain the effectiveness of a registration statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1997
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Peggy J. Miller
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(3) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.48
FORM OF
WARRANT I001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "I" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, Robert
Gonnelli, a(n) individual or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to 150,000 fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $1.10.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on September
21, 2002 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933 or any state securities law. The
Corporation shall have no obligation to register such Warrant Stock for resale.
The foregoing notwithstanding, any obligation undertaken by the Corporation to
register the Warrant Stock shall be limited to the Corporation's use of its best
efforts to do so, and in no event shall the Corporation be required to file or
maintain the effectiveness of a registration statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1997
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Peggy J. Miller
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(4) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.49
FORM OF
WARRANT J001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "J" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, Raphael,
L.L.C., a(n) partnership or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to 100,000 fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $0.85.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on September
29, 2002 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933 or any state securities law. The
Corporation shall have no obligation to register such Warrant Stock for resale.
The foregoing notwithstanding, any obligation undertaken by the Corporation to
register the Warrant Stock shall be limited to the Corporation's use of its best
efforts to do so, and in no event shall the Corporation be required to file or
maintain the effectiveness of a registration statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1998
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Peggy J. Miller
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(3) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.50
FORM OF
WARRANT L001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "L" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, Robert
Gonnelli, a(n) individual or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to 50,000 fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $1.10.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on March 30,
2003 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933 or any state securities law. The
Corporation shall have no obligation to register such Warrant Stock for resale.
The foregoing notwithstanding, any obligation undertaken by the Corporation to
register the Warrant Stock shall be limited to the Corporation's use of its best
efforts to do so, and in no event shall the Corporation be required to file or
maintain the effectiveness of a registration statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1998
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Michael A. Temple
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(4) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.51
FORM OF
WARRANT M001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "M" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, Robert
Gonnelli, a(n) individual or registered assigns, is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to 80,243 fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $1.10.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on March 30,
2003 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933 or any state securities law. The
Corporation shall have no obligation to register such Warrant Stock for resale.
The foregoing notwithstanding, any obligation undertaken by the Corporation to
register the Warrant Stock shall be limited to the Corporation's use of its best
efforts to do so, and in no event shall the Corporation be required to file or
maintain the effectiveness of a registration statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
<PAGE>
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1998
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Michael A. Temple
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(3) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.52
FORM OF
WARRANT N001
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF WARRANTHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM
ANY PROPOSED TRANSFER OR ASSIGNMENT.
SERIES "N" COMMON STOCK PURCHASE WARRANT
Bioject Medical Technologies Inc.
THIS CERTIFIES that for good and valuable consideration received, __________i,
a(n) ________ or registered assigns, is entitled, upon the terms and subject to
the conditions hereinafter set forth, to acquire from Bioject Medical
Technologies Inc., an Oregon corporation (the "Corporation") up to ______ fully
paid and nonassessable shares of common stock, without par value, of the
Corporation ("Warrant Stock") at a purchase price per share (the "Exercise
Price") of $1.348.
1. Term of Warrant
Subject to the terms and conditions set forth herein, this Warrant shall be
exercisable, in whole or from time to time part, at any time on or after the
date hereof and at or prior to 11:59 p.m., Pacific Standard Time, on March 31,
2003 (the "Expiration Time").
2. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to time
at or prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise form attached hereto duly executed to the office of the
Corporation at 7620 S.W. Bridgeport Road, Portland, Oregon 97224 (or such other
office or agency of the Corporation as it may designate by notice in writing to
the registered holder hereof at the address of such holder appearing on the
books of the Corporation), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of the
Corporation or by cancellation of indebtedness of the Corporation to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase price
of the shares thereby purchased); whereupon the holder of this Warrant shall be
entitled to receive from the Corporation a stock certificate in proper form
representing the number of shares of Warrant Stock so purchased.
3. Issuance of Shares; No Fractional Shares of Scrip
Certificates for shares purchased hereunder shall be delivered to the holder
hereof by the Corporation's transfer agent at the Corporation's expense within a
reasonable time after the date on which this Warrant shall have been exercised
in accordance with the terms hereof. Each certificate so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or, subject to applicable laws, other name
as shall be requested by such holder. If, upon exercise of this Warrant, fewer
than all of the shares of Warrant Stock evidenced by this Warrant are purchased
prior to the Expiration Time, one or more new warrants substantially in the form
of, and on the terms in, this Warrant will be issued for the remaining number of
shares of Warrant Stock not purchased upon exercise of this Warrant. The
Corporation hereby represents and warrants that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant will, upon such exercise,
be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
<PAGE>
The Corporation agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered for
exercise in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon the exercise of
this Warrant, an amount equal to such fraction multiplied by the then current
price at which each share may be purchased hereunder shall be paid in cash to
the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise of this
Warrant shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Corporation,
and such certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Corporation prior to the exercise hereof.
6. Registration Rights
The Warrant Stock purchasable upon exercise of this Warrant has not been
registered under the Securities Act of 1933, as amended, or any state securities
law. The Corporation is not obligated to and does not plan to register such
Warrant Stock for resale. The foregoing notwithstanding, any obligation
undertaken by the Corporation to register the Warrant Stock shall be limited to
the Corporation's use of its best efforts to do so, and in no event shall the
Corporation be required to file or maintain the effectiveness of a registration
statement on Form S-1.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered holder
at the above-mentioned office or agency of the Corporation, for a new Warrant of
like tenor and dated as of such exchange. The Corporation shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for exchange,
transfer or exercise, in accordance with its terms, at such office or agency of
the Corporation, and the Corporation shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction of indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Corporation of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Corporation will make and deliver a new Warrant of like tenor and dated as of
such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday or a Sunday or shall be
a legal holiday, then such action may be taken or such right may be exercised on
the next succeeding day not a Saturday, Sunday or legal holiday.
<PAGE>
10. Merger, Sale of Assets, Etc.
If at any time the Corporation proposes to merge or consolidate with or into any
other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, then, as a condition of
such reorganization, consolidation, merger, sale or conveyance, the Corporation
or its successor, as the case may be, shall enter into a supplemental agreement
to make lawful and adequate provision whereby the holder shall have the right to
receive, upon exercise of the Warrant, the kind and amount of equity securities
which would have been received upon such reorganization, consolidation, merger,
sale or conveyance by a holder of a number of shares of common stock equal to
the number of shares issuable upon exercise of the Warrant immediately prior to
such reorganization, consolidation, merger, sale or conveyance. If the property
to be received upon such reorganization, consolidation, merger, sale or
conveyance is not equity securities, the Corporation shall give the holder of
this Warrant fifteen (15) business days prior written notice of the proposed
effective date of such transaction, and if this Warrant has not been exercised
by or on the effective date of such transaction, it shall terminate.
11. Subdivision, Combination, Reclassification, Conversion, Etc.
If the Corporation at any time shall, by subdivision, combination,
reclassification of securities or otherwise, change the Warrant Stock into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle the holder to acquire such number and kind of
securities as would have been issuable in respect of the Warrant Stock (or other
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change) as the result of such change if this Warrant had been exercised in full
for cash immediately prior to such change. The Exercise Price hereunder shall be
adjusted if and to the extent necessary to reflect such change. If the Warrant
Stock or other securities issuable upon exercise hereof are subdivided or
combined into a greater or smaller number of shares of such security, the number
of shares issuable hereunder shall be proportionately increased or decreased, as
the case may be, and the Exercise Price shall be proportionately reduced or
increased, as the case may be, in both cases according to the ratio which the
total number of shares of such security to be outstanding immediately after such
even bears to the total number of shares of such security outstanding
immediately prior to such event. The Corporation shall give the holder prompt
written notice of any change in the type of securities issuable hereunder, any
adjustment of the Exercise Price for the securities issuable hereunder, and any
increase or decrease in the number of shares issuable hereunder.
12. Transferability; Compliance with Securities Laws
(a) This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Corporation, if requested by the Corporation). Subject such restrictions,
prior to the Expiration Time, this Warrant and all rights hereunder are
transferable by the holder hereof, in whole or in part, at the office or
agency of the Corporation referred to in Section 1 hereof. Any such
transfer shall be made in person or by the holder's duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
attached hereto properly endorsed.
(b) The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the Warrant Stock issuable upon exercise hereof are being
acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and that the holder will not offer, sell
or otherwise dispose of this Warrant or any shares of Warrant Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Upon exercise of this Warrant, the holder shall, if
requested by the Corporation, confirm in writing, in a form satisfactory to
the Corporation, that the shares of Warrant Stock so purchased are being
acquired solely for holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
<PAGE>
(c) Except as contemplated in the Registration Rights Agreement, the Warrant
Stock has not been and will not be registered under the Securities Act of
1933, as amended, and this Warrant may not be exercised except by (i) the
original purchaser of this Warrant from the Corporation or (ii) an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended. Each certificate representing the Warrant Stock or other
securities issued in respect of the Warrant Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event,
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION
OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT.
13. Representations and Warranties
The Corporation hereby represents and warrants to the holder hereof that:
(a) during the period this Warrant is outstanding, the Corporation will reserve
from its authorized and unissued common stock a sufficient number of shares
to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to the
Corporation's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise of this Warrant;
(c) the Corporation has all requisite legal and corporate power to execute and
deliver this Warrant, to sell and issue the Warrant Stock hereunder, to
issue the common stock issuable upon exercise of the Warrant Stock and to
carry out and perform its obligations under the terms of this Warrant; and
(d) all corporate action on the part of the Corporation, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Corporation, the authorization, sale,
issuance and delivery of the Warrant Stock, the grant of registration
rights as provided herein and the performance of the Corporation's
obligations hereunder has been taken;
(e) the Warrant Stock, when issued in compliance with the provisions of this
Warrant and the Corporation's Articles of Incorporation (as they may be
amended from time to time (the "Articles")), will be validly issued, fully
paid and nonassessable, and free of all taxes, liens or encumbrances with
respect to the issue thereof, and will be issued in compliance with all
applicable federal and state securities laws; and
(f) the issuance of the Warrant Stock will not be subject to any preemptive
rights, rights of first refusal or similar rights.
14. Corporation
The Corporation will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the laws of
the State of Oregon.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers.
Dated: _________________________, 1998
BIOJECT MEDICAL TECHNOLOGIES INC.
By:
Name: Michael A. Temple
Title: Vice President, Chief Financial Officer & Secretary
<PAGE>
NOTICE OF EXERCISE
To: Bioject Medical Technologies Inc.
(1) The undersigned hereby elects to purchase _________ shares of common stock
of Bioject Medical Technologies Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of common stock to be issued upon exercise
hereof are being acquired solely for the account of the undersigned and not
as a nominee for any other party, and for investment, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
common stock except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
common stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(4) The undersigned represents that (a) he, she or it is the original purchaser
from the Corporation of the attached Warrant or an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act of 1933, as
amended and (b) the aforesaid shares of common stock are being acquired for
the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of common stock of Bioject Medical Technologies Inc. set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Attorney
_____________________ to make such transfer on the books of Bioject Medical
Technologies Inc., maintained for the purpose, with full power of substitution
in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee shall, if requested by the Corporation, confirm in
writing, in a form satisfactory to the Corporation, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:
Holder's Signature:
Holder's Address:
---------------------------------------------------------
---------------------------------------------------------
Guaranteed Signature:
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those action in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 10.53
ASSET PURCHASE AGREEMENT
This Agreement is dated March 23, 1998, by and among BIOJECT MEDICAL
TECHNOLOGIES INC., an Oregon corporation ("Purchaser"), VITAJET CORPORATION, a
California corporation ("Seller"), and SERGIO LANDAU and MARA L. LANDAU
(collectively, "Landau").
R E C I T A L S:
Seller manufactures and sells a needle-free injection system under the trademark
"Vitajet" (the "Business"). Landau owns all of the issued and outstanding stock
of Seller. Seller wishes to sell substantially all of the assets of the Business
to Purchaser, and Purchaser wishes to purchase such assets, in accordance with
the terms of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Sale and Purchase.
Subject to the terms and conditions of this Agreement, Seller agrees to sell and
transfer to Purchaser on the Closing Date (as defined below) and Purchaser
agrees to buy from Seller, substantially all of the assets of the Business,
which shall include the inventory specified in Section 2, molds, trademarks,
tradenames, patents, copyrights, trade secrets, FDA approval to market the
Vitajet injector, customer lists, pending contracts to which Seller is a party,
and records of the Business, together with the name "Vitajet" and all goodwill
associated with such name (the "Assets"). A list of the Assets as of the date of
this Agreement is attached hereto as Exhibit A. Items listed in Exhibit D and
Exhibit E attached hereto are also Assets being transferred.
2. Assets and Business Not to be Transferred.
Seller shall retain, and Purchaser shall not acquire, Seller's cash, cash
equivalents, bank accounts, corporate franchise, prepaid expenses, receivables,
furniture, computers, office materials and vehicles. In addition, Seller shall
retain all inventory of finished Vitajet injector units and syringes except for
12 injector units and 50 boxes of syringes, which shall be included in the
Assets.
3. Liabilities.
Purchaser does not assume any actual or contingent liability, obligation or
commitment of Seller, other than liabilities and obligations related to the
contracts that Purchaser is assuming that arise after Closing. Seller shall
satisfy all liabilities being retained by Seller out of the proceeds of the sale
or from other assets of Seller.
4. Consideration.
The consideration (the "Purchase Price") for the transfer of the Assets shall be
as follows.
(a) Purchaser shall issue to Seller at Closing (as defined in Section 9)
100,000 shares of Purchaser's common stock.
(b) Purchaser shall issue to Seller payments of 60,000 shares of Purchaser's
common stock on each of March 31, 1999, 2000 and 2001, provided that Seller
or Seller's agent, Landau, is making reasonable progress toward the
achievement of the following goals (which are not necessarily listed in
order of importance or priority):
(i) Technology transfer of current Vitajet 3 to Purchaser's Portland facility
to be completed by September 30, 1998.
(ii) Designing, prototyping and validation testing of a modified version of the
Vitajet 3, and an adaptation of Purchaser's standard disposable syringe, so
that both products can work together, for subcutaneous injections of 0.5
cc. or less.
<PAGE>
(iii)Designing, prototyping and validation testing of a low cost and small
(marker size) needle-free injector with disposable syringe for subcutaneous
injections of 0.5 cc. or less.
(iv) Designing, prototyping and validation testing of a syringe/spacer and
necessary adaptation of the standard Biojector or alternate injector, for
intradermal injections of 0.5 cc. or less.
The goals specified above, which currently are expected to be completed by March
31, 2001, except as specified above, are subject to reasonable modifications by
Purchaser.
(c) Purchaser shall issue to Seller up to an additional 90,000 shares of
Purchaser's common stock if certain conditions are met by March 31, 2001.
Seller will be entitled to receive such shares in the amounts specified
below if Seller's existing products or new products designed by Seller or
Seller's agent, Landau (such existing and new products to be referred to
herein as the "Products"), result in aggregate revenues to Purchaser in the
amounts specified below:
Aggregate Revenues Number of Shares
Up to $1,000,000 30,000
$1,000,001 to $2,000,000 Additional 30,000
More than $2,000,000 Additional 30,000
Aggregate revenues to be received by Purchaser from the Products will be
calculated as follows:
(i) If one or more partnership agreements relating to the Products are signed
by Purchaser and a third party by March 31, 2001, the revenues to be earned
by Purchaser under each such partnership agreement will equal the amounts
committed to be paid to Purchaser under such partnership agreement with
respect to the Products during the first ten years after the partnership
agreement is signed; and
(ii) If the Products are sold outside of a partnership arrangement, revenues
from such sales will be included in the calculation as Products are shipped
to third-party purchasers of the Products; provided, however, that Products
must be shipped by March 31, 2001 to be included in the calculation of
aggregate revenues.
All revenues committed to be received under each partnership agreement during
the first ten years after the agreement is signed and all sales of the Products
outside of partnership arrangements will be aggregated in meeting the milestones
specified above. Once Seller has met a milestone, Purchaser will issue a stock
certificate representing the earned shares within 30 days thereafter.
(d) The stock certificates representing the shares issued hereunder will bear
such legends as the Company shall deem appropriate to reflect the
restrictions on transfer imposed by federal and applicable state securities
laws. Purchaser agrees to use reasonable efforts to file Form S-3 (or
successor form) to register the shares issued hereunder within 90 days
after each such issuance of shares.
(e) With respect to each Vitajet injector unit purchased in excess of the 12
units specified in Section 2, Purchaser shall pay to Seller $110. For each
box of three-month supply of disposable items for inventory that Purchaser
purchases in excess of the 50 boxes of syringes specified in Section 2,
Purchaser shall pay Seller $19.
<PAGE>
5. Purchase Price Allocation.
Each of the parties shall report this transaction for all state and federal tax
purposes in accordance with the allocation set forth on Exhibit B attached
hereto and shall not file any tax return or report (including Form 8594) or
otherwise take a position with federal or state tax authorities which is
inconsistent with such allocation. The allocation is intended to comply with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the related regulations.
6. Taxes.
Seller shall pay when due the entire amount of any sales, use, transfer, excise,
documentary and other like taxes or recording, filing or notary fees imposed by
any state or governmental subdivision within such state in connection with the
sale and transfer of the Assets. Personal property taxes shall be prorated as of
Closing.
7. Risk of Loss.
All right, title and interest and risk of loss with respect to the Assets shall
pass to Purchaser at the Closing.
8. Non-Competition.
In consideration of Purchaser's obligations under this Agreement, Landau and
Seller each agree that neither of them shall, for a period of three years from
the Closing Date, own, operate, represent, be employed by, or have any interest
in any business that competes with Purchaser with respect to the design,
manufacture or sale of needle-free injection systems anywhere in the world. In
addition, Seller and Landau shall not suggest or encourage any customer or
potential customer not to do business with Purchaser or to purchase products
similar to, or sold in competition with, those sold by Purchaser from anyone
other than Purchaser or do any act which may be detrimental to Purchaser.
9. Closing.
The transactions contemplated by this Agreement shall be consummated (the
"Closing") by facsimile at 2:00 p.m. on March 26, 1998, or by such other method
or on such other date and time, as the parties shall mutually agree (the
"Closing Date"). At the Closing, Purchaser and Seller shall take the following
actions:
(a) Seller shall execute and deliver to Purchaser a bill of sale and other
documents in a form reasonably acceptable to Purchaser transferring title
to the Assets to Purchaser. Such documents shall include assignment of the
name "Vitajet," and documents in form ready for filing changing Seller's
corporate name to exclude such name.
(b) Purchaser shall take possession, or arrange for taking possession, of the
Assets.
(c) Purchaser and Landau shall enter into an Employment Agreement in the form
of Exhibit C attached hereto.
(d) Purchaser shall deliver to Seller a stock certificate representing 100,000
shares of Purchaser's common stock.
10. Representations and Warranties of Seller and Landau.
Seller and Landau jointly and severally represent and warrant to Purchaser that:
(a) Organization. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the state of California. Seller has all
requisite corporate power and authority to, and is entitled to, carry on
its business as now conducted and to own or lease its properties as and in
the places where such business is now conducted and such properties are now
owned, leased or operated.
<PAGE>
(b) Authorization. Seller has all requisite corporate power and authority to
enter into this Agreement and to consummate the contemplated transactions.
Seller's execution and delivery of this Agreement and consummation of the
transactions contemplated by this Agreement have been duly authorized by
all requisite corporate action. Seller and Landau have each duly executed
and delivered this Agreement, which constitutes the valid and binding
obligation of Seller and Landau, enforceable in accordance with its terms,
subject to all applicable bankruptcy, insolvency, reorganization and other
laws applicable to creditors' rights and remedies and to the exercise of
judicial discretion in accordance with general principles of equity. No
consent or approval or filing (with any governmental agency or otherwise)
is required for the execution of this Agreement. Landau owns all of the
issued and outstanding stock of Seller.
(c) Effect of Agreement. The execution and delivery of this Agreement by Seller
and Landau and consummation of the transactions contemplated by this
Agreement shall not result in a breach, default (with or without notice or
lapse of time, or both) or violation of, or the creation of any lien,
charge or encumbrance pursuant to any provision of the Articles of
Incorporation or Bylaws of Seller, any law or regulation of any
governmental authority, foreign or domestic, or any provision of any
agreement, instrument, understanding, order, judgment or decree to which
Seller or any of its properties or assets is bound or affected.
(d) Title to Assets. Seller has good and marketable title to all of the Assets,
all of the Assets are free and clear of restrictions on or conditions to
transfer, and at the Closing, Seller shall transfer to Purchaser good title
to all of the Assets, free and clear of any mortgages, liens, security
interests, pledges, encumbrances, claims, conditions and restrictions, of
any nature whatsoever, direct or indirect, whether accrued, absolute or
contingent, known or unknown. Purchaser shall receive from Seller all of
Seller's rights in the name "Vitajet" and Seller shall not attempt to
convey any rights in such name to any other party.
(e) Environmental Matters.
(i) Neither Seller nor Landau nor, to the best of their knowledge and belief,
any other person has used, sold, treated, released, stored or disposed of
any Hazardous Material (as defined below) used in or with or affecting the
Assets in violation of any Applicable Law (as defined below).
(ii) Seller has not exposed its employees or others to Hazardous Materials in
violation of Applicable Laws.
(iii)No action, investigation, proceeding, permit revocation, permit amendment,
writ, injunction or claim is pending, nor has Seller received notice of any
of the foregoing, concerning or relating to (i) the use, storage, sale or
disposal of any Hazardous Material related to or affecting the Assets, (ii)
the release of or the exposure of any person to Hazardous Materials as a
consequence of the activities related to or affecting the Business, or
(iii) the presence of any Hazardous Material in or on any property that has
been owned, leased, operated or occupied by Seller which is related to or
affecting the Assets.
(iv) For purposes of this Agreement, the term "Applicable Law" shall mean any
statute, regulation, rule, order or law that relates to the use, sale,
treatment, disposal or storage of any material ("Hazardous Material")
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act,
the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous
Materials Transportation Act, the Clean Water Act and all applicable state
and local laws and regulations.
(f) Employees. Seller has no liability to any of its employees or former
employees for severance or termination pay, or for any unfunded pension
liability, which will either attach to the Assets being sold to Purchaser
hereunder or in any way become the liability of Purchaser following the
closing of the purchase and sale transaction contemplated by this
Agreement. Any such liability will be funded by Seller from the payment
being made to Seller by Purchaser hereunder.
<PAGE>
(g) Plant Closure Notice. Seller has provided all notices, if any, that may be
required by the Worker Adjustment and Retraining Notification Act on
account of employment terminations arising from the transactions
contemplated by this Agreement. Such notices fully comply with requirements
of such Act and the related regulations. Seller has paid any and all
compensation and benefits that may be due to Seller's employees and former
employees under such Act.
(h) Compliance with Laws. Seller has complied with, is not in material
violation of, and has not received any notices of violation with respect
to, any federal, state or local statute, law or regulation (including all
applicable laws of Brazil) with respect to the conduct of its business, or
the ownership or operation of its business or the Assets.
(i) Litigation. There are no pending or threatened claims, litigation or
proceedings of any nature against Seller or Landau or to which Seller or
Landau is a party which could result in any lien or encumbrance on the
Assets or in any way impair the ability of Seller or Landau to fully
perform their obligations under this Agreement.
(j) Tax Matters. Seller has filed with the appropriate United States, state and
local governmental agencies all tax returns and reports required to be
filed by Seller and has paid, or has made provision for the payment of, and
has made adequate reserves therefor on its books and records, all taxes
which have become due. All such returns and reports are accurate and
complete to the best of Seller's knowledge, and Seller has paid in full or
has made adequate provision for the payment of, and has made adequate
reserves therefore on its books and records, all taxes, interest,
penalties, assessments or deficiencies shown to be due on such tax returns
and reports. Seller has made withholding of tax (and transmittals of the
same) required to be made under all applicable tax regulations.
(k) Condition of Assets. The Assets are in good repair and operating condition
and are fit for their intended purpose, except for reasonable wear and
tear.
(l) Financial Statements. Seller's financial statements (the "Financial
Statements") have been delivered to Purchaser. The Financial Statements are
complete and correct in all material respects, were prepared from the books
and records of Seller and fairly present the financial position of Seller
at the date thereof. All assets reflected on the Financial Statements
remain the assets of Seller located on its business premises as of the date
hereof, except for sales of inventory and other assets consumed in the
ordinary course of business.
(m) Intellectual Property. Attached hereto as Exhibit D is a true and complete
list of all patents and patent applications owned or pursued by Seller, and
of all trademarks, tradenames and copyrights of Seller for which Seller has
applied for or received a registration from any federal, state or local
governmental authority (collectively the "Intellectual Property"). Seller
is the sole owner of the Intellectual Property free of all liens,
encumbrances and security interests, and none of the Intellectual Property
infringes upon the rights of any third party.
(n) Manufacturing Cost. The manufacturing cost of the Vitajet device does not
exceed $110.
(o) FDA Approval. Seller has received FDA approval to market the Vitajet
injector. Purchaser agrees to pay the expenses of transferring such FDA
approval to Purchaser.
(p) Status of Contracts. Attached hereto as Exhibit E is a list of all
contracts to which Seller is a party and that Seller is assigning to
Purchaser hereunder. Each of such contracts is a binding agreement of the
parties thereto, and each of the parties thereto is current in its
obligations to the other parties thereto. No consent of any party is
required to assign the contracts to Purchaser.
<PAGE>
11. Representations and Warranties of Purchaser.
Purchaser represents and warrants to Seller and Landau as follows:
(a) Organization. Purchaser is a corporation duly organized, validly existing
and having an active status under the laws of the state of Oregon.
Purchaser has all requisite corporate power and authority to carry on its
business as now conducted and to own or lease its properties as and in the
places where such business is now conducted.
(b) Authorization. Purchaser has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by
Purchaser and the consummation by Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid and binding obligation of Purchaser
enforceable in accordance with its terms, subject to all applicable
bankruptcy, insolvency, reorganization and other laws applicable to
creditors' rights and remedies and to the exercise of judicial discretion
in accordance with general principles of equity. No consent or approval or
filing (with any governmental agency or otherwise) is required for the
execution of this Agreement.
12. Operation of Business Prior to Closing Date.
During the period from the date of this Agreement up to the Closing Date, Seller
shall operate its business in the usual, regular and ordinary course and in
substantially the same manner as operated previously.
13. Employees.
At or before the Closing, Seller shall terminate the employment of all of its
employees. Following Closing, Purchaser may, without obligation, accept and
consider applications from Seller's employees and may offer employment, at
Purchaser's sole discretion, to any of such persons under terms acceptable to
Purchaser.
14. Conditions Precedent to the Obligations of Seller and Landau.
The obligations of Seller and Landau to consummate and effect this Agreement and
the transactions contemplated by this Agreement shall be subject to the
satisfaction at the Closing of each of the following conditions, any of which
may be waived, in writing, by Seller or Landau:
(a) Representations, Warranties and Covenants. The representations and
warranties of Purchaser in this Agreement shall be true and correct on and
as of the Closing Date as though such representations and warranties were
made on and as of such date and Purchaser shall have performed and complied
with all covenants, obligations and conditions of this Agreement required
to be performed and complied with by it as of the Closing Date.
(b) No Litigation. No action, suit, proceeding or investigation shall be
pending or threatened before any court or government entity to restrain or
prohibit, or to obtain specific damages, in respect of this Agreement or
the consummation of the transactions contemplated by this Agreement and
which, in the reasonable judgment of Seller or Landau, has a reasonable
likelihood of success.
(c) Employment Agreement. At or prior to the Closing, Purchaser shall have
executed an Employment Agreement in the form of Exhibit C.
<PAGE>
15. Conditions Precedent to the Obligations of Purchaser.
The obligations of Purchaser to consummate and effect this Agreement and the
transactions contemplated by this Agreement shall be subject to the satisfaction
at the Closing of each of the following conditions, any of which may be waived,
in writing, by Purchaser:
(a) Representations, Warranties and Covenants. The representations and
warranties of Seller and Landau in this Agreement shall be true and correct
on and as of the Closing Date as though such representations and warranties
were made on and as of such date, and Seller and Landau shall have
performed and complied with all covenants, obligations and conditions of
this Agreement required to be performed and complied with by either of them
as of the Closing Date.
(b) Employment Agreement. At or prior to the Closing, Landau shall have
executed an Employment Agreement in the form of Exhibit C.
(c) No Litigation. No action, suit, proceeding or investigation shall be
pending or threatened before any court or government entity to restrain or
prohibit, or to obtain specific damages, in respect of this Agreement or
the consummation of the transactions contemplated by this Agreement and
which, in the reasonable judgment of Purchaser, has a reasonable likelihood
of success.
(d) No Adverse Changes. There shall have been no material adverse changes in
Seller or its Business.
16. Indemnification.
(a) By Seller and Landau. Seller and Landau shall defend, indemnify and hold
Purchaser harmless from and against any and all claims, losses or
liabilities (including reasonable attorney fees, court costs and expenses
of investigation as determined by a court of competent jurisdiction),
incurred by Purchaser or any of its affiliates: (i) as a result of any
breach of Seller's or Landau's representations, warranties or covenants
contained in this Agreement, or (ii) with respect to any liability of
Seller or Landau not expressly assumed by Purchaser.
(b) By Purchaser. Purchaser shall defend, indemnify and hold Seller and Landau
harmless from and against any and all claims, losses or liabilities
(including reasonable attorney fees, court costs and expenses of
investigation as determined by a court of competent jurisdiction), incurred
by Seller, Landau or any of their affiliates as a result of any breach of
Purchaser's representations, warranties or covenants contained in this
Agreement.
17. Registration Rights. At any time within one year from the date of each
issuance of shares to Seller pursuant to Section 4, Seller shall be entitled to
request Purchaser to register such shares under the Securities Act of 1933;
provided, however, that Purchaser shall only be required to register such shares
on a Form S-3 Registration Statement (or successor form).
18. Miscellaneous Provisions.
(a) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
assigns. No party shall assign its rights or obligations under this
Agreement to any third party without the prior written consent of the other
parties.
(b) Notices. All notices which are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be delivered
personally or by certified mail, return receipt requested, postage prepaid,
or sent by facsimile, with receipt confirmed, or sent by overnight delivery
service as follows:
<PAGE>
If to Purchaser: Bioject Medical Technologies Inc.
Attn: Chief Executive Officer
7620 SW Bridgeport Rd.
Portland, Oregon 97224
Facsimile: (503)642-9002
with copy to: Tonkon Torp LLP
Attn: Carol Dey Hibbs
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204-2099
Facsimile: (503) 972-3716
If to Seller or Vitajet Corporation or
Landau: Sergio Landau at
27071 Cabot Road, Suite 110 -or- 49 South Peak
Laguna Hills, California 92653 Laguna Niguel, CA
92677
Facsimile: (714) 582-8095
Facsimile: (714) 240-2059
Any of the addresses or facsimile numbers set forth above may be changed from
time to time by written notice from the party requesting the change.
Such notices and other communications shall for all purposes of this Agreement
be treated as being effective immediately if delivered personally, or five days
after mailing by certified mail, return receipt requested, first-class postage
prepaid, or upon confirmation of receipt of a notice sent by facsimile, or one
day after deposit for delivery by an overnight delivery service.
(c) Alterations and Waivers. The waiver, amendment or modification of any
provision of this Agreement or any right, power or remedy under this
Agreement, whether by agreement of the parties or by custom, course of
dealing or trade practice, shall not be effective unless in writing and
signed by the party against whom enforcement of such waiver, amendment or
modification is sought. No failure or delay by either party in exercising
any right, power or remedy with respect to any of the provisions of this
Agreement shall operate as a waiver of such provisions with respect to such
occurrences.
(d) Governing Law. This Agreement shall be construed, governed and enforced in
accordance with the laws of the state of Oregon, without regard to
principles concerning the conflict of laws.
(e) Severability. In the event any provision of this Agreement or the
application of any such provision shall be held to be prohibited or
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability. The remaining provisions of this Agreement shall remain
in full force and effect, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. The parties shall use their best
efforts to replace the provision that is contrary to law with a legal one
approximating to the extent possible the original intent of the parties.
(f) Exhibits. The exhibits that are attached to and referred to in this
Agreement are incorporated into and are a part of this Agreement.
(g) Integration and Entire Agreement. This Agreement and the exhibits and other
documents referred to in this Agreement set forth the entire understanding
between the parties and supersede all previous and contemporaneous written
or oral negotiations, commitments, understandings, and agreements relating
to the subject matter of this Agreement and merge all prior and
contemporaneous discussions between the parties. No party shall be bound by
any definition, condition, representation, warranty, covenant or provision
other than as contained in this Agreement.
(h) Counterpart and Headings. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument. All headings and captions are inserted for convenience
of reference only and shall not affect meaning or interpretation.
<PAGE>
(i) Specific Performance. The parties acknowledge that damages would be an
inadequate remedy for any breach of the provisions of this Agreement. The
parties agree that, in the event of a violation of this Agreement, the
nonbreaching party shall have the right to obtain injunctive or other
similar relief, as well as any relevant damages, without the requirement of
posting bond or similar measures.
(j) Survival. All representations and warranties of the parties made in this
Agreement, as well as all obligations of the parties under this Agreement
which by their nature require performance following Closing, shall survive
the Closing.
(k) Joint and Several Liability. Seller and the Landau shall be jointly and
severally liable with respect to the obligations of Seller and Landau under
this Agreement.
(l) Bulk Sales Compliance. The parties waive compliance with the provisions of
any applicable Bulk Sales Law, and Seller and Landau hereby agree to
indemnify and hold Purchaser harmless with respect to any claims related to
the failure to comply with such law.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
written above.
PURCHASER: BIOJECT MEDICAL TECHNOLOGIES INC.
By: /s/ James O'Shea
James O'Shea
Chairman, President and
Chief Executive Officer
SELLER: Vitajet Corporation
By: /s/ Sergio Landau
Sergio Landau, President
LANDAU: Sergio Landau
---------------------------
Mara L. Landau
---------------------------
<PAGE>
LIST OF EXHIBITS
EXHIBIT A - ASSETS
EXHIBIT B - TAX ALLOCATION
EXHIBIT C - EMPLOYMENT AGREEMENT
EXHIBIT D - INTELLECTUAL PROPERTY
EXHIBIT E - CONTRACTS
EXHIBIT 10.54
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated the 17th day of April, 1998, between:
BIOJECT MEDICAL TECHNOLOGIES INC. ("BMT"), a Corporation incorporated under the
laws of the State of Oregon having its principal offices at 7620 SW Bridgeport
Rd., Portland, Oregon 97224
BIOJECT INC., a Corporation incorporated under the laws of the State of Oregon
having its principal offices at 7620 S.W. Bridgeport Road, Portland, Oregon,
97224 (collectively referred to as the "Company")
AND:
Michael A. Temple, an individual residing at:
2408 N.W. Benson Lane
Portland, OR 97229
(the "Executive")
RECITALS:
1. The Company desires to secure the services and expertise of the Executive
and to ensure the availability of the Executive to the Company; and
2. The Executive desires to serve in the employ of the Company on a full-time
basis for the period and upon the terms and conditions provided for in this
agreement.
3. The Executive and the Company desire to execute an agreement entered into
between them.
NOW THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties noted above agree as follows:
SECTION 1
1.1 Employment
The Company appoints the Executive to and retains the Executive for the position
of Chief Financial Officer for the Company, and the Executive accepts such
appointment. This appointment becomes effective as soon as the Executive can
make appropriate arrangements with his current employer, or on April 20 th,
1998, whichever date is earlier.
1.2 Approval by the Board
The Company represents, if required by its Bylaws, that the appointment of the
Executive to the position referred to in Section 1.1 will be approved by the
Board of Directors of the Company (the "Board") and that all corporate action
required to effect the appointment will be taken.
1.3 Definitions
As used in this agreement:
a. "Confidential Information" means any of the company's customers, employees,
products, processes, services, financial information, marketing techniques,
merchandising, business strategies, or plans, research, development,
systems, inventions or any other trade secret or information pertaining to
any of the preceding terms.
b. "Conflicting Product" means any product, process or service of any person
or organization other than the Company, in existence or under development,
which resembles or competes with the current or projected products,
processes or services of the Company.
c. "Conflicting Organization" means any person or organization engaged or
about to become engaged in research, development, production, marketing or
selling of a Conflicting Product.
<PAGE>
d. "Inventions" means discoveries, concepts, and ideas, whether patentable or
not, including but not limited to, procedures, processes, methods,
formulas, and techniques, as well as improvements thereof or know-how
related thereto, concerning any present or prospective activities of the
Company with which the Employee becomes acquainted as a result of his
employment by the Company.
SECTION 2 - DUTIES/RESPONSIBILITIES
2.1 Duties/Responsibilities
During the employment term and any renewals thereof, the Executive will devote
such time, attention, skill and efforts as may be necessary to assure the full
performance of his duties and responsibilities, to the best of his abilities,
with such authority as is customarily associated with the position of Chief
Financial Officer. The Executive hereby accepts and agrees to such engagement of
services, and will devote himself solely to the operation of the Company's
business. The Executive may continue his existing involvement in an advisory or
board capacity with non-competing organizations.
2.2 Reporting
In conducting his duties under this Agreement, the Executive shall report to the
Chief Executive Officer and Chairman of the Board of Directors of the Company.
2.3 Location of Employment
The Executive shall conduct his duties under this Agreement at the offices of
the Company in Portland, Oregon, or such other geographical locations as shall
be reasonably required in order to assure the efficient and proper operation of
the Company. In the event that the location of the Company is moved outside the
Portland metropolitan area, the Executive will be offered a choice to either
relocate to the new location, or to accept a severance package as described in
Section 4.2b(ii).
SECTION 3 - COMPENSATION
3.1 Salary
For the Executive's services to the Company, the Executive shall be entitled to
receive a minimum annual gross salary of $110,000. Not less than once during
each year of employment, the Chief Executive Officer shall review the
Executive's performance, duties and compensation for the purpose of promotion
and/or increasing the compensation payable to the Executive. Executive's salary
shall be paid in bi-weekly installments during the calendar year for the term of
this Agreement. The Company shall deduct or withhold from such payments to the
Executive the sums as are required under applicable laws for worker's
compensation, income taxes and other benefits in accordance with Company policy.
3.2 Bonus Program
The Executive shall not be eligible to earn a cash bonus until the fiscal year
following the year the Company has achieved profitability. In the interim, the
Executive is eligible to earn bonuses in the form of stock options for fiscal
years in which the Company achieves its financial performance objectives,
including budget projections. Specific bonus requirements and objectives will be
determined by the Chief Executive Officer and the Board of Directors, and are
subject to approval by the Board.
At such time during Executive's employment by the Company, that the Company
attains two consecutive fiscal quarters of positive earnings per share from
ordinary income and expenditures (i.e., computed by utilizing customer sales
revenues less ordinary and usual operating expenses for each month, as well as
GAAP), the Executive will receive a grant of 15,000 incentive shares from the
Company's incentive stock plan, having a tax basis to Executive of zero. The
Executive is eligible for only one such bonus during his employment.
<PAGE>
3.3 Reimbursement of Expenses
The Company shall pay or reimburse the Executive for all reasonable
out-of-pocket expenses, including, without limitation, all travel and
entertainment expenses payable or incurred by the Executive in connection with
his duties under this Agreement. It is the policy of the Company for employees
to travel as inexpensively as possible, utilizing economy airfare and standard
rental cars. All payments or reimbursements shall be made promptly upon
submission by the Executive of vouchers, bills or receipt for all expenses.
3.4 Disability
Should Executive become disabled and unable to perform substantially all of his
duties hereunder, as documented by an independent physician selected jointly by
the Executive and the Company, the Company will continue paying the Executive
any bonus earned and previously awarded, together with his then- current salary
at seventy-five percent (75%) of current salary for a period of not less than
six (6) months from the disability date, then reduced to fifty percent (50%) of
current salary for any remaining period of disability for a period of up to an
additional six (6) months, with health and dental insurance and other benefit
coverage to continue for the duration of such payments. Should payments to
Executive under worker's compensation and/or disability insurance programs, when
combined with Company payments, exceed seventy-five percent (75%) of employee's
current salary, the Company will reduce its payment by the excess amount.
SECTION 4 - TERMS OF EMPLOYMENT
4.1 Duration
The term of this Agreement shall commence on a mutually agreeable date, but not
later than April 20th, 1998. It shall continue for an initial term period of
two, consecutive one-year terms, subject to the early termination provisions of
this Section. Upon expiration of the initial term period, this Agreement will be
automatically renewed for successive one-year terms unless either the Executive
or the Company shall, upon three months written notice to the other, elect not
to renew this Agreement for any year.
4.2 Termination by the Company
(a) The Company may terminate this Agreement:
(i) Immediately if it is determined by the Board of Directors that the
Executive's actions: (1) constitute a material breach of his duties
hereunder or (2) constitute a criminal act reflecting adversely on the
business or reputation of the Company or (3) have resulted in the
Executive, in his personal capacity, being indicted or sanctioned or his
entering into a consent decree, in connection with any investigation of,
allegation of wrongdoing by, or other formal proceeding against the
Executive, by the United States Food and Drug Administration or the United
States Securities and Exchange Commission, whether related to the business
of the Company or to any other employment or activity of the Executive,
past or future; or
(ii) With or without other cause at any time by giving sixty (60) days prior
written notice to the Executive; or
(b) Upon termination of this Agreement by the Company:
(i) Pursuant to Sections 4.2(a)(i):
A. The salary payable to the Executive pursuant to Section 3.1 shall be paid
in regular bi-weekly installments for sixty (60) days following the date
of termination;
B. All other forms of compensation payable to the Executive pursuant to
Section 3 shall terminate on the date of termination, except that as
expeditiously as possible following the termination, the Company shall pay
or reimburse the Executive for all expenses incurred prior to the
termination pursuant to Section 3.3, together with any bonuses earned by
and previously awarded to the Executive pursuant to Section 3.2 prior to
the date of termination.
(ii) Pursuant to Section 4.2(a)(ii), and Section 2.3:
<PAGE>
A. The salary payable to the Executive pursuant to Section 3.1 shall be paid
for the period commencing on the date of the termination, and continuing
for:
One hundred twenty (120) days following the date of termination.
B. All other forms of compensation payable to the Executive pursuant to
Section 3 shall terminate, except that as expeditiously as possible after
the termination the Company shall pay or reimburse the Executive for all
expenses incurred prior to the termination pursuant to Section 3.3,
together with any bonuses earned by and previously awarded to the Executive
pursuant to Section 3.2, prior to the date of termination.
4.3 Termination by Executive
The Executive may terminate this Agreement by giving sixty (60) days prior
written notice to the Company. Upon termination of this Agreement by the
Executive pursuant to this Section:
(a) The salary payable to the Executive pursuant to Section 3.1 shall be
prorated to the date of the termination;
(b) Except for the severance package made available to the Executive pursuant
to Section 2.3, all other forms of compensation payable to the Executive
pursuant to Section 3 shall terminate on the date of the termination. As
expeditiously as possible after termination of the Executive's employment,
the Company shall pay or reimburse the Executive for all expenses incurred
prior to the termination pursuant to Section 3.3, together with any bonuses
earned by and previously awarded to the Executive pursuant to Section 3.2,
prior to the date of termination.
(c) Executive shall utilize his best efforts to continue to perform all duties
assigned by the Company in the manner stated in paragraph 2.1 hereof, prior
to the date of termination.
4.4 Termination Upon Death
This Agreement shall terminate immediately upon the Executive's death. In the
event of the Executive's death:
(a) The Company shall pay to the Executive's estate the salary otherwise
payable to the Executive pursuant to Section 3.1 through the last day of
the calendar month in which the Executive's death occurs and for a period
of one hundred twenty (120) days thereafter.
(b) As expeditiously as possible after the Executive's death the Company shall
pay or reimburse the Executive's estate for all expenses incurred pursuant
to Sections 3.3 prior to such death, together with any bonuses earned by
and awarded to the Executive pursuant to Section 3.2, prior to the date of
such death.
4.5 Reorganization, Merger or Sale
If at any time during the term of this Agreement there is effected any
consolidation or merger of the Company with another corporation (other than a
consolidation or merger in which the Company is a continuing corporation) or the
sale of all or substantially all of the assets of the Company, then, as to such
consolidation, merger or sale, the Company will utilize its best efforts to make
appropriate provisions to preserve the rights and interests of the Executive
pursuant to this Agreement. Additionally, in the event of merger or acquisition,
all stock options which have been awarded to the Executive, but are not yet
vested, will vest immediately.
4.6 Acts Upon Termination
Upon termination of Executive's employment with the Company, all documents,
records, notebooks, and similar repositories of or containing Confidential
Information, including copies thereof, then in the Executive's possession,
whether prepared by himself or others will be delivered to the Company within
thirty (30) days of such termination. The obligations of the Executive in
Sections 6.1 and 6.2 of this Agreement shall survive any termination of the
Executive.
<PAGE>
SECTION 5 - STOCK
5.1 Grant of Stock Options
As soon as possible following the execution hereof the Executive and the Company
shall execute an Incentive Stock Option Agreement granting the Executive the
following:
150,000 options to purchase shares of BMT at the mean between the bid and asked
price on April 20, 1998. These options vest as follows: 25% (37,500) on each of
the Executive's next four annual anniversaries of employment with the Company,
provided he remains employed by the Company during each year. All options
granted will be subject to the same terms and conditions as provided in the
Company's incentive stock program.
5.2 Registration
It is understood that BMT is a reporting company within the requirements of the
Securities and Exchange Commission ("SEC") and has elected to register the
options granted hereunder with the SEC.
SECTION 6 - MISCELLANEOUS
6.1 Disclosure of Information and Employee Restrictions
Executive agrees to the following:
a. Executive agrees that he shall not, during his employment, either as an
individual or as part of an organization, throughout North America or
Europe, compete with the Company or render services directly or indirectly,
to any conflicting organization or himself establish or acquire any
interest, directly or indirectly, in a conflicting organization, nor will
he assist any other person or entity to do so;
b. Executive will not during his employment solicit or sell to any of the
Company's present or future customers, a conflicting product or service nor
will he assist any other person or entity to do so;
c. Except as required in his duties to the Company, the Executive will never,
during or after his employment, directly or indirectly use, disseminate,
disclose, lecture upon, or publish any Confidential Information without
Company's written consent.
In the event this Agreement is terminated, for whatever reason, Executive agrees
that he shall not, for two years following the date of termination:
a. Either as an individual or as part of an organization, throughout Canada or
the United States, compete with the Company or render services directly or
indirectly, to any conflicting organization or himself establish or acquire
any interest, directly or indirectly, in a conflicting organization, nor
will he assist any other person or entity to do so; and
b. He will not employ, without the consent of the Company, directly or
indirectly, any past or present employees of the Company, nor will he
assist any other person or entity to do so; and
6.2 Arbitration and Jurisdiction
Subject to the remedies stated in Section 6.1, any controversy or claim arising
out of or relating to this Agreement or any breach of this Agreement shall be
finally settled by arbitration in accordance with the provisions of the
Commercial Arbitration Rules of the American Arbitration Association. Such
arbitration shall be conducted in Portland, Oregon by one arbitrator, with one
discovery allowed by each party to this agreement. This agreement is entered
into and shall be interpreted and enforced according to the laws of the State of
Oregon; both parties consent to personal jurisdiction for that purpose.
<PAGE>
6.3 Notices
Any notice or other communication required or permitted to be given under this
Agreement shall be in writing, given by personal delivery or sent by first class
mail, postage prepaid, addressed as follows:
To the Executive: Michael A. Temple
2408 N.W. Benson Lane
Portland, OR 97229
To the Company: Secretary to the Board of Directors
Bioject Medical Technologies Inc.
7620 S.W. Bridgeport Road
Portland, Oregon 97224
Either party, by notice as provided above, may change the address to which
subsequent notice shall be given. Any notice given herein shall be deemed
received seven (7) days after posting in a post office box; PROVIDED, HOWEVER,
that if there should be a postal strike, slow-down or other labor dispute which
may effect the delivery of such notice through the mail between the time of
mailing and the actual receipt of the notice, then such notice shall be
effective only if actually delivered.
6.4 Assignment
This Agreement is a personal services agreement and may not be assigned by
either party without the prior written consent of the other party; however,
during his employment term, the Executive may by written assignment assign all
or any portion of the compensation or benefits to which he is entitled under
Section 3 to any member of his immediate family or to any corporation,
partnership or other business entity controlled by the Executive. Except as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge or hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no effect.
6.5 Indemnity
The Executive, his heirs, executors, administrators, estate and effects, shall
at all times be indemnified and held harmless by the Company from and against:
a. All costs, charges and expenses whatsoever sustained or incurred as a
result of any action, suit or proceeding, whether civil, criminal,
administrative, or investigative, that is brought, commenced or prosecuted
for or in respect of any act, deed, matter or thing whatsoever made, done
or permitted in or about the execution of the Executive's duties; and
b. All other costs, charges and expenses sustained or incurred in or about or
in relation to the affairs of the Company;
Except such costs, charges or expenses as are occasioned by the criminal act,
willful neglect or default of duties by the Executive. At all such times that
the Company obtains and maintains directors and officers errors and omissions
insurance, Executive shall be a beneficiary of such policy(ies).
6.6 Amendment and Severability
This Agreement may not be amended or otherwise modified except by an instrument
in writing signed by both parties. All agreements and covenants herein contained
in this Agreement are deemed to be severable, and in the event any portion of
this Agreement is declared to be invalid, this Agreement shall be interpreted as
if such invalid portion or covenant were severed and not contained herein, with
all other terms of this Agreement remaining valid and binding on the parties
hereto.
6.7 Entire Agreement
This agreement specifies all of the terms and conditions of an employment
agreement entered into between the parties on April 17th, 1998, which terms and
conditions have been negotiated prior to that date.
<PAGE>
6.8 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns, except as otherwise expressly provided herein.
6.9 Review of Legal Counsel
The Executive acknowledges that he has had adequate time and opportunity to
consult with legal counsel of his own selection prior to entering into and
executing this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement effective on the day
and year first written above.
/s/ Michael Temple
Michael Temple
BIOJECT MEDICAL TECHNOLOGIES INC.
/s/ James C. O'Shea
James C. O'Shea
Title: Chairman of the Board and
Chief Executive Officer
BIOJECT INC.
/s/ Kurt Lynam
Kurt Lynam
Title: Director, Human Resources
EXHIBIT 10.55
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (hereafter the "Agreement")
is made effective as of the eighth (8th) day after this Agreement has been
signed by both parties, by and between BIOJECT MEDICAL TECHNOLOGIES INC.,
BIOJECT MEDICAL SYSTEMS LTD. and BIOJECT INC. (hereafter collectively referred
to as "Bioject") on the one hand, and Peggy J. Miller ("Employee") on the other
hand. The purpose of this Agreement is to set forth the terms of Employee's
voluntary resignation from employment with Bioject. For purposes of this
Agreement, the "parties" refers to Bioject and Employee. Nothing contained in
this Agreement shall constitute an admission of wrongdoing or liability by any
of the parties to this Agreement.
The parties do hereby acknowledge and agree:
1. On March 9, 1998, Employee voluntarily tendered her resignation
to Bioject. Employee's employment with Bioject will end on April 30, 1998.
Bioject agrees to continue providing normal salary and employee benefits to
which Employee would otherwise be entitled including 401(k) matching
contributions through April 30, 1998. Bioject acknowledges and confirms that on
April 30, 1998, Employee will receive all wages and accrued and untaken vacation
pay (known as FTO) earned through April 30, 1998.
The public announcement of Employee's departure from Bioject will
be approved and agreed upon between the parties before publication.
Bioject, including James C. O'Shea, agrees to provide excellent
references to prospective employers of Employee, upon Employee's request and
authorization to release such information.
2. In addition, for good and due consideration recited herein, the
parties agree to the following:
Bioject will provide Employee the following severance pay and
benefits after the effective date of this Agreement and within the time periods
specified below:
a. On April 30, 1998, a lump sum payment in an amount equal to
4 months of Employee's current salary, less applicable
federal, state and local taxes;
b. Employee's current salary pro-rated for a period of 2 months
to be paid to Employee during the period May and June 1998,
consistent
<PAGE>
with Employer's current bi-weekly payment schedule, less
applicable federal, state and local taxes;
c. Bioject will pay Employee's premium payment (102% of the
Employer's contribution) for Employee's health and dental
insurance under COBRA during the period May l, 1998 through
October 31, 1998; and
d. The parties acknowledge that Employee currently has Bioject
common stock and options to purchase Bioject common stock in
the amounts, prices and subject to the conditions set forth
in the statement of Stock and Option Ownership dated
November 24, 1997 (hereafter "Stock and Option Statement"
and attached hereto as Attachment B). The parties further
acknowledge and agree that all of the stock options listed
on Attachment B are currently vested except for the 25,000
options granted on June 11, 1997 (subject to performance
vesting at 3/31/98) and the 25,000 options granted on
September 19, 1997 (subject to one-third vesting on
September 19, 1998, 1999 and 2000). Under Section 5 of the
Employee's Bioject Officer/Insider Stock Option Agreement
(the "Stock Option Agreement") dated September 19, 1997
(attached hereto as Attachment C), Employee's vested 130,000
stock options will expire and terminate one-year after April
30, 1998 (i.e., April 30, 1999).
In consideration for this Agreement, and within thirty (30)
calendar days after its effective date, Bioject will cause
the Stock Option Committee of Bioject Medical Technologies
Inc. ("BMT") to exchange Employee's 130,000 currently vested
stock options as identified in Attachment B for 130,000
vested stock options with an expiration date of April 30,
2000. The exercise price per share of all of the foregoing
options will remain as stated on Attachment B.
In consideration for Employee's cooperation in the
transition to a new chief financial officer (defined to mean
Employee's telephone consultation and assistance, to be
reasonably scheduled in advance, but limited on-site work
effort from May 1, 1998 through September 1, 1998, with
hours not to exceed 40 in the aggregate and 8 hours in any
one week) and within thirty (30) calendar days after the
effective date of this Agreement, Bioject will cause the
Stock Option Committee of BMT to exchange the September 19,
1997, 25,000 unvested options identified in Attachment B for
25,000 stock options which will vest at 5,000 per month
beginning May 1, 1998,
<PAGE>
and which will have an exercise date identical to their
vesting date and an expiration date of April 30, 2000.
However, in the event that Employee fails to so cooperate,
any unvested options shall be forfeited. The exercise price
per share of all of the foregoing options will remain as
stated on Attachment B.
In consideration for this Agreement, Employee agrees to
waive and forfeit any right to the June 11, 1997, 25,000
unvested options identified in Attachment B.
An appropriate amendment to the Stock Option Agreement will
be executed by the parties reflecting this change in stock
options. All other obligations of the Employee under the
Stock Option Agreement shall remain enforceable.
Employee acknowledges and agrees that after executing this
Agreement, she will have no Bioject stock options other than
the 130,000 vested options with an expiration date of April
30, 2000 and the 25,000 unvested options which will vest at
5,000 per month beginning May 1, 1998 and expire on April
30, 2000, as described above. The parties acknowledge and
agree that Employee's remaining 25,000 unvested stock
options (granted June 11, 1997) are deemed terminated, as of
the effective date of this Agreement. Employee further
acknowledges and agrees that she is not entitled to any
options in the future beyond the exchanged options stated
herein.
Bioject acknowledges that it has obtained all necessary approvals
and authorizations from Bioject's Boards of Directors and appropriate committees
for the consideration granted Employee in paragraph 2 herein.
3. Employee acknowledges and warrants that by April 30, 1998, she
will have submitted any and all vouchers, bills and receipts verifying all
out-of-pocket business expenses necessarily incurred by Employee during her
employment with Bioject. Bioject agrees to reimburse Employee in a timely manner
for all such out-of-pocket business expenses in accordance with Bioject's
reimbursement policies.
4. The parties acknowledge that BMT is a reporting company within
the requirements of the Securities and Exchange Commission ("SEC"). Employee
expressly agrees to fully comply with all applicable reporting and trading
restrictions in exercising or trading any of the stock options provided herein,
including Section 16(b) of the Securities Exchange Act of 1934.
<PAGE>
5. Employee accepts Bioject's undertakings in this Agreement as
full settlement of any and all claims, known or unknown, arising out of, or
related to, Employee's employment with Bioject, or its termination, including,
but not limited to, any claims of discrimination or wrongful discharge. This
includes, but is not limited to, claims under the Age Discrimination in
Employment Act of 1967 ("ADEA"), 29 U.S.C. ss. 621 et seq, the Americans with
Disabilities Act of 1990 ("ADA"), 42 U.S.C. ss. 12101 et seq, Title VII of the
Civil Rights Act of 1964, 42 U.S.C. ss. 1981, and Chapters 652 and 659 of the
Oregon Revised Statutes. These claims are examples, not a complete list, of the
released claims, as it is the parties' intent that Employee release any and all
claims, of whatever kind or nature, in exchange for the severance arrangements
set forth in paragraph 2 above. Employee realizes this constitutes a full and
final settlement of any and all such claims, and except for obligations arising
under this Agreement, this settlement releases Bioject and any related companies
(and their owners, officers, directors, employees, and anyone else against whom
Employee could assert a claim based on her employment or termination thereof)
from any further liability to Employee (or to anyone else Employee has power to
bind in this settlement) in connection with such claims.
In exchange for Employee's agreements and obligations herein,
Bioject, on behalf of themselves and their officers and directors, hereby
releases, acquits, and forever discharges Employee and her past, current and
future agents, assigns, attorneys, representatives and affiliates from any and
all claims, demands, damages, costs, attorney fees, liabilities, claims for
contribution, and claims for indemnity, of every kind and nature, whether known
or unknown, fixed or contingent, including but not limited to, any and all
claims arising out of, or in any way related to, Employee's employment with
Bioject through April 30, 1998.
6. Tender and delivery of the wages, severance pay and benefits as
described in paragraphs 1-2 herein shall constitute full satisfaction by Bioject
of any and all claims by Employee for wages, vacation pay (FTO), severance pay,
and any other compensation, benefits or leave of any kind to which Employee may
be entitled.
7. Employee acknowledges that her obligations under the parties'
Executive Employment Contract dated January 18, 1993 (hereafter "Executive
Employment Contract" and attached hereto as Attachment A) shall continue
following her separation from employment with Bioject. These obligations
specifically include, but are not limited to, the restrictions imposed on
Employee regarding competition with Bioject and involvement with conflicting
organizations, products and services, as fully set forth in section 6.1 of the
Executive Employment Contract, and Employee's obligations with respect to
patents and copyrights, as fully set forth in section 6.2 of the Executive
Employment Contract. These obligations are in addition to any obligations
imposed under federal or state law.
<PAGE>
8. Bioject acknowledges that its indemnity obligations under the
parties' Executive Employment Contract (section 6.6) shall survive Employee's
separation from employment with Bioject and continue indefinitely. These
obligations are in addition to obligations imposed by state law, Bioject's
by-laws, and Bioject's directors and officers' and other insurance policies.
9. Employee agrees to keep confidential all confidential or
proprietary information disclosed directly or indirectly by Bioject and agrees
that she will not, directly or indirectly, use, disclose, or divulge for any
purpose such confidential or proprietary information obtained during her
employment with Bioject or at any other time without the prior written approval
of Bioject. Such confidential and proprietary information includes, but is not
limited to, the agenda, decisions or other information relating to meetings or
discussions held by and between Bioject's officers, directors or board of
directors, any and all employment information relating to any past or present
Bioject employees or prospective employees including salaries, severance, and
disciplinary actions, Bioject's product design and development information,
proprietary production processes, research and development strategies,
scientific and technological data, formulae or prototypes, non-public financial
information, business or marketing strategies, customer lists and information
regarding Bioject's past, present, prospective and future customers.
10. The parties agree to keep the terms and conditions of this
Agreement confidential and not disclosed to any individual or entity that is not
a party to this Agreement except as required by law or provided herein. Employee
may disclose the fact and terms of this Agreement to her immediate family
members, attorney, tax advisor, accountant and financial consultant and to
Bioject's internal financial management, outside auditors and legal counsel as
may be required to fulfill Employee's duties as Chief Financial Officer and
agrees to instruct them to make no further disclosures, except as required by
law. Bioject may disclose the fact and terms of this Agreement to its officers,
directors, internal financial management, outside auditors, legal counsel and as
required by law as a publicly traded company.
11. The parties to this Agreement expressly agree to refrain from
making any disparaging, misleading or false remarks concerning each other or any
of the entities or individuals released in paragraph 5 above and will conduct
themselves in a manner that does not damage or undermine the reputation of each
other or any entity or person identified in paragraph 5 above.
12. Employee warrants that upon her departure, she will return to
Bioject all company property in her possession, including documents and all
materials of any nature pertaining to her work with Bioject whether or not they
contain confidential or
<PAGE>
proprietary information.
13. Employee expressly waives and will not assert any claim of
right to reinstatement of employment with Bioject or its related entities.
14. The parties acknowledge and agree that any breach of this
Agreement by either party shall subject that party to liability for the actual
and consequential damages resulting from the breach. The non-breaching party
shall also be entitled to all available equitable relief as a result of the
breach, including imposition of an injunction. This provision applies to any
breach of this Agreement.
15. The parties agree that this Agreement shall be construed and
interpreted according to the laws of the State of Oregon (excluding choice of
law provisions). The parties agree that the forum for resolution of any dispute
arising out of or relating to: (1) Employee's employment with Bioject; (2)
Employee's termination of employment with Bioject; or (3) any breach of this
Agreement will be by final and binding arbitration in Multnomah County, Oregon,
utilizing the mediation services of Arbitration Service of Portland, Inc.
("ASP") or other mutually agreed upon arbitration service. The arbitrator shall
have the same authority to award remedies and damages as provided to a judge
and/or jury under applicable law. The arbitrator shall apply Oregon State law
(excluding choice of law provisions) and applicable federal law in deciding all
substantive aspects of the dispute, and all procedural issues not covered by the
ASP arbitration rules. The arbitrator shall not have the power to alter, amend,
or modify any provision of this Agreement. The prevailing party shall be
entitled to recover reasonable attorney fees and other costs of the arbitration
from the other party. Judgment on the award rendered pursuant to such
arbitration may be entered in any court having jurisdiction thereof.
16. The parties agree that this Agreement supersedes any and all
other prior agreements or understandings, both oral and written, except the
Employer's and Employee's obligations under the Agreements attached hereto and
referenced herein. The parties further agree that this Agreement cannot be
modified without the express written consent and agreement of both parties
hereto.
17. The parties agree that the provisions in this Agreement are
separable and that in the event any provision is deemed ineffective or
unenforceable, they are separable from the remaining provisions of the
Agreement, which provisions shall remain binding on the parties.
18. Employee confirms that she has carefully read this Agreement.
Employee acknowledges that she has been advised to consult with an attorney, and
has in fact done so, before signing this Agreement, which Employee has been
given
<PAGE>
twenty-one (21) days to consider, and which she may revoke within seven (7) days
after signing. Employee acknowledges that she has signed this Agreement of her
own free will and with the advice of counsel. This offer expires on the 22nd day
after it has been extended to Employee by Bioject.
/S/ Peggy J. Miller 3/9/98
_________________________________ Dated: ____________________
Peggy J. Miller
BIOJECT MEDICAL TECHNOLOGIES INC.
/s/ James C. O'Shea 3/9/98
__________________________________ Dated: ____________________
By: James C. O'Shea
Title: Chairman, President and
Chief Executive Officer
BIOJECT MEDICAL SYSTEMS LTD.
/s/ James C. O'Shea 3/9/98
__________________________________ Dated: ____________________
By: James C. O'Shea
Title: President
BIOJECT INC.
/s/ James C. O'Shea 3/9/98
__________________________________ Dated: ____________________
By: James C. O'Shea
Title: Chairman, President and
Chief Executive Officer
EXHIBIT 10.56
FORM OF
MASSACHUSETTS BIOTECHNOLOGY RESEARCH PARK
Worcester, Massachusetts
THREE BIOTECH PARK
SPACE LEASE
WORCESTER BUSINESS DEVELOPMENT CORPORATION
to
BIOJECT MEDICAL TECHNOLOGIES, INC.
April 20, 1998
MASSACHUSETTS BIOTECHNOLOGY RESEARCH PARK
THREE BIOTECH PARK
SPACE LEASE
THIS LEASE is made in Worcester, Massachusetts effective on the Date of Lease
stated in Article 1 between the Landlord and the Tenant named in Article 1. In
consideration of the Rent payable by Tenant and of the agreements to be
performed and observed by Tenant, Landlord hereby leases the Premises to Tenant,
and Tenant hereby takes the Premises from Landlord, subject to the provisions
and for the term stated below:
ARTICLE 1
Reference Data and Definitions
Section 1.01 - Terms and Titles Referred To. Each reference in this lease to any
of the following terms and titles incorporates the data stated for that term or
title in this Section 1.01:
DATE OF LEASE: April 20, 1998
LANDLORD: WORCESTER BUSINESS DEVELOPMENT CORPORATION, a Massachusetts
corporation established pursuant to the provisions of Chapter 600 of the Acts of
1965, acting on behalf of Waldo Corporation, Trustee of Three Biotech Realty
Trust under an Assignment and Assumption of Leases dated December 20, 1995
recorded with Worcester District Registry of Deeds in Book 17557, Page 379, its
successors and assigns.
<PAGE>
LANDLORD'S ADDRESS: One Innovation Drive
Worcester, Massachusetts 01605
TENANT: BIOJECT MEDICAL TECHNOLOGIES, INC., an Oregon corporation
TENANT'S ADDRESS: After the Term Commencement Date, Tenant's address will be
the Premises; before the Term Commencement Date, Tenant's address will be:
7620 S.W. Bridgeport Road
Portland, Oregon 97224
TERM COMMENCEMENT DATE: May 1, 1998, or as defined in Section 1.03, if
different.
STATED EXPIRATION DATE: May 31, 1999, or as defined in Section 1.03, if
different.
DESIGN START DATE: Not Applicable.
PERMITTED USE: Research and Development; and limited light manufacturing to
the extent authorized under the City of Worcester Zoning Ordinance.
LAND: The parcel of land on Innovation Drive in Worcester, Worcester County,
Massachusetts, shown on the plan entitled "Plan of Property Owned by Worcester
Business Development Corporation, Three Biotech Park, off Plantation Street,
Worcester, Massachusetts" dated January 31, 1990 and recorded with the Worcester
District Registry of Deeds in Plan Book 633, Plan 79, containing a total area of
8.8048 acres, more or less, according to said plan, plus or minus any additions
or deletions resulting from the change of any abutting street line.
PREMISES: That portion of the fourth floor of the Building shown as outlined or
hatched on the Lease Plan attached as Exhibit B (the "Exclusive Premises") and
the right in common with other tenants to use Glasswash Room 438, Conference
Room 401, Lunch Room 403/404, and the corridors needed to access the Premises.
RENTABLE AREA OF THE PREMISES: 2,197 square feet
RENTABLE AREA OF THE BUILDING: 115,179 square feet
TENANT'S SHARE: 1.91%
LEASE TERM: The period between the Term Commencement Date and the Stated
Expiration Date.
BASIC RENT: $28.50 per square foot of Rentable Area of
the Premises for each Lease Year of the first Fixed Rental Period.
$62,615.00 per Lease Year during the first Fixed Rental Period.
$5,218.00 per month during the first Fixed Rental Period.
FIXED RENTAL PERIOD: Not Applicable.
ESTIMATED OPERATING EXPENSES: Not Applicable.
<PAGE>
ESTIMATED TAXES: Not Applicable.
INITIAL MONTHLY PAYMENT: Not Applicable.
SECURITY DEPOSIT: Not Applicable.
GUARANTOR: Not Applicable.
Section 1.02 - General Provisions. For all purposes of this Lease, unless the
context otherwise requires:
(a) A pronoun in one gender includes and applies to the other genders as well.
(b) Each definition stated in Section 1.01 or 1.03 of this Lease applies
equally to the singular and the plural forms of the word or term defined.
(c) Any reference to a document defined in Section 1.03 of this Lease is to the
document as originally executed, or, if amended or supplemented as provided
in this Lease, to the document as amended or supplemented and in effect at
the relevant time of reference.
(d) All accounting terms not otherwise defined in this Lease have the meanings
assigned to them under generally accepted accounting principles.
(e) All references in Section 1.01 are subject to the specific definitions (if
any) in Section 1.03.
Section 1.03 - Definitions. Each underlined word or term in this Section 1.03
has the meaning stated immediately after it.
Additional Rent. All Taxes, Operating Expenses, costs, expenses and other
charges (other than Basic Rent) due from Tenant to Landlord or incurred by
Landlord as the result of a Default.
Additional Services. Services provided to Tenant or in respect of the
Premises which are not Basic Services described in Exhibit A.
Authorizations. All franchises, licenses, permits and other governmental
consents issued by Governmental Authorities under Legal Requirements which are
or may be required for the occupancy of the Premises and the conduct of a
Permitted Use on the Premises.
Basic Services. The Landlord's services described in Exhibit A.
Building. The building on or to be constructed or under construction on the
Land.
Business Day. A day which is not a Saturday, Sunday or other day on which
banks in Worcester, Massachusetts, are authorized or required by law or
executive order to remain closed.
Common Areas. All areas of the Building devoted to the common use of the
occupants of the Building or all occupants of multi-tenant floors or the
<PAGE>
provision of Basic or Additional Services to occupants of the Building,
including but not limited to air shafts, pipes, wires, ducts, conduits, elevator
shafts and elevators, stairwells and stairs, restrooms, mechanical rooms,
janitor closets, vending areas, loading docks and loading facilities.
Default. Any event or condition specified in Article 20 so long as any
applicable requirements for the giving of notice or lapse of time have not
been fulfilled.
Event of Default. Any event or condition specified in Article 20 if all
applicable requirements for the giving of notice or lapse of time have been
fulfilled.
Governmental Authority. United States of America, Commonwealth of Massachusetts,
City of Worcester, County of Worcester, and any political subdivision, agency,
department, commission, board, bureau or instrumentality of any of them.
Ground Lease. The lease of the Land from the Ground Lessor to Landlord dated
July 20, 1990 for which a Notice of Lease is recorded at the Worcester District
Registry of Deeds in Book 12906, Page 1.
Ground Lessor. Massachusetts Biotechnology Research Institute, Inc., a
Massachusetts non-profit corporation, or any successor under or assignee of
the Ground Lease.
Hazardous Substances. "Oil", "hazardous materials", "hazardous wastes" and
"hazardous substances" as those terms are defined under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., as amended, the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, et seq., as amended, Massachusetts General Laws, Chapters
21C and 21E, as amended, and the regulations from time to time adopted under
those laws.
Improvements. All (i) structures located in and forming a part of the Premises,
including but not limited to, walls, ceilings, doors and floor covering, (ii)
pipes, wires, conduits, controls and fixtures relating to utilities located in
and serving the Premises, (iii) casework, including but not limited to, benches,
tables, cabinets and storage facilities, connected to a utility or affixed to
the Premises or the Building and (iv) fixtures, equipment and personal property
of any kind installed on the Premises in such a manner that they become part of
the Premises or the Building under law or that they cannot be removed without
material damage to the structure, fixtures, equipment or personal property or to
the Premises or the Building.
Insurance Requirements. All terms of any policy of insurance maintained by
Landlord or Tenant and applicable to the Land, the Building or the Premises; all
requirements of the issuer of any such policy; and all orders, rules,
regulations and other requirements of the National Fire Protection Association
(or any other body exercising similar functions) applicable to any condition,
operation, use or occupancy of all or any part of the Premises.
Land Disposition Agreement. The agreement dated June 13, 1984 between the
Commonwealth of Massachusetts, Division of Capital Planning and Operations,
<PAGE>
and WBDC relating to the acquisition by WBDC of the land in the Park.
Landlord's Fixtures. All fixtures and equipment paid for by Landlord and
installed in the Building or the Premises for use by Tenant, whether before or
during the Lease Term and whether or not shown in the Working Drawings,
irrespective of whether or how the fixtures or equipment may be affixed to the
Premises or the Building.
Landlord's Work. The work to be done by Landlord with respect to the Premises
described in the Work Letter.
Lease. This document, all exhibits and riders attached and referred to in
this document and all amendments to this document, the exhibits and riders.
Lease Term. The period stated in Section 1.01 beginning on the Term Commencement
Date. The Lease Term includes the period of any extension exercised by Tenant as
provided in this Lease.
Lease Termination Date. The earliest to occur of (a) the Stated Expiration Date,
(b) the termination of this Lease by Landlord as the result of an Event of
Default or (c) the termination of this Lease under Article 17 (Damage or
Destruction) or Article 18 (Eminent Domain).
Lease Year. Each twelve consecutive calendar month period ending on the day
before an anniversary of the Term Commencement Date (or on the day before the
first day of the next succeeding calendar month if the Term Commencement Date
occurs other than on the first day of a month); provided that (a) the first
Lease Year includes the partial month, if any, between the Term Commencement
Date and the first day of the next calendar month and (b) the last Lease Year
will end on the Lease Termination Date.
Legal Requirements. (a) All statutes, codes, ordinances (and rules and
regulations thereunder) and all executive, judicial and administrative orders,
judgments, decrees and injunctions of or by any Governmental Authority which are
applicable to any condition or use of the Premises, Building or Land, and (b)
the provisions of all Authorizations.
Occupancy Arrangement. With respect to all or any part of the Premises or this
Lease, and whether (a) written or unwritten or (b) for all or any portion of the
Lease Term, an assignment, a sublease, a tenancy at will, a tenancy at
sufferance or any other arrangement (including but not limited to a license or
concession) under which a Person occupies the Premises for any purpose.
Operating Expenses. All expenses, costs, and disbursements of every kind which
Landlord pays or becomes obligated to pay in connection with the operation,
management, repair, cleaning and maintenance of the Land and the Building
(including all facilities and equipment in operation on the Term Commencement
Date and such additional facilities and equipment in subsequent years as may be
determined by Landlord to be necessary or beneficial in reducing Operating
Expenses or protecting the health and safety of occupants of the Building) and
the provision of Basic Services, including, but not limited to (a) wages,
salaries and fees, including taxes, insurance, and benefits of all Persons
engaged in connection with Basic Services, (b) the cost of (i) supplies and
materials, electricity and lighting, for Common
<PAGE>
Areas, (ii) water, heat, air conditioning, and ventilating for the Building,
(iii) maintenance, janitorial, and service agreements, (iv) snow removal and
maintenance of parking and landscaped areas, (v) insurance, including casualty
and liability insurance applicable to the Building and Landlord's personal
property used in connection with the Building, (vi) repairs and general
maintenance, (vii) capital items and improvements which are primarily for the
purpose of reducing Operating Expenses, or which are designed to protect the
health and safety of occupants of the Building or which may be required by a
Governmental Authority, amortized over the reasonable life of the capital items
with the reasonable life and amortization schedule being determined by Landlord
in accordance with generally accepted accounting principles, (viii) pursuing an
application for an abatement of Taxes to the extent not deducted from the
abatement, if any, received, (ix) independent auditors, (x) that portion of
Landlord's central accounting functions allocable to the Building and (xi)
office space for the manager of the Building, (c) management fees, not to exceed
eight percent (8%) of Basic Rent in any Lease Year, and (d) maintenance charges
with respect to the Land imposed on the Landlord under the Ground Lease.
Operating expenses will be determined on the accrual basis in accordance with
generally accepted accounting principles consistently applied.
Operating Expenses do not include (i) costs of services in excess of Basic
Services billed to and payable by specific Tenants; (ii) Taxes, any sales tax,
gross receipt tax or similar tax based on Rent, and any income, profits or
similar tax imposed on Landlord; (iii) expenditures for capital improvements,
and any depreciation or amortization, except amortization of certain capital
expenditures as provided in clause (vii) above; (iv) executive salaries above
the grade of building manager; (v) advertising and promotional expenses; (vi)
brokerage commissions; (vii) interest, principal and other amounts payable under
any mortgage, and rent payable under the Ground Lease; (viii) expenditures for
correcting construction defects in the Building; (ix) expenditures for any
alteration, renovation, redecoration, subdivision, layout or finish of any
tenant space in the Building; (x) cost of any curative action required to remedy
damage caused by or resulting from the negligence or willful act of Landlord,
its agents, servants or employees; (xi) legal and other professional fees
incurred by Landlord in connection with the leasing of space in the Building and
in connection with enforcing leases, or for any other matters not directly
connected to the administration or operation of the Building; and (xii) costs of
any type relating to the development of the Building.
Park. Massachusetts Biotechnology Research Park created by WBDC pursuant to the
provisions of Chapter 317 of the Acts of 1983, as it may be expanded by
amendment of Chapter 317 or by virtue of any other legislation or acquisition by
WBDC.
Permitted Exceptions. Any liens or encumbrances on the Premises of the
following character:
(a) Provisions of Chapter 317 of the Acts of 1983, as amended;
(b) Provisions of the Land Disposition Agreement;
(c) Rights, easements and restrictions in the deed dated June 13, 1984 from
<PAGE>
the Commonwealth of Massachusetts, Division of Capital Planning and Operations,
to WBDC recorded with Worcester District Registry of Deeds in Book 8233, Page
106;
(d) Present and future zoning laws, ordinances, resolutions and regulations of
the City of Worcester, including, without limitation, Chapter 17 of the
Revised Ordinances of 1986 - Regulations Relative to Biomedical Research in
the City of Worcester;
(e) The lien of any Taxes assessed but not yet due and payable;
(f) The Ground Lease;
(g) Mortgages of record;
(h) The rights of Landlord and other Persons to whom Landlord has granted
rights to use the Common Areas in common with Tenant;
(i) The easements created by instruments recorded with Worcester District
Registry of Deeds in Book 9538, Page 142 (as modified by Release in Book
12860, Page 119), Book 12717, Page 3 and Book 12860, Page 123, insofar as
they affect the Land;
(j) All declarations, covenants, conditions, restrictions, reservations,
rights, rights-of-way, easements and other matters of record or apparent
affecting the Land or the use of the Land now or in the future in force and
applicable; and
(k) Provisions of the Declaration of Protective Covenants, Conditions and
Restrictions recorded with the Worcester District Registry of Deeds in Book
12860, Page 145, as they may from time to time in the future be amended.
Person. An individual, a corporation, a company, a voluntary association, a
partnership, a trust, an unincorporated organization or a Governmental
Authority.
Premises. The space referred to in Section 1.01 located in the Building shown
outlined or hatched on Exhibit B (the Lease Plan), excluding exterior walls of
the building except the inner surfaces thereof and excluding any Common Areas
located within such space.
Rent. Basic Rent and all Additional Rent.
Rentable Area of the Premises. The number of square feet stated in Section 1.01,
irrespective of whether the number should be more or less as a result of minor
variations resulting from actual construction of the Building or the Premises so
long as such construction is done in accordance with the provisions of this
Lease.
Stated Expiration Date. The later to occur of (i) date as stated in
Section 1.01, or (ii) last day of the final Lease Year of the Lease Term.
Substantial Completion Date. The later to occur of (i) the date on which a
certificate of occupancy for the Premises is issued by the City of Worcester,
<PAGE>
or (ii) the date on which Tenant Fit-up, together with the appurtenant areas of
the Building necessary for access and service to the Premises, have been
completed as provided in Article 7, except for items of work and adjustment of
equipment and fixtures which are not necessary to make the Premises reasonably
tenantable for the Permitted Use or which, because of season or weather or
nature of the item, cannot practicably be done at the time.
Taking. The taking or condemnation of title to all or any part of the Land or
Building or of possession or use of the Land, the Building or the Premises by a
Governmental Authority for any public use or purpose, or any proceeding or
negotiations which might result in such a taking, or any sale or lease in lieu
of such a taking.
Taxes. All (i) taxes (or payments in lieu of taxes), special or general
assessments, water and sewer charges, and other charges of every nature imposed
by Governmental Authorities which are assessed, become due or become liens upon
or with respect to the Land, the Building, the Premises, Landlord's Fixtures,
equipment owned by Landlord on the Land or in the Building or the Premises, or
this Lease under all present or future Legal Requirements, and (ii) taxes based
on a percentage fraction or capitalized value of the Rent (whether in lieu of or
in addition to the taxes described above) computed as if the Land and the
Building were the only property of Landlord subject to such tax. Taxes do not
include (a) inheritance, estate, excise, succession, transfer, gift, franchise,
income, gross receipt, or profit taxes except to the extent they are in
substitution for Taxes now imposed on the Building, the Land, the Premises or
this Lease, or (b) assessments for streets, water or sewer installations or
other municipal improvements made in connection with the initial development of
the Building or the Park.
Tenant Fit-up. All Improvements and other work provided for in the Work Letter
necessary to prepare the Premises for Tenant's initial occupancy other than
Landlord's Work.
Tenant's Cost. The cost of designing and constructing Tenant Fit-up.
Term Commencement Date. The earliest to occur of (a) the Substantial Completion
Date, (b) any other date for commencement of the Term determined as provided in
Article 7 or (c) the date on which Tenant first occupies the Premises for the
Permitted Use.
Total Taking. (i) a Taking of: (a) the fee interest in all or substantially all
of the Land or the Building or (b) such title to or easement in, over, under or
such rights to occupy and use any part of the Land or the Building to the
exclusion of Landlord as, in the good faith judgment of Landlord, unreasonably
restricts access to the Building by vehicle or renders the portion of the
Building remaining after such Taking (even if restoration were made) unsuitable
or uneconomical for the continued use and occupancy of the Building for the
Permitted Use or (ii) a Taking of all or substantially all of the Premises or
such title to or easement in, on or over the Premises to the exclusion of Tenant
which in the good faith judgment of Landlord prohibits access to the Premises or
the exercise, to any material extent, by Tenant of its rights under this Lease.
Unavoidable Delays. Acts of God, strikes, lock outs, labor troubles,
<PAGE>
inability to procure materials, failure of power, riots and insurrection, acts
of the public enemy, wars, earthquakes, hurricanes and other natural disasters,
fires, explosions, any act, failure to act or default of the other party to this
Lease or any other reason (except lack of money) beyond the control of any party
to this Lease.
Work Letter. The agreement between Landlord and Tenant with respect to Tenant
Fit-up, substantially in the form of Exhibit C.
Working Drawings. The detailed plans and specifications developed by Landlord
and Tenant as provided in the Work Letter, prepared in compliance with all
applicable Legal Requirements, stamped by registered Massachusetts
professionals, and consisting of all architectural and engineering plans which
are required to construct Tenant Fit-up and to obtain any Authorization required
for the Premises.
WBDC. Worcester Business Development Corporation, a Massachusetts corporation
established pursuant to the provisions of Chapter 600 of the Acts of 1965.
ARTICLE 2
Premises
Section 2.01 - Premises. Landlord hereby leases the Premises to Tenant, and
Tenant hereby takes the Premises from Landlord, subject to the provisions of
this Lease and the Permitted Exceptions. Landlord reserves the right to relocate
within or without the Premises pipes, ducts, vents, flues, conduits, wires and
appurtenant fixtures which service other parts of the Building; provided that
such work is done in a manner that it does not unreasonably interfere with
Tenant's use of the Premises.
Section 2.02 - Appurtenances. Tenant may use the Common Areas and the Land as
appurtenant to the Premises for the purposes for which they were designed.
Tenant, its employees and business invitees have the non-exclusive right to use
the parking areas on the Land.
Section 2.03 - Landlord's Fixtures. Tenant may use the Landlord's Fixtures
during the Lease Term. Landlord's Fixtures remain the property of Landlord and
may not be removed by Tenant whether or not they are affixed to the Building.
ARTICLE 3
Term
Section 3.01 - Term Commencement. The Lease Term will begin on the Term
Commencement Date.
Section 3.02 - Termination. The Lease Term will end on the Lease Termination
Date.
<PAGE>
Section 3.03 - Estoppel Certificate. If either the Term Commencement Date or the
Stated Expiration Date occurs on a date other than as stated in Section 1.01,
Landlord and Tenant agree to execute a certificate in the form of the estoppel
certificate referred to in Section 25.02 or such other form as either may
request, establishing the Term Commencement Date and the Stated Expiration Date.
ARTICLE 4
Rent
Section 4.01 - Basic Rent. Tenant agrees to pay Landlord the Basic Rent as
annual rent for the Premises for each Lease Year, without offset or deduction
and without previous demand. Tenant agrees to pay Basic Rent in equal monthly
installments in advance on the first day of each calendar month during the Lease
Term, except that the first installment of Basic Rent, pro-rated for the partial
month, if any, at the beginning of the Lease Term, will be paid on the Term
Commencement Date.
Section 4.02 - Adjustment of Basic Rent. The Basic Rent for each Lease Year
during the first Fixed Rental Period will be as stated in Section 1.01. The
Basic Rent for each Lease Year of each successive Fixed Rental Period, if any,
will be as stated in Exhibit E, the Rent Rider.
ARTICLE 5
Use of Premises
Section 5.01 - Use Restricted. The Premises may be used for the Permitted Use
and for no other purpose. Tenant agrees not to make any use of the Premises that
would cause the Premises to be considered a "place of public accommodation"
under the Americans with Disabilities Act of 1990. No Improvements, alterations
or additions may be made in or to the Premises except as provided in this Lease.
ARTICLE 6
Operating Expenses; Taxes
Section 6.01 - Operating Expenses and Taxes. Tenant agrees to pay Landlord, as
Additional Rent, (i) Tenant's Share of Operating Expenses and Taxes as provided
in this Article 6, pro-rated for any partial calendar year falling within the
Lease Term, and (ii) all Taxes assessed with respect to Improvements or
structures anywhere in the Park constructed by or on behalf of Tenant after the
Substantial Completion Date.
Section 6.02 - Monthly Payments of Additional Rent. Tenant agrees to pay to
Landlord in advance for each calendar month of the Lease Term, as Additional
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Rent, Operating Expenses and Taxes in an amount equal to (a) 1/12th of the
product of (i) Estimated Operating Expenses for the then current calendar year
times (ii) the Rentable Area of the Premises, plus (b) 1/12th of the product of
(i) Estimated Taxes for the then current calendar year times (ii) the Rentable
Area of the Premises. Tenant agrees to pay the amount payable under this Section
6.02 with Tenant's monthly payments of Basic Rent. The amounts paid will be
credited by Landlord to Tenant's obligations under Section 6.01. For the balance
of the first calendar year at the beginning of the Lease Term the amount payable
by Tenant each month with respect to Tenant's Share of Estimated Operating
Expenses and Estimated Taxes will be the Initial Monthly Payment stated in
Section 1.01, which amount will be pro-rated for the partial month, if any, at
the beginning of the Lease Term and paid beginning on the Term Commencement
Date.
Section 6.03 - Annual Statements. Within sixty (60) days after the end of each
calendar year, Landlord agrees to render to Tenant a statement, prepared in
accordance with generally accepted accounting practices, showing in reasonable
detail (i) for the calendar year just ended (if any) (a) the amount of Taxes,
(b) the amount of Operating Expenses and (c) a calculation of Tenant's Share of
Taxes and Operating Expenses, and (ii) for the then current calendar year, the
amount of Estimated Operating Expenses and Estimated Taxes determined by
Landlord in the reasonable exercise of its judgment. Estimated Operating
Expenses and Estimated Taxes for the calendar year in which the Lease Term
begins are the sums set forth in Section 1.01. If the total amount paid by
Tenant on account of Operating Expenses or Taxes or both in any calendar year
exceeds the actual amount of Tenant's Share of Operating Expenses or Taxes for
the year, then the excess will be credited by Landlord against the monthly
installments of Additional Rent next falling due or refunded to Tenant upon the
expiration or termination of this Lease, if earlier (unless such expiration or
termination is the result of an Event of Default). If the total amount of
Operating Expenses or Taxes or both paid by Tenant in any calendar year is less
than the actual amount of Tenant's Share of Operating Expenses or Taxes for the
year, then Tenant agrees to pay the difference to Landlord within thirty (30)
days after receipt by Tenant of Landlord's statement. Not more frequently than
once each Lease Year, Tenant may, at its expense and after ten (10) Business
Days prior notice, audit Landlord's records relating to Operating Expenses.
Section 6.04 - Assessments and Other Taxes. Landlord agrees that all special and
general assessments will be paid in installments over the longest period
permitted by law and that the amount of Taxes shown on each annual statement
will include only the portion due in that year. Nothing in this Lease shall be
construed to require Tenant to pay any inheritance, estate, excise, succession,
transfer, gift, franchise, income, gross receipt, or profit taxes that are, or
may be, imposed upon Landlord, its successors or assigns, except to the extent
such taxes are in substitution for Taxes as now imposed on the Building, the
Land, the Premises or this Lease.
Section 6.05 - Accounting Periods. Landlord may from time to time change the
periods of accounting under this Lease to any annual period other than a
calendar year. Upon any such change, all items referred to in this Article 6
will be appropriately apportioned. In all statements rendered under Section
6.03, amounts for periods partially within and partially outside of the
accounting periods will be appropriately apportioned. Any items which are
<PAGE>
not determinable at the time of a statement will be included on the basis of
Landlord's estimate. Promptly after determination, Landlord will render a
supplemental statement in which appropriate adjustment will be made.
Section 6.06 - Abatement of Taxes. Landlord may at any time and from time to
time make application to the appropriate Governmental Authority for an abatement
of Taxes. Landlord agrees to make such an application at any time tenants
occupying more than 60% of the Rentable Area of the Building under written
Occupancy Arrangements directly with the Landlord request that Landlord do so.
If (i) such an application is successful and (ii) Tenant has made any payment in
respect of Taxes under this Article 6 for the period with respect to which the
abatement was granted, Landlord agrees (a) to deduct from the amount of the
abatement all expenses incurred by it in connection with the application (b)
within thirty (30) days after receipt of the abatement amount, to pay to Tenant
Tenant's Share (adjusted for any period for which Tenant had made a partial
payment) of the abatement, with interest, if any, paid by the Governmental
Authority on such abatement, and (c) retain the balance, if any.
Section 6.07 - Exemption From Taxes. As provided in Section 6 of Chapter 317 of
the Acts of 1983, Landlord may be or become exempt from the obligation to pay
Taxes if it leases any part of the Building to an organization exempt from taxes
under the United States Internal Revenue Code. If Tenant is able to establish to
Landlord's satisfaction the amount of the reduction in Taxes during any calendar
year which is a result of this Lease and Tenant's tax-exempt status, Tenant's
obligation to pay Taxes for such calendar year as provided in this Article 6
will abate in the same amount, or the amount, if previously paid, will be
refunded to Tenant. If Tenant is not tax-exempt but Landlord's obligation to pay
Taxes is abated because of the tax-exempt status of any other tenant or tenants
of the Building, Landlord reserves the right to increase Tenant's Share as it
relates to Taxes so that the Taxes payable with respect to the Land and the
Building for any calendar year during the Lease Term are equitably apportioned
among the tenants of the Building who are not exempt from taxation.
ARTICLE 7
Improvements
Section 7.01 - Tenant Fit-up. In connection with the preparation of the Premises
for Tenant's initial occupancy, Landlord agrees to do Landlord's Work and Tenant
Fit-up as described in the Working Drawings. Landlord agrees to perform all work
in a good and workmanlike manner and in compliance with all Legal Requirements
and Insurance Requirements, subject to the provisions of the Work Letter. Unless
otherwise agreed, Tenant agrees to pay Tenant's Cost as Additional Rent in
installments as the work progresses as provided in the agreement with the
contractor performing the work and in any event on or before the Term
Commencement Date.
Section 7.02 - Time for Completion. Landlord agrees to use due diligence to have
the Premises ready for occupancy on or before the Term Commencement Date
referred to in Section 1.01. Reference is made to the Work Letter for details of
the completion process.
<PAGE>
Section 7.03 - Notice of Substantial Completion Date. Approximately fifteen (15)
days before it occurs, Landlord agrees to give Tenant a notice stating the
Substantial Completion Date.
Section 7.04 - Delays. If Landlord is delayed in substantially completing
Tenant Fit-up as the result of
(a) delay by Tenant or any Person employed by Tenant in delivery to Landlord of
any plans, design work and detailed drawings, or
(b) Tenant's requests for special work not part of the work described in the
Working Drawings or for changes to the Working Drawings after approval by
Tenant (notwithstanding Landlord's approval of such changes), or
(c) delays in performance by Tenant or any Person employed by Tenant which
cause delays in the completion of any work to be done by Landlord or which
otherwise delay the substantial completion of the Premises, or
(d) any fault, negligence, omission, or failure to act on the part of Tenant or
its agents, contractors, workmen, mechanics, suppliers or invitees,
provided Tenant has been given notice of each such delay, the Premises will be
substantially completed on (and the Term Commencement Date will be) that date
determined by Landlord, in the reasonable exercise of its judgment, on which the
Substantial Completion Date would have occurred but for the delays referred to
in this Section 7.04.
Section 7.05 - Tenant's Access to the Premises. Tenant and Tenant's agents, at
Tenant's sole risk, may, with Landlord's prior consent, enter the Premises
before the Term Commencement Date in order to (a) install its furniture,
furnishings and equipment and (b) perform or inspect work necessary to make the
Premises ready for Tenant's use and occupancy. If Landlord permits entry before
the Term Commencement Date, the permission is conditioned upon (i) Tenant
delivering to Landlord evidence of the insurance required under Section 15.01
and (ii) Tenant and Tenant's agents, contractors, workmen, mechanics, suppliers
and invitees, working in harmony with Landlord and contractors working for
Landlord and with other tenants of the Building. If at any time Tenant's entry
causes or threatens to cause disharmony or interfere with the orderly completion
or operation of the Building, Landlord may withdraw the permission upon notice
to Tenant. Any entry by Tenant will be deemed to be under all of the provisions
of this Lease except the covenant to pay Rent. Except for negligence of Landlord
and its employees, if Tenant or its agents enter the Premises before the Term
Commencement Date, Landlord will not be liable for and Tenant agrees to assume
the entire risk for any loss or damage which may occur to any Improvements or to
any property placed in the Premises before the Term Commencement Date.
Section 7.06 - Improvements by Tenant. Tenant agrees not to hang shades,
curtains, signs, awnings or other materials in any window, attach any materials
to or make any change in the appearance of any glass visible from outside of the
Premises, add any window treatment of any kind or make Improvements or install
furniture visible from outside of the Premises, without Landlord's prior written
consent. Tenant agrees not to make any
<PAGE>
Improvements before or during the Lease Term, the total cost of which during any
twelve (12) consecutive months exceeds $5,000, unless Landlord first approves
the plans and specifications for the Improvements and the contractors performing
the work. Tenant agrees not to make any Improvements which would (a) delay
completion of the Premises or the Building, or (b) require unusual expense to
readapt the Premises to normal research and development, general office and
limited light manufacturing use upon termination of this Lease or (c) increase
(i) the cost of Landlord's Work or insurance or (ii) Taxes. All Improvements
will become part of the Premises and property of Landlord upon their completion
or installation except to the extent Landlord specifies that they must be
removed at Tenant's expense on the Lease Termination Date as an express
condition to Landlord's approval of their initial installation. The construction
of Improvements by Tenant and the installation of Tenant's furniture,
furnishings and equipment will be coordinated with any work being performed by
Landlord and will be performed in such manner as to maintain harmonious labor
relations and not to damage the Building or the Premises or interfere with
Building operation. Except for work done by or through Landlord before making
any Improvements, Tenant will: secure all necessary Authorizations; deliver to
Landlord a statement of the names of all its contractors and subcontractors and
the estimated cost of all labor and material to be furnished by them; cause each
contractor to carry (1) worker's compensation insurance in statutory amounts
covering all the contractor's and subcontractor's employees, (2) comprehensive
public liability insurance with such limits as Landlord may reasonably require,
but in no event less than $1,000,000, and (3) property damage insurance with
limits of not less than $300,000 (all such insurance to be written by companies
approved by Landlord and insuring Landlord and Tenant as well as the
contractors), and to deliver to Landlord certificates of all such insurance; and
secure casualty insurance against loss or damage to the Improvements pending
completion and deliver evidence of such insurance to Landlord. Tenant agrees to
pay promptly when due the entire cost of any work done in the Premises by
Tenant, its agents, employees, or independent contractors, and not to cause or
permit any liens for labor or materials performed or furnished in connection
with its work to attach to the Premises and immediately to discharge any such
liens which may attach. All construction work done by Tenant, its agents,
employees or independent contractors will be done in a good and workmanlike
manner and in compliance with all Legal Requirements and Insurance Requirements.
Landlord may inspect the work at any time and will promptly give notice to
Tenant of any observed defects.
ARTICLE 8
Building Services
Section 8.01 - Basic Services. During the Lease Term, Landlord agrees to
furnish, or cause to be furnished, the Basic Services.
Section 8.02 - Other Janitors. No Person will be employed by Tenant to do
janitorial work in the Premises and no Person other than the janitors of the
Building will clean the Premises unless first approved in writing by Landlord.
Any Person employed by Tenant with Landlord's approval to do janitorial work
will, while in the Building, either inside or outside the Premises, be subject
<PAGE>
to and under the control and direction of the superintendent of the Building
(but not as agent or servant of the superintendent or of Landlord).
Section 8.03 - Additional Services. Tenant agrees to pay Landlord a reasonable
charge for any extra cleaning of the Premises required because of the
carelessness or indifference of Tenant and for any Additional Services rendered
at the request of Tenant. If the cost of cleaning the Premises is increased due
to the installation in the Premises, at Tenant's request, of any unique or
special materials, finish or equipment, Tenant agrees to pay the Landlord an
amount equal to the increase in cost. All charges for Additional Services will
be payable within ten (10) days after the date on which they are billed.
Section 8.04 - Limitations on Landlord's Liability. Landlord will not be liable
in damages nor in default under this Lease for any failure or delay in
furnishing Basic Services or Additional Services when the failure or delay is
caused by Unavoidable Delays. No failure or delay by Landlord in furnishing
Basic Services or Additional Services caused by Unavoidable Delays may be
claimed or pleaded as an eviction or disturbance of Tenant's possession or give
Tenant any right to terminate this Lease or give rise to any claim for set-off
or abatement of Rent or excuse Tenant from the performance of any of its
obligations under this Lease.
Section 8.05 - Electric Service. Tenant agrees to make its own arrangements for
the provision of electricity to the Premises and to pay the full cost (as shown
on a separate electric meter to be installed at Landlord's expense) directly to
the utility company providing the electricity. Tenant's use of electricity in
the Premises will not at any time exceed the capacity of any of the electrical
conductors or equipment in or serving the Premises. In order to insure that such
capacity is not exceeded and to avert possible adverse effect upon the Building
electric service, Tenant agrees it will not, without prior written notice to
Landlord in each instance, connect to the Building electric distribution system
any fixtures, appliances or equipment which operate on a voltage in excess of
208 volts nominal or make any alteration or addition to the electric system of
the Premises. Unless Landlord objects to the connection of any such fixtures,
appliances or equipment, all additional risers or other equipment required for
the connection will be provided by Landlord, and the cost will be paid by Tenant
on Landlord's demand.
ARTICLE 9
Tenant's Covenants
Section 9.01 - Pay Rent. Tenant agrees to pay when due and without notice,
demand, offset or deduction all Rent and all charges for utility services
rendered to the Premises not included in Rent and, as Additional Rent, all
charges of Landlord for Additional Services.
Section 9.02 - Occupancy of the Premises. Tenant agrees to occupy the Premises
continuously from the Term Commencement Date for the Permitted Use only. Tenant
will not (i) injure or deface the Premises or the Building, (ii) install any
sign in or on any window, demising wall, corridor, elevator
<PAGE>
foyer or other Common Area, (iii) permit in the Premises any inflammable fluids
or chemicals not reasonably related to the Permitted Use, nor (iv) permit any
nuisance or use of the Premises which is improper, offensive, contrary to any
Legal Requirement or Insurance Requirement or liable to render necessary any
alteration or addition to the Building.
Section 9.03 - Rules and Regulations. Tenant agrees not to obstruct in any
manner any portion of the Building or the Land. Tenant agrees to comply with all
reasonable rules and regulations of which Tenant has notice promulgated by
Landlord and uniformly applicable to Persons occupying the Building regulating
the details of the operation and use of the Building.
Section 9.04 - Safety. Tenant agrees to keep the Premises equipped with all
safety appliances required by Legal Requirements or Insurance Requirements
applicable to Tenant specifically because of any use made by Tenant and not
applicable generally to all other tenants of the Building. Tenant agrees to
procure all Authorizations required because of Tenant's use of the Premises and
to do any work required under any Authorization because of such use, it being
understood that the provisions of this Section may not be construed to broaden
in any way the Permitted Use.
Section 9.05 - Equipment. Tenant agrees not to place a load upon the floor of
the Premises exceeding the live load for which the floor has been designed.
Tenant agrees not to move any safe or other heavy equipment into, about or out
of the Premises except in the manner and at the time authorized by Landlord in
each instance. Tenant agrees to isolate and maintain all of Tenant's equipment
which causes or may cause airborne or structure-borne vibration or noise,
whether or not it may be transmitted to any other part of the Building, so as to
eliminate such vibration or noise.
Section 9.06 - Pay Taxes. Tenant agrees to pay promptly when due all Taxes upon
personal property (including, without limitation, fixtures and equipment) in the
Premises irrespective of the Person to whom the Taxes may be assessed.
Section 9.07 - Maintenance. Tenant agrees, at all times during the Lease Term,
and at its own expense, (i) to maintain the Premises in good repair and
condition (except for (a) ordinary wear and tear, (b) damage by fire or casualty
and (c) any defect in material or workmanship performed by Landlord in
connection with initial preparation of the Premises for Tenant's use and
occupancy), (ii) to use all reasonable precautions to prevent waste, damage or
injury to the Premises or any other part of the Building and (iii) to repair all
damage to any part of the Building caused by Tenant or any of Tenant's agents,
employees or invitees, to the extent that such damage is not covered by
Landlord's insurance.
Section 9.08 - Redelivery. On the Lease Termination Date, Tenant agrees to leave
the Premises and surrender possession to Landlord free of (i) all tenants or
occupants claiming through or under Tenant, and (ii) all liens encumbrances,
restrictions or reservations caused or consented to by Tenant. Tenant agrees,
subject to the provisions of Articles 17 and 18, to surrender the Premises,
including all Landlord's Fixtures and all Improvements except those which Tenant
is required to remove as provided in Section 7.06, to Landlord broom clean and
in good condition and repair (ordinary wear and tear and damage by fire or other
casualty only excepted) with all damage resulting
<PAGE>
from removal of (i) Tenant's furniture, furnishings and equipment and (ii) any
Improvements which Tenant is required to remove as provided in Section 7.06
repaired at Tenant's expense to Landlord's reasonable satisfaction.
Section 9.09 - Tenant Financial Information. Tenant agrees to deliver to
Landlord (i) within thirty (30) days after the last day of each fiscal quarter
other than the fourth quarter, a management prepared statement of Tenant's
income and expense for the preceding quarter and Tenant's balance sheet as of
the end of the quarter, and (ii) as soon as available and in any event within
ninety (90) days after the end of Tenant's fiscal year, a year-end financial
report audited by Tenant's certified public accountants and containing
statements of Tenant's income and expenses for the preceding fiscal year and
Tenant's balance sheet as of the end of the fiscal year. Whenever requested by
Landlord in connection with financing of the Building or its own operations,
Tenant agrees to provide to Landlord all information currently available
relating to Tenant's existing and future financial condition, including but not
limited to internally and externally prepared financial statements and reports,
prospectuses and offering circulars, underwriting agreements private placement
memoranda and similar documents involving public and private funding sources.
Landlord agrees to maintain all the information in strictest confidence except
to the extent necessary to share it with lenders in connection with financing of
the Building or its own operations.
ARTICLE 10
Compliance With Requirements
Section 10.01 - Legal Requirements. Tenant agrees, at its expense, promptly to
observe and comply with all Legal Requirements relating to it specifically or
its use of the Premises and not applicable generally to all other tenants of the
Building. Tenant agrees to pay all costs, liabilities, losses, damages, fines,
penalties, claims and demands, that may arise out of or be imposed because of
the failure of Tenant to comply with the covenants of this Article 10.
Section 10.02 - Contests. Tenant has the right to contest by appropriate legal
proceedings diligently conducted in good faith, in the name of Tenant or
Landlord (if legally required) or both (if legally required), without expense or
liability to Landlord, the validity or application of any Legal Requirement. If
compliance with the terms of any Legal Requirement may legally be delayed
pending the prosecution of any such proceeding, Tenant may delay compliance
until the final determination of the proceeding.
Section 10.03 - Land Disposition Agreement. As required under the Land
Disposition Agreement, Tenant, working with the public and private higher
educational institutions of Worcester and existing or future federal, state and
local job training programs, agrees to endeavor to establish education and
training programs to assist Worcester residents and women and minority group
members in developing skills necessary for future employment within or ancillary
to the Park and to establish fair and equitable procedures to provide employment
opportunities for qualified residents of the City of Worcester and women and
minority group members on a priority basis.
<PAGE>
Section 10.04 - Environmental Legal Requirements. Except to the extent permitted
under applicable Legal Requirements, Tenant agrees not to cause or permit any
Hazardous Substances to be released on the Land or in the Building or the
Premises or into the air, or to be introduced into the sewage or other waste
disposal system serving the Premises. Tenant agrees to generate, store or
dispose of Hazardous Substances in the Premises or dispose of Hazardous
Substances from the Premises to any other location only in compliance with all
applicable Legal Requirements and to notify Landlord of any incident which would
require the filing of a notice under any Legal Requirement. Tenant agrees to
provide Landlord with such information required by Governmental Authorities as
Landlord may reasonably request from time to time with respect to compliance
with this Section.
ARTICLE 11
Covenant Against Liens
Section 11.01 - No Liens. Tenant agrees not to create any lien on the Premises,
the Building or the Land and to discharge any lien on the Premises, the Building
or the Land arising out of any act or omission by Tenant, including but not
limited to any tax, mechanic's, laborer's or materialman's lien or lien arising
under Massachusetts General Laws, Chapter 21E.
Section 11.02 - Discharge. If any lien is filed against the Premises, the
Building or the Land as a result of any act or omission by Tenant, Tenant agrees
to cause the lien to be discharged of record by payment, deposit, bond, order of
a court of competent jurisdiction or otherwise, within sixty (60) days after (i)
Tenant has actual or constructive notice that it is filed, or (ii) final
judgment in favor of the holder of the lien. If Tenant fails to cause the lien
to be discharged, then, in addition to any remedies available to Landlord in
case of an Event of Default, Landlord may, but is not obligated to, discharge
the lien either by paying the amount claimed to be due or by procuring the
discharge of the lien by deposit or by bonding proceedings. Any amount paid by
Landlord and all costs incurred by Landlord in connection the removal of any
lien will constitute Additional Rent and will be paid by Tenant to Landlord on
demand with interest as provided in Section 21.06.
ARTICLE 12
Access to Premises
Section 12.01 - Access. Landlord or Landlord's agents and designees will have
the right, but not the obligation, to enter the Premises at all reasonable times
during ordinary business hours, after not less than twenty-four hours notice
except in the case of an emergency, to examine the Premises, to make necessary
repairs and replacements and to exhibit the Premises to prospective purchasers,
mortgagees, and, during the last six (6) months of the Lease Term, prospective
tenants. Except in the case of an emergency, any Person entering the Premises
under this Section 12.01 will be accompanied by a Person designated by Tenant,
if Tenant requires.
<PAGE>
ARTICLE 13
Assignment and Subletting: Occupancy Arrangements
Section 13.01 - Assignment and Subletting. Tenant agrees not to enter into any
Occupancy Arrangement, either voluntarily or by operation of law, (other than
with a Person who is affiliated with Tenant and for a period ending when and if
such Person ceases to be affiliated with Tenant) without the prior written
consent of Landlord. For purposes of this Article 13, a Person will be
considered to be affiliated with Tenant if such Person, directly or indirectly,
controls, is controlled by or is under common control with Tenant.
Section 13.02 - Procedure. If Tenant intends to enter into an Occupancy
Arrangement which requires Landlord's consent, Tenant agrees to give Landlord
notice of the name of (and a financial statement with respect to) the proposed
occupant, the exact terms of the Arrangement and a precise description of the
portion of the Premises intended to be subject to the Occupancy Arrangement.
Within thirty (30) days after receipt of the notice, Landlord will (i) consent
to the Occupancy Arrangement, or (ii) refuse to consent to the occupancy
Arrangement, or (iii) notify Tenant of Landlord's election to terminate this
Lease with respect to so much of the Premises as is intended to be subject to
the Occupancy Arrangement. If Landlord consents to the Occupancy Arrangement,
Tenant agrees (i) to enter into the Arrangement on the exact terms described to
Landlord within thirty (30) days after Landlord's consent and to deliver to
Landlord and to the holder of any first mortgage on the Building an executed
original counterpart of the Occupancy Arrangement and (ii) to remain liable for
the payment and performance of the provisions of this Lease. If Tenant enters
into an Occupancy Arrangement, Tenant agrees to pay to Landlord when received
the excess, if any, of amounts received in respect of the Occupancy Arrangement
over the Rent. Any Occupancy Arrangement will expressly incorporate and be
subject to the terms of this Lease, which terms will be binding on all parties
to the Occupancy Arrangement. If Landlord consents to and Tenant does not enter
into the Arrangement within the thirty (30) day period, such consent will be
deemed revoked and Tenant will again comply with the terms of this Section. If
Landlord elects to terminate this Lease with respect to that portion of the
Premises to be subject to the Occupancy Arrangement, this Lease will terminate
as of the date specified in the election, which date will be not less than
thirty (30) days nor more than sixty (60) days after the date of the election;
provided that Tenant may, at any time before the date of termination, withdraw
its request for Landlord's consent to an Occupancy Arrangement. Such withdrawal
by Tenant will nullify Landlord's election to terminate, and this Lease will
remain in effect as if no election by Landlord had been made. If Landlord
terminates this Lease, all Rent due will be adjusted as of the day the Premises
(or the portion affected by the termination) are redelivered to Landlord. Any
portion of the Premises redelivered to Landlord will be in the condition
specified in Section 9.08.
ARTICLE 14
Indemnity
<PAGE>
Section 14.01 - Tenant's Indemnity. Except to the extent waived by Landlord
under the provisions of Section 16.02, Tenant agrees to indemnify Landlord
against all claims, losses and expenses, including reasonable attorneys' fees,
which may be imposed upon or incurred by Landlord by reason of any of the
following occurrences:
(a) any act or omission on the Premises by Tenant or any Person other than
Landlord, its agents, contractors, licensees or invitees;
(b) any use, non-use, possession, occupation, condition, operation, maintenance
or management of the Premises;
(c) any act or omission on the part of Tenant, or any of its agents,
contractors, licensees or invitees, whether or not occurring on the
Premises;
(d) any accident, injury or damage to any Person or property occurring in the
Premises, not due to any act or omission of Landlord, its agents,
contractors or licensees;
(e) any failure on the part of Tenant to comply with any of its obligations
under this Lease, whether or not such failure constitutes a Default or
Event of Default;
(f) any untrue or misleading statement of a material fact or any
misrepresentation of a material fact made by or on behalf of Tenant in
connection with the negotiation of this Lease; or
(g) any release or threat of release of Hazardous Substances by Tenant, or any
of its agents, contractors, licensees or invitees, whether or not occurring
on the Premises.
Section 14.02 - Claims by Landlord. If a proceeding is brought against Landlord
arising out of an occurrence described in Section 14.01, upon notice from
Landlord Tenant agrees, at its expense, to defend the proceeding using legal
counsel reasonably satisfactory to Landlord or, if applicable, Tenant's insurer,
provided that Tenant has not been prejudiced by failure or delay on the part of
Landlord to give Tenant prompt notice of the proceeding. If Tenant has supplied
Landlord with insurance covering an occurrence described in Section 14.01, no
claim may be made against Tenant with respect to that occurrence unless the
insurer fails or refuses to defend and/or pay all claims, losses and expenses
incurred by Landlord. Notwithstanding the foregoing, Landlord has the right to
make claims, institute legal proceedings, or otherwise seek redress against
Tenant before the expiration of any statute of limitations or other limitation
on the time or manner in which Landlord may seek redress regardless of whether
or not an insurer is responding. Tenant's obligation to indemnify Landlord as
provided in Sections 14.01 and 14.02 will survive the expiration or earlier
termination of this Lease.
Section 14.03 - Landlord's Liability. Except for its intentional acts or
negligence or the intentional acts or negligence of its agents, contractors or
licensees, Landlord will not be responsible or liable for any loss, damage or
injury to the Premises or to any Person or property at any time on the Land or
in the Building or the Premises.
<PAGE>
ARTICLE 15
Insurance
Section 15.01 - Tenant's Insurance. Tenant agrees to provide, at its expense,
and to keep in force:
(a) Comprehensive general liability insurance against claims for personal
injury, death and property damage occurring with respect to Tenant's
occupancy of the Premises having primary combined single limit coverage of
at least $1,000,000 for bodily injury and property damage.
(b) Casualty insurance against loss or damage to (i) all inventory, furniture,
furnishings and equipment other than Landlord's Fixtures owned, controlled
or in use by Tenant and situated in the Building, (ii) all Improvements
made by Tenant pending completion and (iii) all Improvements made by Tenant
which Tenant is required to remove on the Lease Termination Date under
Section 7.06, under a so-called "All Risk" policy in an amount sufficient
to replace the same without allowance for depreciation, if available, and
if not, in the amount necessary to avoid the effect of co-insurance
provisions under the applicable policies.
(c) Worker's compensation insurance for all Tenant's employees working in the
Premises in an amount sufficient to comply with Legal Requirements.
(d) Such greater limits and such other insurance and in such amounts as may
from time to time be reasonably required by Landlord against other
insurable hazards which at the time are customarily insured against in the
case of buildings similarly situated and used.
Section 15.02 - General Insurance Provisions.
(a) All insurance provided for in Section 15.01 will be written as primary
policies (without "contribution" or "solely in excess of coverage carried
by Lessor" provisions) and will be effected under valid and enforceable
policies, issued by insurers of recognized responsibility authorized to
write such insurance in Massachusetts and having a Best's financial rating
of B or better. Not less than five (5) days before the Term Commencement
Date, and thereafter not less than ten (10) days before the expiration
dates of the expiring policies furnished under to Section 15.01, binders,
certificates or other evidence of such insurance satisfactory to Landlord
bearing notations evidencing the payment of premiums or accompanied by
other evidence satisfactory to Landlord of such payment, will be delivered
by Tenant to Landlord.
(b) Nothing in this Article 15 will prevent Tenant from taking out insurance of
the kind and in the amounts provided for under this Article under a blanket
insurance policy or policies covering other properties as well as the
Premises. Any policy or policies of blanket insurance (i) will specify, or
Tenant will furnish Landlord with a written statement from the insurers
specifying, the amounts of the total insurance allocated to the Premises,
<PAGE>
which amounts will not be less than the amounts required by Section 15.01
and will be sufficient to prevent any of the insureds from becoming a
co-insurer within the terms of the applicable policy or policies, (ii) will
contain an "Agreed Amount" clause as to the Premises and (iii) will
otherwise comply as to endorsements and coverage with the provisions of
this Article.
(c) All policies of insurance provided for in Section 15.01 will name Landlord
and Tenant as the insured, as their respective interests may appear, and
also the Ground Lessor and any mortgagee, when requested, as their
respective interests may appear, except that Landlord, the Ground Lessor
and any such mortgagee will have no interest in the insurance on Tenant's
personal property. Each such policy or certificate issued by the insurer
will, to the extent obtainable, contain an agreement by the insurer that
the insurance will not be cancelled without at least twenty (20) days prior
written notice to Landlord and to any other named insureds. Landlord agrees
not to carry any insurance concurrent in coverage and contributing in the
event of loss with any insurance required to be furnished by Tenant if the
effect of such separate insurance would be to reduce the protection or the
payment to be made under Tenant's insurance.
Section 15.03 - Landlord's Insurance. Landlord agrees to cause the Building
(including Landlord's Fixtures but excluding any Improvements and leasehold
improvements (a) by any tenant prior to their completion, or (b) which any
tenant may be required to remove upon termination of its lease) to be insured
for the benefit of Landlord, the Ground Lessor and any mortgagee of Landlord, as
their respective interests may appear, against loss or damage under a so-called
"All Risk" policy in an amount equal to (i) the replacement value or (ii) the
amount necessary to avoid the effect of co-insurance provisions of the
applicable policies. Landlord also agrees to maintain comprehensive form boiler
insurance, rental value insurance and such other insurance against such perils
and in such amounts as may be required by the Ground Lessor or any mortgagee of
Landlord or as Landlord may consider prudent. The cost of such insurance will be
part of the Operating Expenses.
ARTICLE 16
Waiver of Subrogation
Section 16.01 - Waiver of Subrogation. If available, all insurance policies
carried by either party covering the Building and/or the Premises will contain a
clause or endorsement expressly waiving any right on the part of the insurer to
make any claim against the other party and against the Ground Lessor. The
parties agree to use reasonable efforts to insure that their policies will
include such waiver clause or endorsement.
Section 16.02 - Waiver of Rights. Landlord and Tenant each waive all claims,
causes of action and rights of recovery against the other and against the Ground
Lessor and their respective partners, agents, officers and employees, for any
loss or damage to persons, property or business which occurs on or about the
Premises or the Building and results from any of the perils insured under any
policy of insurance maintained by Landlord and/or Tenant, regardless of cause.
This waiver includes the negligence and intentional wrongdoing of
<PAGE>
either party and their respective agents, officers and employees but is
effective only to the extent of recovery, if any, under any such policy. This
waiver will be void to the extent that any such insurance is invalidated by
reason of this waiver.
ARTICLE 17
Damage and Restoration
Section 17.01 - Substantial Damage. If the Building is damaged by fire or other
casualty, Tenant agrees to give prompt written notice to Landlord. If as a
result of fire or other casualty, (i) the Building is so damaged that
substantial alteration or reconstruction of the Building is, in Landlord's sole
opinion, required (whether or not the Premises have been damaged), or (ii) the
Ground Lease is terminated, or (iii) any mortgagee of the Building requires that
all or a substantial portion of insurance proceeds payable be used to retire the
mortgage debt, Landlord may, at its option, terminate this Lease by giving
notice to Tenant within sixty (60) days after the date of the damage. If, within
sixty (60) days after the date of the damage, Landlord does not begin to restore
the Building as provided in Section 17.02 or notify Tenant of its election to
terminate this Lease, Tenant may terminate this Lease by giving notice to
Landlord within ten (10) days after the expiration of the sixty (60) day period.
If this Lease is terminated by Landlord or Tenant as provided in this Section
17.01, Rent will be abated as of the date of the damage.
Section 17.02 - Restoration. If Landlord does not terminate this Lease as
provided in Section 17.01 within sixty (60) days after the date of the damage,
Landlord agrees to begin to restore the Building to substantially the same
condition in which it was immediately before the damage, and, subject to
Unavoidable Delays, to continue the restoration with reasonable diligence.
Landlord's restoration work will include Landlord's Fixtures, the scope of the
work done by Landlord in originally finishing the Premises according to the
Working Drawings and subsequent Improvements made by Tenant under the provisions
of Section 7.06 which are to remain part of the Premises. Landlord will not be
required to rebuild, repair, or replace (i) any part of Tenant's furniture,
furnishings or equipment, or (ii) any Improvements made by Tenant which Tenant
is required to remove on the Lease Termination Date under Section 7.06. Landlord
will not be liable for any inconvenience or annoyance to Tenant or injury to the
business of Tenant resulting from the damage to or the repair of the Building,
except that Landlord will allow Tenant a fair reduction of Rent to the extent
the Premises are unfit for occupancy from the date of the occurrence of the
damage to a date thirty (30) days after completion of Landlord's repairs.
ARTICLE 18
Eminent Domain
Section 18.01 - Total Taking. If there is a Total Taking, then this Lease
<PAGE>
will terminate as of the earlier to occur of (i) the date when physical
possession of the Building or the Premises is taken by the condemning
Governmental Authority or (ii) the date when title vests in the condemning
Governmental Authority.
Section 18.02 - Partial Taking. If there is a Taking of the Premises which is
not a Total Taking, Landlord may terminate this Lease by giving notice to Tenant
within sixty (60) days after receiving notice of the Taking, in which event this
Lease will terminate as of the earlier to occur of (i) the date when physical
possession of such portion of the Premises is taken by the condemning
Governmental Authority or (ii) the date when title vests in the condemning
Governmental Authority. If this Lease is not terminated, Rent will be abated
from the date the Premises are rendered unfit for occupancy by an amount
representing that part of the Rent properly allocable to the portion of the
Premises taken, and Landlord will, at Landlord's expense, restore the Building
and the Premises to substantially their former condition to the extent that
restoration, in Landlord's judgment, may be feasible. Landlord's restoration
work will not exceed the scope of Tenant Fit-up as shown in the Working Drawings
and subsequent Improvements made by Tenant under the provisions of Section 7.06
which are to remain part of the Premises.
Section 18.03 - Awards and Proceeds. All proceeds payable in respect of a Taking
will be the property of Landlord. Tenant hereby assigns to Landlord all rights
of Tenant in or to such awards and proceeds, provided that Tenant will be
entitled to separately petition the condemning authority for a separate award
for its moving expenses and trade fixtures but only if such a separate award
will not diminish the amount of award or proceeds payable to Landlord.
ARTICLE 19
Quiet Enjoyment
Section 19.01 - Landlord's Covenant. Landlord covenants that it has good title
to the Premises and the Common Areas, subject to the Permitted Exceptions, and
that it has sufficient authority to enter into this Lease. Landlord also
covenants that if Tenant pays the Rent and performs all of its obligations under
this Lease, subject to the Permitted Exceptions, it will quietly have and enjoy
the Premises during the Lease Term, without interference from any Person
lawfully claiming under Landlord or by paramount title. Landlord agrees that it
will pay and perform all of its obligations under the Ground Lease.
Section 19.02 - Subordination and Non-Disturbance. This Lease is subordinate to
(i) the Ground Lease and (ii) any mortgage now or hereafter on the Building and
to each advance made under any such mortgage, and to all renewals,
modifications, consolidations, replacements and extensions of such mortgage.
This Section 19.02 is self-operative and no further instrument of subordination
will be required, provided that before a future subordination is effective
Landlord will cause the mortgagee or Ground Lessor to deliver to Tenant a
non-disturbance agreement, binding upon itself and any successor in interest, to
the effect that no foreclosure of the mortgage or termination of
<PAGE>
the Ground Lease will disturb the possession of Tenant under this Lease so long
as no Event of Default exists. In confirmation of such subordination, Tenant
agrees to execute and deliver promptly any certificate that Landlord or the
Ground Lessor or any mortgagee may request. If any mortgagee or Ground Lessor
succeeds to the interest of Landlord and agrees to recognize the interest of
Tenant under this Lease, Tenant agrees to attorn to such mortgagee or Ground
Lessor, to recognize such mortgagee or Ground Lessor as its landlord and to
execute any instrument reflecting its attornment and recognition reasonably
requested by such mortgagee or Ground Lessor.
Section 19.03 - Notice to Mortgagee and Ground Lessor. No act or failure to act
on the part of Landlord which would entitle Tenant under the terms of this
Lease, or by law, to be relieved of Tenant's obligations under or to terminate
this Lease, will result in a release or termination of such obligations or a
termination of this Lease unless (i) Tenant first gives written notice of
Landlord's act or failure to act to Landlord's first mortgagee of record, if
any, and to the Ground Lessor specifying the act or failure to act on the part
of Landlord which could or would give basis to Tenant's rights; and (ii) the
mortgagee or Ground Lessor, after receipt of such notice, fails or refuses to
correct or cure the condition complained of within a reasonable time. Nothing
contained in this Section 19.03 will be deemed to impose any obligation on any
mortgagee or Ground Lessor to correct or cure any condition. "Reasonable time"
means a period of not less than thirty (30) Business Days and includes (but is
not limited to) a reasonable time to obtain possession of the Building if the
mortgagee or Ground Lessor elects to do so and a reasonable time to correct or
cure the condition if the condition is determined to exist. Tenant has no
obligation to give notice under this Section 19.03 until the mortgagee or the
Ground Lessor has given Tenant notice of its interest as such and the address to
which notices under this Section 19.03 are to be sent.
Section 19.04 - Other Provisions Regarding Mortgagees. If this Lease or the Rent
is assigned to a mortgagee as collateral security for any obligation, the
mortgagee will not be deemed to have assumed any of Landlord's obligations under
this Lease solely as a result of the assignment. A mortgagee to whom this Lease
has been assigned will be deemed to have assumed such obligations only if (i) by
the terms of the assignment the mortgagee specifically elects to assume the
obligations, or (ii) the mortgagee has (a) foreclosed its mortgage, (b) accepted
a deed in substitution of foreclosure, or (c) taken possession of the Premises.
Even if the mortgagee assumes the obligations of Landlord, the mortgagee will be
liable for breaches of any of Landlord's obligations only to the extent the
breaches occur during the period of ownership by the mortgagee after foreclosure
(or any conveyance by a deed in substitution of foreclosure) or after entry, and
the mortgagee will have no liability for any act or omission or for any
obligations incurred by any prior Landlord, including liability with respect to
any Security Deposit except to the extent actually received by such mortgagee.
ARTICLE 20
Defaults; Events of Default
Section 20.1 - Defaults. The following will (i) if any requirement for notice
<PAGE>
or lapse of time has not been met, constitute Defaults, and (ii) if there are no
such requirements or if such requirements have been met, constitute Events of
Default:
(a) The failure of Tenant to pay Rent when due, and the continuation of the
failure for a period of ten (10) days after notice from Landlord specifying
the failure;
(b) The failure of Tenant to perform any of its obligations under this Lease,
other than its obligation to pay Rent, and the continuation of the failure
for a period of twenty (20) days after notice from Landlord specifying in
reasonable detail the nature of the failure;
(c) The failure of Tenant to pay Rent when due or to perform any of its
obligations under this Lease, if Landlord has given Tenant notice of the
same or similar failure at least twice during the twelve (12) month period
preceding the date on which the Rent or performance was due.
(d) The occurrence with respect to Tenant or any Guarantor of one or more of
the following events: the death, dissolution, termination of existence
(other than by merger or consolidation), insolvency, appointment of a
receiver for all or substantially all of its property, the making of a
fraudulent conveyance or the execution of an assignment or trust mortgage
for the benefit of creditors by it, or the filing of a petition of
bankruptcy or the commencement of any proceedings by or against it under a
bankruptcy, insolvency or other law relating to the relief or the
adjustment of indebtedness, rehabilitation or reorganization of debtors;
provided that if such petition or commencement is involuntarily made
against it and is dismissed within sixty (60) days of the date of such
filing or commencement, such events will not constitute an Event of
Default;
(e) The issuance of any execution or attachment against Tenant or any other
occupant of the Premises as a result of which the Premises are taken or
occupied by a Person other than Tenant; and
(f) The cancellation of, refusal to review or denial of liability under any
insurance policy relating to the Premises as a result of the Premises being
unoccupied.
Section 20.2 - Tenant's Best Efforts. If the Default of which Landlord gives
notice is of such a nature that it cannot be cured within twenty (20) days, then
the Default will not be deemed to continue so long as Tenant, after receiving
notice of the Default, begins to cure the Default as soon as reasonably possible
and continues to take all steps necessary to complete the curing of the Default
within time which, under all prevailing circumstances, is reasonable. No Default
will be deemed to continue so long as Tenant is acting to cure the Default in
good faith or is delayed in or prevented from curing the Default by reason of
Unavoidable Delays.
ARTICLE 21
Landlord's Remedies; Damages on Default
<PAGE>
Section 21.01 - Landlord's Remedies. Landlord may, at its option:
(a) Whenever an Event of Default exists, give Tenant a notice terminating this
Lease on a date specified in the notice. On the date specified in the
notice, this Lease and all rights of Tenant under this Lease will end
without further notice or lapse of time, but Tenant will continue to be
liable to Landlord as provided in this Article 21.
(b) If an Event of Default results from Tenant's failure to pay Tenant's Cost
as required by Section 7.01 and the Work Letter, in addition to or in
substitution of the other remedies available to Landlord, refuse Tenant
access to the Premises. In such event the Term Commencement Date will be
the earlier of (i) the date determined under Section 7.04 or (ii) the
Substantial Completion Date.
(c) If an Event of Default results from Tenant's failure to pay a charge for
Additional Services, without further notice to Tenant, discontinue any or
all Additional Services.
Section 21.02 - Possession. Upon termination of this Lease as the result of an
Event of Default, Tenant agrees to leave the Premises peacefully and surrender
possession to Landlord as provided in Section 9.08. Landlord may, at any time
after any termination of this Lease and without further notice, enter the
Premises and recover possession by summary proceedings or any other manner
permitted by law, and may remove Tenant and all other Persons and property from
the Premises. After termination of this Lease, Landlord will be entitled to
receive all rental income from the Premises.
Section 21.03- Right to Relet. After termination of this Lease as a result of an
Event of Default, Landlord may relet all or any part of the Premises in the name
of Landlord or otherwise, for such term (which may be greater or less than the
period which would have constituted the balance of the Lease Term) and on such
conditions (which may include concessions or free rent) as Landlord, in its
reasonable discretion, may determine. Landlord agrees to use reasonable efforts
but will not be liable for failure to relet the Premises or for failure to
collect any rent due upon reletting, and Landlord will not be obligated to show
the Premises in preference to other space available in the Building.
Section 21.04 - Survival of Covenants, Etc. If this Lease is terminated as
provided in Section 21.01:
(a) The termination will not relieve Tenant of its obligations under this
Lease, which obligations will survive the termination. Tenant agrees to
indemnify Landlord against all claims, losses and expenses arising out of
the termination.
(b) At the time of termination, Tenant agrees to pay to Landlord the Rent up to
the date of termination. Tenant also agrees to pay to Landlord, on demand,
as liquidated damages for Tenant's Default, the excess of
(1) the total Rent that would have been payable under this Lease by Tenant
from the date of the termination until the Stated Expiration Date,
over
<PAGE>
(2) the fair and reasonable rental value of the Premises for the same
period reduced by Landlord's reasonable estimate of expenses to be
incurred in connection with reletting the Premises, including, without
limitation, all repossession costs, brokerage commissions, legal
expenses, reasonable attorneys' fees, alteration costs, and expenses
of preparation for reletting.
(c) If all or part of the Premises are relet by Landlord, before presentation
of proof of such liquidated damages to any court, commission or tribunal,
the amount of rent reserved upon the reletting will be, prima facie, the
fair and reasonable rental value for the part or the whole of the Premises
relet during the term of the reletting.
(d) Nothing contained in this Section 21.04 will limit or prejudice the right
of Landlord to prove and obtain as liquidated damages by reason of the
termination, an amount equal to the maximum allowed by any statute or rule
of law in effect at the time when, and governing the proceedings in which,
such damages are to be proved, whether or not such amount is greater, equal
to, or less than the amount determined as provided in clause (b) above.
Section 21.05 - Right to Equitable Relief. If a Default occurs, Landlord will be
entitled to enjoin the Default and may invoke any remedy allowed at law or in
equity as though re-entry, summary proceedings and other remedies were not
provided for in this Lease.
Section 21.06 - Right to Self Help; Interest On Overdue Rent. If an Event of
Default occurs, Landlord has the right, but not the obligation, to enter the
Premises and to perform any obligation of Tenant under this Lease
notwithstanding the fact that no specific provision for substituted performance
by Landlord is made in this Lease. In performing the obligation, Landlord may
make any payment of money or perform any other act. The total of (i) all sums
paid by Landlord (ii) interest (at the rate of 1-1/2% per month or the highest
rate permitted by law, whichever is less) on such sums plus all Rent not paid
when due and (iii) all expenses in connection with the performance of the
obligation by Landlord, will be deemed to be Rent under this Lease and payable
to Landlord on demand. Landlord may exercise its rights under this Section 21.05
without waiving any other of its rights or releasing Tenant from any of its
obligations under this Lease.
ARTICLE 22
Notices
Section 22.01 - Notices and Communications. All notices, demands, requests and
other communications provided for or permitted under this Lease must be in
writing and be delivered by hand or sent by telecopy, nationally recognized and
reputable overnight delivery service, express mail, certified mail or
first-class mail, postage prepaid, to the parties, respectively at the following
addresses:
(a) if to Landlord, at the address stated in Section 1.01 (or at such other
address as Landlord designates in writing to Tenant), with a copy to such
<PAGE>
Persons as Landlord designates in writing to Tenant, or
(b) if to Tenant, at the address stated in Section 1.01 (or at such other
address as Tenant designates in writing to Landlord), with a copy to such
Persons as Tenant designates in writing to Landlord.
Section 22.02 - When Effective. Any communication provided for in this Lease
will become effective only when received or deemed received by the Person to
whom it is given. If it is mailed by express, certified or first-class mail, it
will be deemed to be received on (i) the second Business Day after being mailed
or (ii) the day of its receipt, whichever is earlier. If given by telecopy, it
will be deemed received when confirmation of complete receipt is received by the
transmitting person during normal business hours on a Business Day, or on the
next Business Day if confirmation is received after normal business hours.
ARTICLE 23
Waivers
Section 23.01 - No Waivers. Failure of Landlord or Tenant to complain of any act
or omission on the part of the other no matter how long the act or omission may
continue, will not be deemed to be a waiver by either Landlord or Tenant of any
of its rights under this Lease. No waiver by Landlord or Tenant at any time,
expressed or implied, of the breach of any provision of this Lease will be
deemed a waiver of a breach of any other provision of this Lease or a consent to
any subsequent breach of the same or any other provision. No acceptance by
Landlord of any partial payment will constitute an accord or satisfaction but
will only be deemed a partial payment on account. None of Tenant's obligations
under this Lease and no Default or Event of Default may be waived or modified
except in writing by Landlord.
ARTICLE 24
Security Deposit
Section 24.01 - Security Deposit. Tenant has deposited with Landlord the
Security Deposit in the amount, if any, stated in Section 1.01. Landlord will
hold the Security Deposit as security for the payment or performance by Tenant
of its obligations under this Lease and not as a prepayment of Rent. Landlord
may commingle the Security Deposit with other funds of Landlord. Landlord will
not be liable to Tenant for the payment of interest. Landlord may expend such
amounts from the Security Deposit as may be necessary to cure any Default or
Event of Default and, in such case, Tenant agrees to pay to Landlord the amount
expended, on demand. Landlord may assign the Security Deposit to any subsequent
owner of the Building and thereafter Landlord will have no liability to Tenant
with respect to the Security Deposit. As soon as reasonably practicable after
the Lease Termination Date, Landlord agrees (i) to inspect the Premises, (ii) to
make such payments from the Security Deposit as may be required to reimburse
itself for unpaid Rent and all
<PAGE>
expenses arising out of the termination of the Lease and reletting the Premises
and (iii) if no Default or Event of Default has occurred or exists, pay the
balance of the Security Deposit to Tenant.
ARTICLE 25
General Provisions
Section 25.01 - Unavoidable Delays. If Landlord or Tenant is delayed, hindered
in or prevented from the performance of any act required under this Lease by
reason of Unavoidable Delays, then performance of the act will be excused for
the period of the delay and the period for the performance of the act will be
extended for a period equivalent to the period of the delay.
Section 25.02 - Estoppel Certificates. Tenant agrees to deliver to Landlord
within five (5) Business Days after the Term Commencement Date an estoppel
certificate substantially in the form of Exhibit D. Within five (5) Business
Days after receipt of a request from Landlord, Tenant agrees to deliver to any
prospective purchaser, mortgagee or other Person specified in the request an
estoppel certificate substantially in the form of Exhibit D or in such other
form as the purchaser, mortgagee or other Person may reasonably prescribe. Each
estoppel certificate will be (i) signed by a duly authorized representative of
Tenant, (ii) delivered without charge to the party requesting it and (iii)
binding as to its contents on Tenant.
Section 25.03 - Right to Relocate. Landlord may, at its option, upon not less
than two (2) months prior notice to Tenant, relocate Tenant (effective as of the
date specified in the notice) to other space in the Building or in another
building in the Park having Improvements comparable in type, quality and
quantity, a substantially similar configuration and a rentable area
approximately the same as the Premises. Landlord agrees to place the other space
in substantially the same condition as the Premises are then in and to pay all
costs associated with the relocation. If Tenant is relocated under this
provision (i) the other space will be substituted for the Premises under this
Lease (ii) the terms and provisions of this Lease will remain in full force and
effect and (iii) Tenant agrees (a) to relocate as requested by Landlord and (b)
to execute all documents (including but not limited to a termination or
amendment of this Lease with respect to the Premises) as Landlord may reasonably
request.
Section 25.04 - Holding Over. If Tenant occupies the Premises after the Lease
Termination Date without having entered into a new lease of the Premises with
Landlord, Tenant will be a tenant-at-sufferance only, subject to all of the
provisions of this Lease at twice the then effective Basic Rent. Such holding
over, even if with the consent of Landlord, will not constitute an extension or
renewal of this Lease.
Section 25.05 - Governing Law. This Lease and the performance of its provisions
will be governed and construed under the laws of the Commonwealth of
Massachusetts.
Section 25.06 - Partial Invalidity. If any provision of this Lease or its
<PAGE>
application to any Person or circumstance is held to be invalid or
unenforceable, the remainder of this Lease, or the application of the provision
to Persons or circumstances other than those as to which it is held invalid or
unenforceable, will not be affected, and each provision of this Lease will be
enforced to the fullest extent permitted by law.
Section 25.07 - Notice of Lease. At the request of either one, Landlord and
Tenant agree to execute promptly duplicate originals of a statutory notice of
lease, in recordable form, setting forth a description of the Premises, the
Lease Term and any other terms of this Lease, except the rental provisions, as
may be required by law or as either party may request.
Section 25.08 - Interpretation. The section headings used in this Lease are for
reference and convenience only, and do not enter into the interpretation of this
Lease. This Lease may be signed in several counterparts, each of which is an
original, but all of which constitute a single instrument. The term "Landlord"
means only the owner at the time of the Building. Upon any sale of the Building
or assignment (other than as collateral security for an obligation) of the
interest of Landlord in this Lease, Landlord will be relieved of all liability
under this Lease and its successor in interest and/or assign will be deemed to
be Landlord so long as it owns the Building. The liability of Landlord under
this Lease is limited to Landlord's interest in the Building.
Section 25.09 - Consents. Except for the consents of Landlord required under
Section 7.06 and Article 13, consents or approvals required or requested of
either Landlord or Tenant shall not be unreasonably withheld or delayed.
Section 25.10 - Entire Agreement; Changes. All prior agreements between the
parties are merged within this Lease, which alone fully states the entire
understanding and agreement of the parties. This Lease may not be changed or
terminated orally or in any manner other than by an agreement in writing and
signed by the party against whom enforcement of the change or termination is
sought.
Section 25.11 - Binding Effect. The provisions of this Lease are binding on and
inure to the benefit of Landlord, its successors and assigns, and Tenant, its
successors and assigns and any Person claiming under Tenant.
Section 25.12 - Time of the Essence. Any provision of law or equity to the
contrary notwithstanding, it is agreed that time is of the essence of this
Lease.
<PAGE>
Section 25.13 - Table of Contents. The table of contents preceding this Lease
but under the same cover is for the purpose of convenience and reference only
and is not to be deemed or construed in any way as part of this Lease.
EXECUTED as a sealed instrument as of the Date of Lease specified in Section
1.01.
LANDLORD:
WORCESTER BUSINESS DEVELOPMENT CORPORATION
By:
TENANT:
BIOJECT MEDICAL TECHNOLOGIES, INC.
By:
Title
<PAGE>
MASSACHUSETTS BIOTECHNOLOGY RESEARCH PARK
SPACE LEASE
TABLE OF CONTENTS
Page No.
ARTICLE 1 REFERENCE DATA AND DEFINITIONS:
1.01 Terms and Titles Referred To 1
1.02 General Provisions 3
1.03 Definitions 3
ARTICLE 2 PREMISES
2.01 Premises 9
2.02 Appurtenances 9
2.03 Landlord's Fixtures 9
ARTICLE 3 TERM
3.01 Term Commencement 10
3.02 Termination 10
3.03 Estoppel Certificate 10
ARTICLE 4 RENT
4.01 Basic Rent 10
4.02 Adjustment of Basic Rent 10
ARTICLE 5 USE OF PREMISES
5.01 Use Restricted 10
ARTICLE 6 OPERATING EXPENSES; TAXES
6.01 Operating Expenses and Taxes 11
6.02 Monthly Payments of Additional Rent 11
6.03 Annual Statements 11
<PAGE>
6.04 Assessments and Other Taxes 12
6.05 Accounting Periods 12
6.06 Abatement of Taxes 12
6.07 Exemption from Taxes 12
ARTICLE 7 IMPROVEMENTS
7.01 Tenant Fit-up 13
7.02 Time for Completion 13
7.03 Notice of Substantial Completion Date 13
7.04 Delays 13
7.05 Tenant's Access to the Premises 14
7.06 Improvements by Tenant 14
ARTICLE 8 BUILDING SERVICES
8.01 Basic Services 15
8.02 Other Janitors 15
8.03 Additional Services 15
8.04 Limitations on Landlord's Liability 15
8.05 Electric Service 15
ARTICLE 9 TENANT'S COVENANTS
9.01 Pay Rent 16
9.02 Occupancy of the Premises 16
9.03 Rules and Regulations 16
9.04 Safety 16
9.05 Equipment 16
9.06 Pay Taxes 17
9.07 Maintenance 17
9.08 Redelivery 17
9.09 Tenant Financial Information 17
ARTICLE 10 COMPLIANCE WITH REQUIREMENTS
10.01 Legal Requirements 18
10.02 Contests 18
10.03 Land Disposition Agreement 18
10.04 Environmental Legal Requirements 18
ARTICLE 11 COVENANT AGAINST LIENS
11.01 No Liens 18
11.02 Discharge 19
ARTICLE 12 ACCESS TO PREMISES
12.01 Access 19
ARTICLE 13 ASSIGNMENT AND SUBLETTING: OCCUPANCY
ARRANGEMENTS
13.01 Assignment and Subletting 19
<PAGE>
13.02 Procedure 19
ARTICLE 14 INDEMNITY
14.01 Tenant's Indemnity 20
14.02 Claims by Landlord 21
14.03 Landlord's Liability 21
ARTICLE 15 INSURANCE
15.01 Tenant's Insurance 21
15.02 General Insurance Provisions 22
15.03 Landlord's Insurance 23
ARTICLE 16 WAIVER OF SUBROGATION
16.01 Waiver of Subrogation 23
16.02 Waiver of Rights 23
ARTICLE 17 DAMAGE AND RESTORATION
17.01 Substantial Damage 24
17.02 Restoration 24
ARTICLE 18 EMINENT DOMAIN
18.01 Total Taking 24
18.02 Partial Taking 25
18.03 Awards and Proceeds 25
ARTICLE 19 QUIET ENJOYMENT
19.01 Landlord's Covenant 25
19.02 Subordination and Non-Disturbance 25
19.03 Notice to Mortgagee and Ground Lessor 26
19.04 Other Provisions Regarding Mortgagees 26
ARTICLE 20 DEFAULTS; EVENTS OF DEFAULT
20.01 Defaults 26
20.02 Tenant's Best Efforts 27
ARTICLE 21 LANDLORD'S REMEDIES; DAMAGES ON DEFAULT
21.01 Landlord's Remedies 28
21.02 Possession 28
21.03 Right to Relet 28
21.04 Survival of Covenants, Etc 28
21.05 Right to Equitable Relief 29
21.06 Right to Self Help; Interest on Overdue Rent 29
ARTICLE 22 NOTICES
22.01 Notices and Communications 30
<PAGE>
22.02 When Effective 30
ARTICLE 23 WAIVERS
23.01 No Waivers 30
ARTICLE 24 SECURITY DEPOSIT
24.01 Security Deposit 31
ARTICLE 25 GENERAL PROVISIONS
25.01 Unavoidable Delays 31
25.02 Estoppel Certificates 31
25.03 Right to Relocate 31
25.04 Holding Over 32
25.05 Governing Law 32
25.06 Partial Invalidity 32
25.07 Notice of Lease 32
25.08 Interpretation 32
25.09 Consents 32
25.10 Entire Agreement; Changes 32
25.11 Binding Effect 33
25.12 Time of the Essence 33
25.13 Table of Contents 33
EXHIBIT A LANDLORD'S SERVICES
EXHIBIT B LEASE PLAN
EXHIBIT C WORK LETTER
EXHIBIT D ESTOPPEL CERTIFICATE
EXHIBIT E RENT RIDER
RIDER AND ADDENDUM
CLERK'S CERTIFICATE
CLERK'S CERTIFICATE
I, Jim O'Shea, hereby certify that I am the duly elected and qualified
Clerk/Assistant Clerk of BIOJECT MEDICAL TECHNOLOGIES, INC., a Massachusetts
corporation whose principal place of business is in Cambridge, Massachusetts,
and that the following vote was duly adopted by its Board of Directors:
"VOTED: That Jim O'Shea, President of Bioject Medical Technologies, Inc.
authorized and directed to execute and deliver a lease with Worcester Business
Development Corporation, in respect of the premises in the Massachusetts
Biotechnology Research Park, located on Innovation Drive in Worcester,
Massachusetts known as "Three Biotech Park," upon all the terms set forth in
<PAGE>
the lease presented to the Directors; and the execution thereof by said
President shall be conclusive evidence of the fact that the Lease signed by him
was the one presented to and approved by the Directors."
I further certify that the foregoing vote is in full force and effect.
Dated: April 13, 1998 Attest: James O'Shea
Clerk/Assistant Clerk
(SEAL)
EXHIBIT 10.57
MASSACHUSETTS BIOTECHNOLOGY RESEARCH PARK
SPACE LEASE
to
BIOJECT MEDICAL TECHNOLOGIES, INC.
RIDER AND ADDENDUM
The Space Lease of the Premises in the building known as Three Biotech Park from
WORCESTER BUSINESS DEVELOPMENT CORPORATION to BIOJECT MEDICAL TECHNOLOGIES, INC.
to which this Rider and Addendum is attached is modified and amended by
incorporation of the following additional provisions:
A. The following provisions (i) will continue in effect so long as Teachers
Insurance and Annuity Association of America ("TIAA"), its successors or
assigns, holds a mortgage of the Building and will be considered permanent
amendments to this Space Lease upon the foreclosure or granting of a deed in
lieu of foreclosure of any such mortgage, but (ii) will cease to be in effect
automatically upon the discharge of any such mortgage:
A-1. Occupancy Arrangements. Notwithstanding the provisions of Article 13
to the contrary, Tenant agrees that Tenant may not enter into an Occupancy
Arrangement with a Person who is affiliated with Tenant unless (a) the Person
has a net worth, determined in accordance with generally accepted accounting
principles, at least equal to Tenant's net worth and (b) the Person agrees to be
bound by the obligations of Tenant under the Lease, including, without
limitation, the covenant against further Occupancy Arrangements. Tenant agrees
not to enter into any Occupancy Arrangement which provides for Rent based in
whole or in part on the net income or profits derived by any Person from the
Premises, and any such Occupancy Arrangement will be void, provided that nothing
in this paragraph A-1 will be deemed to prohibit Occupancy Arrangements which
provide for Rent based upon a percentage of sales or receipts.
A-2. Hazardous Materials. In addition to and not in limitation of the
provisions of Section 10.04, Tenant agrees to execute affidavits,
representations and certificates from time to time at Landlord's request
concerning Tenant's best knowledge and belief regarding the presence of
Hazardous Substances on the Premises.
A-3. Tenant's Insurance. In addition to the limits required under Section
15.01, Tenant agrees to keep in force comprehensive general liability insurance
against claims for personal injury, death and property damage occurring with
respect to Tenant's occupancy of the Premises having primary combined single
limit coverage of at least $3,000,000 per occurrence.
A-4. Restoration. Notwithstanding the provisions of Article 17, Landlord's
obligation to restore the Building following damage by fire or other casualty is
limited to the amount of insurance proceeds available to Landlord for
restoration purposes.
A-5 Partial Taking. Notwithstanding the provisions of Section 18.02,
Landlord's obligation to restore the Building following a Partial Taking is
limited to the amount of condemnation proceeds available to Landlord for
restoration purposes.
B. The following provisions will continue in effect throughout the Lease Term:
B-1 Delete the definition of "Substantial Completion Date" and insert the
following: The date on which the improvements to be constructed by Landlord
pursuant to B-3 of this Rider are completed.
B-2 The only rent obligation of the Tenant under this Lease shall be the
obligation to pay the Basic Rent and notwithstanding Article 6 of this Lease or
any other term or provision of this Lease, no Additional Rent shall be owing to
the Landlord.
B-3 The Exclusive Premises shall be remodeled for Tenant's use at the cost
of Landlord as follows:
a. Install a demising partition to create separate office areas 425
and 425A.
<PAGE>
b. Install a new entry door and sidelight from Common Corridor A into
Office 425A.
c. Install a new door from Office 425A into Lab 429.
d. Remove existing casework and partition and create new opening
between Lab 429 and Lab 430A.
e. Install new 8-foot frame hood and associated mechanical and
plumbing systems in Lab 430A.
B-4 Upon execution of this Lease, Tenant shall pay $7,500.00 to Landlord to
be applied to the cost of the frame hood to be installed by Landlord pursuant to
B-3 of this Rider. If Tenant and Landlord enter a new lease or lease extension
of at least one (1) year in length, Landlord agrees to provide a credit to
Tenant against rent due under the new lease or the extension in the amount of
$7,500.00.
B-5 Landlord agrees to clean the Premises, repair any damaged surfaces,
repaint walls as needed, and ensure that all building systems serving the
Premises are in working order.
B-6 Article 6 and Article 24 are deleted in their entirety.
B-7 Sections 7.01, 7.02, 7.03, 7.04 and 8.05 are deleted in their entirety.
B-8 Exhibit D and Exhibit E are deleted in their entirety.
EXHIBIT 10.58
BIOJECT MEDICAL TECHNOLOGIES INC.
RESTATED 1992 STOCK INCENTIVE PLAN
Restated Effective April 15, 1998
1. Purpose. The purpose of this Restated 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. Subject to the Plan. Subject to adjustment as provided below and in paragraph
11, up to 3,650,000 shares of Common Stock of the Company (the "Shares") shall
be offered and issued under the Plan. No more than 3,000,000 of such Shares
offered and issued under the Plan may be offered and issued pursuant to grants
under the Plan of Incentive Stock Options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). 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 29, 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
<PAGE>
"Committee"). The Committee shalldetermine 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 "non-employee" directors as such term is defined from time to
time in SEC Rule 16b-3(b)(3)(i) or successor rule. 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 vesting or
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 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.
<PAGE>
(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
<PAGE>
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 paragraphs 6(e) and (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. Except as provided in paragraphs 6(f), 11 and 12, options
granted under the Plan may vest and 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) Restrictions on Transfer. 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; provided, however, that, with the consent of the
Committee, which consent may be withheld in its sole discretion or conditioned
on such requirements as the Committee shall deem appropriate, an officer or
director of the Company who is subject to Section 16(b) of the Exchange Act may
assign or transfer without consideration all or any portion of a Nonstatutory
Stock Option granted under the Plan to such officer's or directors spouse (or
former spouse) pursuant to a qualified domestic relations order. The holder of
any Nonstatutory Stock Option that has been transferred pursuant to this
paragraph 6(e) may be subject to treatment under tax and securities laws with
respect to the transferred option which differs from the treatment to which the
applicable officer or director was subject with respect to the option prior to
the transfer.
(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 (one year in the case of officers and two
years in
<PAGE>
the case of directors)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 or 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
<PAGE>
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
<PAGE>
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.
(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
<PAGE>
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. For purposes of this paragraph, 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 vest and become exercisable with respect to 8,750
shares six months after the date of grant, with the remaining 8,750 shares
vesting and 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,
<PAGE>
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, 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 with respect to vesting or exercisability
(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) 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
<PAGE>
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. 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.
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.
EXHIBIT 21
SUBSIDIARIES OF BIOJECT MEDICAL TECHNOLOGIES, INC.
1. Bioject, Inc.
2. Bioject JV Subsidiary, Inc.
(80.1% owned)
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated April 30, 1998 included in this Form 10-K for the year ended March
31, 1998, into the Company's previously filed Registration Statements on Form
S-3, File Nos. 33-80679, 333-18933, 333-30955 and 333-39421, and Registration
Statements on Form S-8, File Nos. 33-94400, 33-56454, 33-42156 and 333-37017.
/S/ ARTHUR ANDERSEN LLP
Portland, Oregon
June 26, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FILED
AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,900,839
<SECURITIES> 0
<RECEIVABLES> 236,726
<ALLOWANCES> 83,005
<INVENTORY> 1,891,970
<CURRENT-ASSETS> 4,021,822
<PP&E> 4,439,763
<DEPRECIATION> 1,947,006
<TOTAL-ASSETS> 6,977,610
<CURRENT-LIABILITIES> 1,002,726
<BONDS> 0
0
9,317,446
<COMMON> 47,557,297
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,977,610
<SALES> 1,435,107
<TOTAL-REVENUES> 1,935,107
<CGS> 1,749,064
<TOTAL-COSTS> 1,749,064
<OTHER-EXPENSES> 19,408,247
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 390,411
<INCOME-PRETAX> (19,502,632)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,502,632)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,629,667)
<EPS-PRIMARY> (.72)
<EPS-DILUTED> (.72)
</TABLE>
